Zimbabwean President Emmerson Mnangagwa. Picture: BLOOMBERG/WALDO SWIEGERS.
Zimbabwean President Emmerson Mnangagwa. Picture: BLOOMBERG/WALDO SWIEGERS.

With his country battling a severe foreign currency shortage and the worst economic meltdown in 10 years, President Emmerson Mnangagwa is looking to mining exports to salvage the economy.

On Monday he launched an ambitious plan to generate $12bn  from the mining sector by 2023.

In 2018 Zimbabwe generated  $3.2bn from mining exports.

The southern African country is richly endowed with mineral deposits, but has failed to put the resources to good use mainly due to huge corruption and inconsistent policies.

Zimbabwe has some of the largest mineral resources in the world, in particular platinum, diamonds, chrome and lithium.

But Mnangagwa’s dream might be elusive as bad policies, a faltering economy, and shortages of forex and all basic commodities, including food,  all threaten the plan.

Investors are cautious about investing in the country which has the second–highest inflation in the world after Venezuela and  severe power shortages.

When he came into office after more than three decades of rule by his predecessor, Robert Mugabe, Mnangagwa repealed the indigenisation law that demanded a 51% stake for local investors.

Many mining houses have shunned Zimbabwe because of cash shortages and a currency crisis that makes it difficult to take money out of the country.

Electricity, a key input in mining, is very expensive and in short supply. Tariffs were hiked 329% recently and the state-owned power utility, Zimbabwe Electricity Supply Authority, has warned of monthly increases.

The Zimbabwe dollar unit is not recognised outside the country and has been constantly losing value. Inflation is above 300%.

Addressing miners in Harare on Monday, Mnangagwa appealed for foreign investment.

“My government will continue to facilitate local mineral resources for beneficiation and value addition, which is vital to the attainment of the $12bn mining economy by 2023.

“The rolling out of the strategic road map … is therefore timely and a realisation of the sector’s potential to anchor and support other economic sectors in our quest to transform.”

Mines minister Winston Chitando said Zimbabwe plans to raise $4bn from gold by increasing output to 100 tonnes in 2023, from just over 30 tonnes in 2018. He said platinum has been earmarked to bring in $3bn by 2023, backed by new investments from SA-based Tharisa’s Karo Resources and Russia’s Great Dyke Investments.

Diamonds and chrome are each set to rake in $1bn annually, while lithium and other minerals will bring $2bn, said Chitando.