Despite the positive signs, major players in the mining sector are taking a cautious approach to re-engaging in Zimbabwe. Even with the Karo deal, which looks so positive on paper, many questions over funding and local ownership aspects remain unanswered, especially for a huge project set to start development in just a few months.
“It’s encouraging when you start seeing these things, but I don’t know whether this is real or if it’s jumping the gun a little bit,” says Botha.
On a broader level, smaller deals will be possible in the short term, but major mining companies that might be considering multi-billion dollar investments in Zimbabwe are unlikely to dive in until they’re more certain of a stable regulatory regime and political landscape. This is not only a reflection of a ‘wait and see’ approach, but also the sheer time it takes for large-cap miners to bring a large-scale project through the pipeline.
“I would say there’s opportunity and optimism in the medium term,” Botha says. “In the short term, this is not something where you flip the switch and next year you see fantastic results. It takes time to commit capital. The large mining companies go through lengthy, rigorous processes. Their capital commitment strategies are plotted and mapped out a couple of years in advance.
“Taking a punt on a few hundred million dollars, or a couple of $10m-30m projects – that’s not that risky. But committing yourself to a $1bn-$3bn project, it will go through a lot of board evaluation, and it will need to find a way into the project pipeline. It would need to push something else in the pipeline back because people don’t have unlimited capital.”
Zimbabwe’s upcoming elections will be a bellwether for the country, both politically and as a signal of stability for investors.
“I think it’s absolutely important that we see how the elections play out,” Botha concludes. “You don’t need to just look at Africa or developing countries – you look all over the world, the largest of the large first-world countries have had some pretty surprising elections, whether it’s Brexit or Trump or in France or Canada. And then when you look closer to home, all the countries around Africa and around Zimbabwe, its neighbours, there have been some very interesting election results recently. So I think there will be a very close eye on that.”