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(HERALD) Mining Indaba sets tone for sector

Mining Indaba sets tone for sector
By Golden Sibanda

THE second Zimbabwe Mining Indaba ended on a high note in Harare last week with the issue of crippling power shortages dominating virtually all the discussions pertaining to the country’s mining industry. The indaba was organised by Utho Minerals and Energy.

It brought together investors, financiers, project managers and promoters, suppliers, service providers, policy makers and other stakeholders.

The benefit to be derived from this high profile Indaba will not be quantifiable, at least for now, but will certainly manifest later in the form of a growing and thriving mining sector and for the purpose of this article, surplus power.

It is without question that the country is facing crippling power shortages, which have made rolling power cuts more of a normality than an abnormality.

Zimbabwe’s national power demand stands at about 2 200 megawatts, but the country is presently only able to generate up to a maximum of 1 100MW.

The cause of this is clear.

Zimbabwe has not invested in new power infrastructure since 1987 yet the economy continued to grow in leaps and bounds.

The effects of the power deficit were never felt for the greater part of the last two decades and a half as imports carried the deficit load.

However, increased demand for power in regional countries from where Zimbabwe used to import, and Zesa Holdings financial woes, have resulted in serious supply problems.

Delegates at the mining Indaba pointed out that Zimbabwe’s decade of economic malaise was actually a blessing in disguise considering the fact that sustained economic growth in the last decade could have worsened power shortages.

Now there are growing fears that the crippling shortages of electricity may actually retard the growth of the mining industry and, obviously, the whole economy.

This is particularly the case considering that mining is one of the main pillars of the economy, the others being agriculture, manufacturing and tourism.

However, the 4,5 percent economic growth projected by Finance Minister Tendai Biti this year is largely anchored on the projected 31 percent growth in mining and the anticipated 18 percent growth in agriculture.

This assertion was also recently confirmed by Chamber of Mines First Vice President Mr Winston Chitando that despite a host of challenges such as the liquidity crisis, high cost of funding, power shortages and perceptions over the indigenisation policy, the industry was now on a growth path.

Fears, however, abound that these projected sectoral growth figures may be constrained for it defies logic to fathom how mines can execute their expansion plans and farmers increase hectarage without adequate power supply.

Admittedly, the investment in power infrastructure by the four investors that the Government has identified would generate more than the country requires, but the projects will not come on stream until, at the earliest, 2014.

In the meantime, there will have to be measures to bridge the power deficit and Zesa is expected to play a delicate balancing act by way of demand-side management, which entails load shedding and importing from the region.

However, a number of external investors intend to enter the local power sector, especially after reports that the country’s current power tariff system allows for a good return on investment.

It also emerged at the Indaba last week that Zesa could seek assistance from regional enterprises that enjoy good rapport with regional utilities, to secure supply contracts to tap into the region’s 900 megawatts power surplus.

Following the second Zimbabwe Mining Indaba many potential investors from across the world would be keen to clinch contracts to rehabilitate, expand or set up new power stations.

This would be made even more possible by the fact that Government has come up with an arrangement where independent investors can establish power stations and then sell to Zesa or alternatively to the region if there is surplus.

Undoubtedly, the Indaba helped investors to get clarity on regulations and laws with bearing on foreign investment, get more assurance from Government the country was safe for their investment and to identify the possible areas of investment including sectors outside of the mining industry.

Hopefully, the mining Indaba, which brought together fund managers from Europe, the United States, Australia and Africa, financial institutions, project engineering consultants, exploration and mining companies to name a few provided the launch pad for the growth of this key sector.

Zimbabwe is fast turning into Southern Africa’s mining hub, as evidenced by the huge foreign investor turn out for the mining Indaba who wanted to explore the numerous opportunities in the local mining industry.

Time will tell.

Labels: MINING

posted by MrK @ 6:53 PM