Workers return from a shift at Zimplats’ Ngwarati Mine in Mhondoro-Ngezi May 30, 2014. The Zimbabwe unit of world number two platinum producer Impala Platinum will upgrade its smelter into a base-metals refinery for $100 million in the next two years, an online news agency quoted a senior Zimplats official saying on Friday. REUTERS

The Zimbabwean mining industry is desperately short of electricity and despite welcoming mining investment and expediting projects, it needs a fourfold increase in power.

At the second annual Harare Indaba in Johannesburg, delegates heard the encouraging message of investment doors opening in Zimbabwe by Polite Kambamura, the country’s deputy minister of mines & mining development,  but there were deep-seated concerns among the 50 delegates about the local currency, the ability to expatriate profit, the inability to secure a full, market-related gold price and electricity supply.

While Zimbabwe is host to the world’s second-largest known platinum group metal deposit after SA, the industry has remained constrained because of damaging government policies and actions under former president Robert Mugabe, but Kambamura spoke of new entrants wanting to start mines in the next few years.

The deeply damaging indigenisation policy giving Zimbabweans, in the form of the government, investors, employees and communities, 51% ownership of mines introduced by Mugabe’s government is on the cusp of being formally scrapped.

Kambamura said legislation to this effect would come before parliament for ratification once it resumes sitting in May. This would clear a major obstacle to investing in the sector.

Zimbabwe generates 1,400MW  of power for the mining sector, but the sector needs 2,100MW, which is met by imports from neighbouring countries, predominantly SA, which itself is facing electricity shortages.

“As the industry grows, that requirement will double in the next few years,” said Batirai Manhando, president of the Chamber of Mines of Zimbabwe.

Kambamura said there was a Chinese energy producer considering an investment in the country, but he declined to give details. He stressed the government welcomed independent power producers keen to invest in solar energy projects and wanted to attract coal-burning power-generating companies too. He was unable to say how advanced plans were to address the electricity shortage in Zimbabwe and the mining sector.

One of the pressing issues for the platinum industry, which earns nearly two-thirds of Zimbabwe’s foreign exchange, is the demand from the government to beneficiate or increase the value of its production. Central to this idea is the construction of a base metals refinery and ultimately a precious metals refinery, which would produce finished products for sale.

Impala Platinum subsidiary Zimplats, the largest miner of Zimbabwe’s platinum, Anglo American Platinum’s Unki and Impala and Sibanye-Stillwater’s jointly owned Mimosa are investigating an investment to build a base metals refinery after the government scrapped a 2% beneficiation tax on matte and concentrate sent to SA for processing.

“Everyone agrees that to benefit the industry/country, it has to work technically and commercially. It has to be value-accretive relative to the required input cost and what can be secured from the free market,” said Implats spokesperson Johan Theron.

Article first appeared in the Business Day .