Fueled by the economic stabilization of the economy brought on by the financial reforms of 2009, which included retiring the hyper-inflation dogged Zimbabwean Dollar in favor of foreign hard currencies such as the US Dollar, and the South African Rand, Zimbabwe’s mining sector grew by an astounding 35 percent annually from 2009 to 2011. Accordingly, the mining sector’s contribution to Zimbabwe’s Gross Domestic Product increased from 4 percent to 16.9 percent, overtaking the agricultural sector as the largest source of economic growth and mining now accounts for over 50% of foreign exchange cash inflows to the country.
Addressing the annual Mining and Infrastructure Indaba held in Harare recently, the president of the Chamber of Mines Zimbabwe, Alex Mhembere, said that to continue Zimbabwe’s explosive growth in mining, there was a pressing need to re-open closed mines as well as founding new ones to extract the vast mineral wealth that underlies the country.
While growth in the mining sector was “only” 19.2 percent in 2012, this is attributed to capital issues rather than a shortage of natural resources. President Mugambe appears to be on board with the importance of mining for the continuing and future health of the Zimbabwean economy, making supportive statements in the press about the industry’s ability to drive Zimbabwe’s economic growth.
This year has seen an increase in production of every major mineral that Zimbabwe mines, with the exception of chrome, production of which is expected to decline slightly from last year. The totals for fiscal 2012 show marked increases from the previous year, with gold production increasing from 14,700kg to 17,000kg, platinum 10,500kg to 12,500kg, palladium 8,000kg to 12,000kg, and diamond production increasing from 12 million carats to 16.9 million carats.
Coal production, so critical to provide for Zimbabwe’s fuel and power needs, has also seen a 15% increase in production last year. The mining sector has become important and central to the economy of Zimbabwe with the Chamber of Mines Zimbabwe stating that its tax contribution to the country grew from US $58 million in 2009 to US $445 million in 2012. Employment in the mining sector is also contributing mightily to Zimbabwe’s economic growth, with 45,000 Zimbabweans employed in the mineral extraction industry, and increase of 12,000 jobs from the 2009 employment figures, and spurring an economic boom in towns and cities like Kwekwe, Gweru, Bindura, Zvishavane and Hwange, driven in large part by the increases in mining activity.
Seeking to facilitate the continuing expansion, Mines and Mining Development Minister, Walter Chidhakwa, has announced that the government is working on a new progressive mineral development policy that will not only speak to the country’s aspirations, but would also cater to foreign investors’ needs for high returns and clear cut ownership rights, stating that a new Mines and Minerals Act will be ratified by end of this year.