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Zimbabwean mining recovery under threat

Zimbabwean Chamber
of Mines president
Victor Gapare
Harare, Zimbabwe — MININGREVIEW.COM — 24 March 2010 – Electricity shortages and a lack of access to capital are threatening the recovery of the mining sector of Zimbabwe, while uncertainty over the country’s empowerment laws is keeping investors away.

Making this claim in an e-mailed response to questions from Reuters here, Chamber of Mines president Victor Gapare said the industry’s recovery “’ which started last year after the formation of a unity government by President Robert Mugabe and his long time rival Morgan Tsvangirai, now prime minister “’ was under threat as miners could not get financing and power shortages had worsened.

“Mines have not been able to access both working capital and long term capital to recapitalise. There are no foreign lines of credit for the industry at the moment,” Gapare said. “And with regard to electricity, the ZESA utility is struggling to supply the mines.”

Reuters reports that the coalition government has said it needs up to US$10 billion (R75 billion) for the economy to recover fully, but Western donors have continued to withdraw badly needed aid and lines of credit until the administration implements political reforms.

“It’s difficult to see production increasing significantly in 2010 in the absence of capital and electricity,” Gapare said. He added that the timing of the publication of contentious rules that force foreign-owned firms, including mines, to cede 51% ownership to local blacks was bad.

He pointed out that foreign investors had shown interest in exploiting Zimbabwe’s huge platinum reserves, as well as gold, coal, chrome and diamonds, but were holding back until the government had clarified its empowerment legislation.

“If we don’t put in place an attractive investment regime, we will not win and our leaders have to realise that ordinary Zimbabweans want to see the country working so that we don’t become a failed state,” said Gapare.

The chamber has made recommendations to the mines ministry on what it wants included in a Minerals Amendment Bill that is expected to be passed by parliament by the end of 2010.