LAST week, the world’s biggest platinum miner gave a brutally frank assessment of Zimbabwe’s investment climate.
Anglo American Platinum (Amplats) chief executive officer, Chris Griffith struck a different chord from the dominant tune that Zimbabwe’s government has been happy to hear since President Emmerson Mnangagwa succeeded Robert Mugabe — many an investor’s bete noir — last November.
Griffith told Reuters: “I said (to Chitando): ‘You think I will bring half a billion dollars to Zimbabwe when you guys keep chopping and changing the rules? There is no way I will do that.’” This is a particularly sobering assessment to those who seem to hold the unrealistic view that the exit of the foreign investor’s ultimate bogeyman, Mugabe, would magically cure Zimbabwe of all ills that have kept investment out in the first place.
Granted, Mnangagwa has avoided Mugabe’s damaging resource nationalism and frequent sabre-rattling which scared off investors, frequently trotting out the “Zimbabwe is open for business” line. But the issues that the Amplats chief executive raises remain and require practical responses, not mere slogans.
While Mnangagwa is to be lauded for his bold move to soften the deleterious indigenisation policy, his unexplained decision to retain the 51 percent local ownership requirement for diamond and platinum -— both relatively undeveloped sectors in the country -— no doubt rankles investors such as Griffith and his peers.
Government has also held a 15 percent raw platinum export tax like a sword of Damocles over the producers’ heads, bullying them into local beneficiation, despite their protestations that current output could not support the level of investment required by the refinery facilities.
The tax, in place since 2013, has been deferred annually and was, at the last review in December, reduced to between one percent and five percent, depending on the level of processing the metal would have reached upon export.
The central bank’s retention threshold on foreign currency earned through commodity exports, which had gone as low as 20 percent last year for platinum before its recent upwards review to 35 percent, has also caused considerable rancour in the sector.
Zimbabwe holds the second largest platinum reserves in the world, after South Africa. The world’s top two platinum miners -— Amplats and its rival Impala Platinum -— both have significant operations here.
As the metal’s price peaked at $2 290 per ounce in 2008, Zimbabwe was doing all it can to discourage investment into the sector to ramp up output. Prices have come off significantly, to around $920 per ounce currently, but the outlook has once again turned positive.
Zimbabwe blew its chance to profit from the most recent commodity boom and looks set to continue the same mistakes by maintaining policies which restrain production, even as platinum demand looks set to improve.
As a consequence of its policies, Zimbabwe remains an insignificant player in the platinum industry despite its potential, with its three mines producing 485 000 ounces last year, or eight percent of total global output.
Amplats is by no means an insignificant voice. The company is a big global player that invested hundreds of millions in Zimbabwe, the most recent being a $62 million smelter, at a time when most foreign investors gave the country a wide berth.
Its voice, off the bandwagon, matters.