One of Zimbabwe’s biggest mining companies, Metallon Gold Zimbabwe, has announced this week that it has re-opened its two closed mines.
Two years ago, Metallon Gold Zimbabwe, a conglomerate owned by South African mining magnate Mzi Khumalo, closed Shamva Gold Mine and Howe Mine, two of the country’s largest gold producers, throwing more than 5000 workers out of employment. The Johannesburg-based company closed the mines saying it had not been paid for metal sold to Zimbabwe’s central bank headed by controversial governor Gideon Gono.
The Zimbabwe Chamber of Mines says the Reserve Bank of Zimbabwe (RBZ) owes gold producers US$30 million dollars in unpaid fees, dating back to the end of 2007.
However, Metallon Gold Zimbabwe Chief Executive, Collin Gura, this week announced that the closed mines were being re-opened after the company secured a US$15 million line of credit from local and foreign banks.
The African Export-Import Bank had agreed to lend the company US$10 million, while an unnamed local bank would provide US$5 million.
“The money will basically go towards working capital and then refurbishment of plant and equipment,” said Gura.
“Howe Mine is running and they will be pouring their first gold. Shamva Mine started operations at the end of last week,” Gura added.
The mining sector, alongside the agricultural sector, has been the backbone of the Zimbabwean economy but both have been devastated by government policies adopted over the past decade that have stifled investors efforts to expand.
A haphazard land reform programme initiated by Zanu-PF in 2000 triggered the collapse of both sectors that provided primary raw materials to manufacturers spawning a severe foreign currency shortage.
Mining laws and regulatory controls instituted by the Reserve Bank have combined to restrict expansion of the sector, further worsening foreign currency shortages.
Last week, Prime Minister Morgan Tsvangirai said Zimbabwe could attract up to US$16 billion in exploration and mining investment if it corrects policies that have scared away foreign investors.
“Government has a window of opportunity to prepare a conducive policy environment by mid 2010 that could see Zimbabwe’s mineral sector attracting between $6 billion and $16 billion in exploration and mine development during the 2011-2018 period,” Tsvangirai said.
Tsvangirai said that while it was necessary to allow locals to participate in the mining industry, this should be done with a view to grow the country’s economy.