Zimbabwe Mining Report Q3 2016 - New Market Research Report

Zimbabwe's mining industry will grow steadily in absolute terms over our forecast period through to 2020 as production increases across the key platinum and diamond mining sub-sectors .

Latest Developments & Structural Trends

Zimbabwe is richly endowed with deposits of chrome, gold, nickel, diamonds and platinum, among other minerals. Its gold reserves are among the largest in Africa, while it has the world's second-largest platinum reserves. Diamond reserves are measured to be the second-largest globally after Russia. Development in these key markets together with a gradual more stable political and economic climate has seen the country's status as major global producers strengthen in recent years. In terms of overall output, Zimbabwe is challenging the world's largest platinum producers, Russia and South Africa, while a recent reduction in taxes for smaller gold miners will see production rise at almost a double-digit rate this year.

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The mining sector will nevertheless face increasing challenges to its current growth trend, however. Political and economic risk remains a particular concern from both a regulatory and investment point of view and the ZANU-PF will continue to spell trouble for the future of the industry.

The changing regulatory environment surrounding Zimbabwe's diamond mining industry is likely to create challenges as well as opportunities for diamond production over the next few years.

Since February 2016, relationships between Zimbabwe and China have deteriorated following the Zimbabwean government's decision to remove Chinese companies from the Chiadzwa diamond fields. In February 2016, the country's mines minister Walter Chidhakwa cancelled existing mining licences of a number of companies by stating that their licences had expired. As a result, Anjin Investments, a joint diamond mining venture between China's Anhui Foreign Economic Construction Company Limited and the Zimbabwe Mining Development Corporation, has taken the Zimbabwean government to court to challenge the decision.

We forecast Zimbabwe to experience a temporary boost in gold production this year as the impact of a recent reduction in gold mining levies leads to an increase in activity by smaller mining firms. Zimbabwe's gold production rose by 25% during Q115 to 4,180kg, according to the country's Chamber of Mines. We forecast output growth to expand by 4.0% annually during 2016-2020, with output growing from 0.61mn ounces (moz) in 2016 to 0.70moz by 2020. Despite this growth trend, Zimbabwe will remain a relatively minor gold producer on a regional level, with the majority of production continuing to come from artisanal and small-scale producers. At present, the country is significantly behind Africa's largest gold producers, South Africa, Ghana and the DRC in terms of its total output.

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