Investors in western countries are also alarmed by the government’s indigenization policy, which requires any foreign company worth more than $500,000 investing in the country to have a local partner with a 51% stake. As a result Zimbabwe has few western investors. But where westerners have left, it is widely believed that China has stepped in. David Ellwood, founder of Metmar Minerals, says bluntly: “The Chinese are not nervous about Zimbabwe. Everyone else in the world is. When everyone wakes up to what’s happening in Zimbabwe, all the opportunities will be gone. The people who are investing in Zimbabwe are going to have a position that no one else is going to be able to get. There is a limited number of quality assets in Zimbabwe. These are all being gobbled up at the moment.”
Metmar needs between $100 million and $200 million to develop its chrome mining assets in Zimbabwe and is talking to Chinese investors. Ellwood says: “Chinese investors never do things on their own. They’ve got plenty of money, but it is sovereign fund money, and they will always have a Chinese government department overseeing all these operations.”
Ellwood adds that China’s position in Zimbabwe is now so secure that the local government would “not dare to influence their ownership or policies. There would be no question of foisting a local company on a major Chinese concern.”
But while political allegiance may be secure, issues such as power outages have an effect on all producers. According to Paul Wheeler of the Perro Tinto mining consultancy, Zimbabwean gold production “has shrunk alarmingly over the past few years, principally because of the poor economic situation”.
The key to rebuilding the country’s mining sector, says Wheeler, is “attracting the capital necessary to get existing operations up and running and then to conduct systematic exploration programmes. Attracting capital will depend on how investors view the economic and political situation within the country.”
That said, Sean Gammon of Imara, a pan-African investment group, says that “investment in Zimbabwe’s mining sector is starting to pick up. There are tentative moves to invest in the country and its mining industry in some quarters.” For example he points to the launch of a Zimbabwean focused fund, Masawara, on London’s junior market AIM.
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