Simply because of its proximity, Zimbabwe has always been important to South African mining companies and the support industries that have grown around mining in this region. The news out of Zimbabwe continues to be mixed. Gold production, which came to a halt in Zimbabwe about a year and a half ago has recommenced at a myriad of small producers, which are now able to repatriate their earnings and obtain payment in US dollars for their output.

But the country is putting in place indigenisation legislation intended to give 51% controlling stake of all mining operations to Zimbabweans. A government promulgation on the 29th of January 2010 calls on all companies to submit a detailed indigenisation implementation plan by the 15th of April this year.

In spite of this widely condemned move, mining operators in Zimbabwe have expressed optimism based on what they perceive to be happening in the country. Kalaa Mpinga, CEO of small gold producer Mwana Africa, which controls the historic Freda Rebecca mine once owned by AngloGold Ashanti, says that the Zimbabwean government’s indigenisation plans will not divert the company from its goal of 30,000 ounces a year at this recently re-opened operation.

Mpinga says there is consensus between the Ministry of Mines, the ministry of Indigenisation, the Ministry of Finance, and the Chamber of Mines that this 51/49% will be difficult to implement in the mining industry. He also says that the situation in Zimbabwe for mining companies such as Mwana is much better than it was 12 months ago.

Ian Saunders CEO of New Dawn, another Zimbabwean gold producer has similar sentiments. New Dawn operates the Turk-Angus mining complex and is planning to ramp up output there to achieve 35,000 to 50,000 ounces a year.

Saunders believes that if all stakeholders are committed to rebuilding the country’s economy through its mining industry, something he holds to be true, the legislation will be amended to something more palatable.

The revived interest in Zimbabwe is real and many south of the border continue to look northwards. DRDGold CEO, Niel Pretorius, notes that there isn’t another country in the world where a tarred road and an existing power line are that close to surface gold.

The ease of access, familiar conditions and the fact that it takes less time to fly to Harare from Johannesburg than Cape Town appeals to South African mining people such as Pretorius.

Of course much has to be done, like implement rule of law in Zimbabwe so that diamond fields such as Marange, a deposit which has been widely publicised in a context of illegal production of blood diamonds, reverts to its legal owner. At the moment this diamond field is controlled by politically connected thugs, while its actual owner, AIM listed exploration group, African Consolidated Resources (ACR), is unable to apply its rights. ACR has won a court order for its rights to this field to be upheld. However, on the ground it is unable to gain access.

However, even this has not deterred ACR CEO Andrew Cranswick, a fourth generation Zimbabwean, from his optimism in the future of Zimbabwe. He suggests that, as a trend, the environment for doing business in Zimbabwe is starting to improve.

Since ACR’s inception it has spent US$25 million on exploration in Zimbabwe and, after Impala Platinum’s Zimplats operation, claims to be the second largest investor in the country’s mining sector.

It is Impala Platinum, though, which holds 87% of Zimplats, that puts into perspective what is at stake in Zimbabwe. The phase two expansion at Zimplats, which would increase that operation’s output by 85,000 ounces a year of platinum to 270,000 ounces a year has been given board approval from a technical perspective. Implats CEO David Brown says the project, which entails a US$450 million investment, the biggest single investment in Zimbabwe in 20 years, could be shelved if the proposed 51% indigenisation is applied.

“It is quite clear that with various utterances on indigenisation and regulations being gazetted at a 51% local shareholding, this cannot be regarded as an investor-friendly approach,” Brown says. “The equation of 49% of the economic profits of a business versus a major share of risk and significant funding does not work.”