Zimbabwe is talking up a US$12 billion mining industry and riding a lithium wave, but the country still has much to do to clear perceptions among some of the world’s most influential resource investors.
An annual survey by Canada’s Fraser Institute, which polls over 2000 mining investors each year on where they prefer to invest, places Zimbabwe at the bottom of 62 mining jurisdictions.
“Zimbabwe has consistently ranked amongst the bottom 10—it has held that dubious distinction for the previous nine years,” according to the 2022 Investment Attractiveness Index, just released.
It is not enough to have good mineral endowments. Strong policy, and managing perceptions around it, are just as key.
“A sound regulatory regime coupled with competitive taxes make a jurisdiction attractive to investors,” says Elmira Aliakbari, director of the Fraser Institute’s Centre for Natural Resource Studies and co-author of the report. “Policymakers across the globe should understand that mineral deposits alone are not enough to attract investment.”
Why does Zimbabwe rank so lowly among this group of investors? It is mostly to do with their perception of how the Zimbabwe government regulates the industry. Zimbabwe is bottom on the Policy Perception Index (PPI), which measures policy attractiveness of the 62 jurisdictions in the survey. To come up with this index, Fraser asked mining investors what they think about Zimbabwe in terms of the administration of current regulations, environmental laws, the legal system and taxation regime, uncertainty concerning protected areas and disputed land claims, infrastructure, socioeconomic and community development conditions, trade barriers, political stability, labour regulations, quality of the geological database, security, and labour and skills availability.
Says the report: “When considering both policy and mineral potential in the Investment Attractiveness Index, Zimbabwe ranks as the least attractive jurisdiction in the world for investment followed by Mozambique, South Sudan, and Angola. Also, in the bottom 10 (beginning with the least attractive for investment) are Zambia, South Africa, China, the Democratic Republic of Congo, Papua New Guinea, and Tanzania.”
Botswana is the highest-ranked jurisdiction in Africa.
Good for some
Not everyone agrees with the sentiment in Fraser’s survey. Nico Muller, CEO of Implats, has said Zimbabwe is, in fact, the best country that his company operates in. This was shared by former Anglo American Platinum CEO, Natascha Viljoen, who told a meeting of investors last year that “I wish I could bottle what they have (in Zimbabwe) and distribute it across” other group operations.
Mark Learmonth, whose Caledonia Mining has bought three mines in Zimbabwe since 2021, has also said: “If we think Zimbabwe has great assets, why would we look elsewhere?”
Despite the optimism of some investors on the ground, perceptions reflected in the Fraser report show why Zimbabwe has not attracted the scale of investment that matches its potential. Only three companies that operate in Zimbabwe AngloPlats, Implats and Huayou Cobalt often make the list of the world’s top 50 companies by market capitalisation. This shows that larger, more influential firms have stayed away from Zimbabwe.
To try and switch up perceptions, Zimbabwe has tried some public relations. Last year, Zimbabwe was nominated for the Most Improved Mining Jurisdiction at UK’s Mines and Money London awards, which attract mostly mid-cap companies.
But, a more sustainable route is actual reform, enacting favourable laws and being consistent on policy. A survey of members of the Chamber of Mines showed that most miners in Zimbabwe are less confident about their industry’s prospects for growth in 2023, concerned by power shortages and policy uncertainty. – NewZWire
