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Painful paradoxes: Mining, crisis and regional capital in Zimbabwe
Richard Saunders, Africa Files
August 30, 2008

http://www.africafiles.org/article.asp?ID=18663

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Zimbabwe today confronts an unhappy paradox: despite several years of a commodities boom for minerals in which the country enjoys an advantage, much of the country's mining production has effectively collapsed in the 2000s. Only ten years ago Zimbabwe was a key player in African gold and ferrochrome production, among other minerals, but foreign investment into the once-thriving sector has since crashed. Several international miners have mothballed operations, or pulled out entirely. Only a handful of operations in the important platinum and diamond sectors have been spared.

Equally jarring is the reality - in the face of the ZANU-PF government's militant rhetoric around "indigenisation" or black empowerment - that remarkably little transformation of ownership in the mining sector has actually taken place. The transferral of ownership to Zimbabweans by legal or violent means, seen in some other sectors, has not happened in mining. Foreign mining houses, led by South African-based companies, continue to dominate the local industry. The key recent change, instead, is that regional investors now include a significant number of black-owned mining firms. Thus a second paradox: if there has been black empowerment in Zimbabwean mining in the 2000s, it has typically involved non-Zimbabweans based outside the country.

What kinds of new investment opportunities emerged for regional players along with the worsening crisis in mining, and how have these openings been mediated by the Zimbabwean State, local business and civil society? What has been lost and gained, and by whom, in the dynamic of cross-border investment in the crisis years of the 2000s? Is the current political-economic tragedy cultivating a new form of opportunistic, parasitic economic domination by external forces in the region?

The dilemma of mining in Zimbabwe also raises broader questions around the engagement and disciplining of large scale foreign investments by national interests that are comparatively weak in financial and technical resources: namely, what kinds of institutions, instruments and policy initiatives might be most effective in sustaining investment and greater shared local beneficiation?

A golden age, found & lost

Zimbabwe's mining sector has been beset by a deepening crisis for more than a decade. Initially based in declining production efficiencies and investor wariness due to the country's worsening economic climate, the sector's continuing deterioration has since been punctuated by political faction-fights over divested public and private assets, murky deals involving the takeover of mineral producers by quasi-state organisations and, more recently, mounting allegations of corruption and smuggling in the diamond and gold sectors.

The key factors in mining's decline lie outside the economics and logistics of the sector, in the security-driven restructuring of Zimbabwean politics and business in the late 1990s and early 2000s. The ensuing economic instability and growing political unpredictability deprived the potentially high-growth sector of the kind of investment needed to sustain and expand existing operations. In this dynamic both local mining entrepreneurs and mineworkers and their communities have been among the most profoundly and negatively affected.

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