Zimbabwe is not likely to benefit from its abundant mineral resources because of patronage politics, outdated legislation and regulatory gaps, a United States private think-tank, Stratfor says.
The situation is not likely to improve any time soon as Zimbabwe President Emmerson Mnangagwa is likely to win the coming elections and will maintain the system.
A British think-tank funded by a South African organisation says Mnangagwa will be beaten by Citizens Coalition for Change leader Nelson Chamisa.
Zimbabwe holds the largest lithium deposits in Africa and the fifth-largest in the world. The country is also home to the world’s third-largest platinum deposits, along with large deposits of other high-value mineral resources like gold, chrome, coal and diamonds, Stratfor says.
“Mnangagwa will likely secure another term in Zimbabwe’s presidential election later this year, which means that mismanagement of the mining sector will probably persist despite the recent reforms, thereby limiting the country’s access to the global market and perpetuating the country’s economic crisis,” it says.
Despite Abundant Resources, Zimbabwe’s Mining Sector Will Remain Unsteady
Despite recent government commitments to reform, Zimbabwe’s mining sector will likely remain crippled by patronage politics, outdated legislation and regulatory gaps, which will continue to constrain the country’s economic outlook and restrict the extraction of some of the world’s most valuable minerals. Zimbabwe, a small country of about 16 million people in southern Africa, holds some of the largest mineral resources on the continent. Its political leaders, however, have failed to build a flourishing mining industry — a trend that will likely continue under President Emerson Mnangagwa, despite his new push to boost the sector’s profitability. Over the past year, Mnangagwa and the ruling Zimbabwean African National Union-Patriotic Front (ZANU-PF) have introduced new legislation to support the president’s goal of increasing mining revenues to US$12 billion in 2023 — a nearly US$8 billion increase from 2022. In July, the government announced it would raise royalty rates on platinum producers and introduce royalties for lithium miners from Jan. 1 in an effort to boost revenue and formalize government fees. In December, the government then banned all lithium exports without explicit state permission in an attempt to clamp down on illegal smuggling (which the government says has cost it US$1.8 billion in lost revenue). Mnangagwa and ZANU-PF are particularly focused on lithium (a key component in the batteries used to power electric vehicles), given high global demand, anticipated price increases and Zimbabwe’s large deposits of the mineral. But without structural changes to the mining sector and institutional changes to the government, Zimbabwe will fail to reap the full potential of its abundant mineral reserves.
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