Zimbabwe is reportedly considering scrapping a controversial equity ownership law currently affecting the country’s platinum sector, in an attempt to encourage foreign investment in the industry.
Platinum mining in Zimbabwe has been governed by the Indigenisation and Economic Empowerment Act, first introduced in 2008 by then-president Robert Mugabe. The act forcibly transferred 51% of businesses in the country into the ownership of native Zimbabweans. While this ensured local ownership of operations, the ambiguity around the definition of those affected by the bill and the fact that it resulted in foreign investment in platinum mining being all but eradicated, has meant the act has proven unpopular.
The sector’s miners have been particularly opposed to the bill considering the importance of platinum mining to the Zimbabwean economy. The country is the third-largest producer of platinum in the world, with the government targeting 50,000 tonnes (t) of production in 2030, and platinum is the driving force behind a mining sector that accounted for around 16% of GDP in 2018.
Miners have lofty ambitious for the platinum sector, with The Herald reporting that the country could account for a quarter of the world’s platinum production, and the Zimbabwe Ministry of Mines and Mining Development claiming that there are 2.8bnt of platinum group metals in the country. However, two of the country’s largest platinum miners, Zimplats and the Sibanye-Stillwater-owned Mimosa operation, produced just 8.3Mt in 2017 as the country’s actual mining output fell well short of its potential.
The news follows the government’s removal of the bill last with regards to the chrome, coal, gold, lithium and nickel sectors, raising hope that foreign investment will soon come to the platinum sector. However, Fidelity Printers and Refiners, the only company to buy gold produced in Zimbabwe, reported that in January 2019 the country’s gold production slumped to 1.7t, compared to the monthly average of 2.8t recorded throughout 2018, suggesting that scrapping the bill may not lead to an immediate upturn in the platinum sector’s fortunes.
The country’s mining sector has struggled this year, with rampant illegal and small-scale mining prompting the government to call on artisanal miners earlier this year to make payments to the government in line with the law.