Mugabe’s shadow still looms over miners

The debacle that is the election in Zimbabwe is spilling over into an already weak mining industry.

According to media sources within the country, President Robert Mugabe plans to seize foreign-owned mines in Zimbabwe as part of a ploy to win over votes for an upcoming run-off election.

Mugabe’s ruling Zanu (PF) party has held up the release of election results for over a week despite national and international pressure to make the results known.

While the leading opposition party, the Movement for Democratic Change (MDC), headed by Morgan Tsvangirai, insists that exit polls show it to be the clear winner, Mugabe is busy preparing for a run-off election despite claiming that results are not yet known because of voting irregularities.

In such a quagmire stories surfaced in the national media on the weekend that Mugabe and his party are looking to confiscate mines as a way to win over large blocks of voters.

The purpose of the seizure would be twofold: it would tap into the nationalism that Zanu (PF) has long agitated for support, and would give Mugabe much needed assets with which to court powerful players in Zimbabwe.

The allegations are based on documents that emerged at a politburo meeting on April 4. The documents accused foreign miners of shutting down operations in an effort to sabotage Zimbabwe’s economy and argued that operations that weren’t operating should be seized.

While the Chamber of Mines of Zimbabwe admitted there were plans to implement a use-it-or-lose it policy to help further a broader “indigenization” policy, the Chamber told the Times of South Africa there was no plan to fast track the strategy as reported by the Zimbabwe press.

Just one month ago Mugabe introduced a law to force foreign-owned business to be 51% owned by Zimbabweans. That move, along with constant political uncertainty, deterioration of infrastructure, lack of foreign currency and an inflation rate running at roughly 168,000% — had foreign miners already close to the brink before news of the seizure plan was released.

Australia’s Aurion Gold and First Quantum (FM-T, FQM-L) have both closed mines there in recent years.

And despite being home to the second-biggest deposits of platinum and chrome and possessing one of sub-Saharan Africa’s most educated populations, mineral production has dwindled.

Gold production was at an anemic 7.5 tonnes last year, compared with 29 tonnes in 1999. Coal and iron ore production have also dropped dramatically in the last eight years, while nickel and ferrochrome production have come off to a lesser extent.

All the while, companies like Impala Platinum (IMP-J, IPLA-L) and Central African Gold (CAN-L), say they are ready to expand should the economic tide in the country turn for the better.