Zimbabwe’s mining sector could create 30 000 jobs and attract $15 billion worth of investment by the year 2018, driven by a projected growth in gold, coal and chrome output, a World Bank official has said.
Nadia Piffaretti, World Bank senior country economist for Zimbabwe, told delegates attending the recently held High Level Economic Forum in Victoria Falls that an aggressive government policy attracting investment in the capital intensive sector is critical to unlock value to the mining indusrty. This sector accounts for 50% of total mining exports.
The country was one of the lowest ranked in the world in the ease-of-doing- business category.
Zimbabwe has over 40 base minerals and the second largest platinum reserves in the world after South Africa.
The sector, which requires up to $4 billion to recapitalise, has over the last 10 years carried out limited prospecting activities.
“In the active policy scenario, investment could reach $15 billion with 30 000 jobs created,” Piffarett said.
“Gold, coal and chrome have the higher potential of absorbing new investment.”
The sector currently employs 45 000 workers excluding small-scale miners.
“In the baseline scenario, we project $5 billion investment by 2018. Most of production volume would expand in gold and coal. Nearly 5 000 jobs will be created,” she said.
However, Piffarett warned that the country – which relies on export earnings from the mining sector – was heavily exposed to price fluctuations on the commodities market. The market has since the start of the year been affected by weak demand on the back of the eurozone crisis.
“The 2009-2011 rebound has seen marked growth in mining than manufactured tradables and recovery of exports led by primary exports, which might indicate that Zimbabwe is at risk of missing the opportunity to rebuild the economic foundation for a diversified and sustainable economy. Zimbabwe is exposed to commodity circles,” she said.
Piffarett said Zimbabwe, which recorded its first positive economic growth rate in 2009 after a decade-long economic contraction, failed to take advantage of a global boom in mining prices.
“Given lack of exploration, infrastructure weaknesses and current persisting uncertainties, there will be no major increase in activity (in the mining sector) in the medium run,” she added.
The mining sector was expected to grow by 16,7% in 2012 driven by strong growth in gold, platinum, nickel, coal and chrome output.