Saturday, 29 January 2022

$1.4bn needed....

ZIMBABWE needs approximately $1,4 billion investment to establish a vibrant local smelting and refinery industry to promote efficient value addition and beneficiation of the country’s vast mineral resources for the benefit of the economy, a Cabinet Minister has said.

Although minerals constitute the bulk of the country’s foreign exchange earnings, with a cumulative $1,6bn worth of exports as at mid-September spurred by a 25 percent increase in production, their value remains low given that they are exported in raw form for further processing in destination markets.

South Africa is a major destination and beneficiary of Zimbabwe’s raw mineral exports, especially platinum. According to the Ministry of Mines on average 250 haulage trucks cross the border per month taking semi-processed platinum concentrate to the neighbouring country for further value addition and beneficiation.

“This is because we have not yet developed the capacity to do the beneficiation that we very badly need,” Mines and Mining Development Minister, Walter Chidhakwa said.

Platinum alone, he explained, is a poly ore body that contains up to 10 different minerals that include; platinum, palladium, oridium, iridium, rufenium, gold, silver, nickel, copper and cobalt.

The minister, who said he was in South Africa recently to meet that country’s refinery executives and track the platinum processing system for the exported ore, said the country was losing millions of potential revenue through raw exports.

Minister Chidhakwa said urgent steps needed to be taken to establish local refinery plants.

“What does it cost to set up all this? A smelter will cost about $700 million, a base metal refinery will cost between $250 million and $400 million depending on how you do it and a precious metal refinery will cost about $400 million. So approximately $1,4 billion is needed,” he said.

“So, you have heard me bemoan and cry that our minerals must be value added and beneficiated at home and that means we must make an investment of $1,4 billion.”

In 2015, the Government imposed a 15 percent tax on raw platinum ore exports to force companies to process locally but suspended the levy after the mines agreed to support local platinum processing.

Zimbabwe has three main platinum producers — Zimplats, Unki and Mimosa.

Minister Chidhakwa said the Government would not budge on its quest to have the parent companies of the three platinum firms, Impala Platinum and Anglo-American, to avail funding to set up local refineries.

“They have these facilities in South Africa already and have got capacity to process not just South African platinum but Zimbabwean platinum. For them the world is a village, they can invest and put one plant there and another there,” said Minister Chidhakwa.

He said establishment of local refineries would ensure that the country creates not just mining jobs, which are low skilled and low income but also creation of high income jobs for the middle class.

“That is how nations built middle classes and middle classes demand products and these people want to buy more products and the country is driven to produce those products and in the process the economy grows. That is what we continue to say, we want it done in Zimbabwe,” he said.

During an alternative mining indaba held in Bulawayo recently, Minister Chidhakwa said the Government was in the process of adopting an alternative platinum refining technology that is proving to be cheaper than the conventional old technologies. The alternative model would result in the construction of an estimated $200 million platinum refinery probably next year through a joint venture with Australia’s Kelltech Ltd.

“We have said we lose nothing by trying it. If it works then we will have much faster, cheaper and cost competitive platinum refineries. So, Cabinet approved the project . . . ,” he said.

“We are at the stage now of building a plant here in Zimbabwe and we look forward to completing that work as a matter of urgency.”

Minister Chidhakwa said such initiatives were meant to plug leakages and ensure the country derives maximum value from extraction of its natural resources.

“That implies the need to ensure that beneficiation is done here to ensure there is no suspicion. When we want such a thing done it’s not done by people of small and weak hearts, we have to take positions . . . that is how we are going to move, tough but working together,” he said.

Zimbabwe holds the world’s largest deposits of platinum after South Africa and has been pushing mining firms operating in the country to build refineries to stop the export of raw platinum ore.

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