Zimbabwe has lost an estimated USD$42 billion and another estimated USD 4.5 billion annually for more than two decades due to the illegal sanctions imposed on it by the West. This has led to industries suffering. The mining sector has not been spared from the huge effects caused by the illegal sanctions.
United States and the Western countries imposed sanctions on Zimbabwe for over two decades after the Southern African nation successfully embarked on the land reform program in 2000. The Land Reform Programme has benefited thousands of previously landless Zimbabweans.The Government undertook the Land Reform Programme through Amendment 17 of the Constitution which allowed expropriation of land without compensation.
The United States’ Democracy and Economic Recovery Act (ZIDERA) has led the country to be on high risk profile to investors, hence closing avenues for fresh lines of credit and smooth trade. ZIDERA has on its list, 141 individuals and 56 companies and it further places financial restrictions that block debt cancellation to Zimbabwe and bars financial institutions such as International Monetary Fund, World Bank from extending any loan to the country without the approval of the United States President.
Sanctions imposed on Zimbabwe were passed outside the multilateral forum. Articles 39 to 42 of the United Nations charter clearly states that economic embargoes can be used in the conduct of international relations on the condition that they are authorized by the United Nations Security Council (UNSC).
While the country has been doing considerably well despite the sanctions, the effects cannot be ignored.
The mining sector is currently suffering due to sanctions. The embargo also makes it very difficult for mineral producers locally to market their products internationally, to potential buyers as these sanctions have painted a bad picture about Zimbabwe. Sanctions have led to reduced ability to access new markets and market share as it eliminated the USA and the EU as its markets. Access to international credit markets have also been blocked by the imposition of sanctions so is the country’s balance of payment.
The United States’- Office of Foreign Asset Control (OFAC) in the Department of Treasury, intercepts the mineral sales proceeds. So it becomes difficult to sell minerals abroad since it controls these sales.
Some global diamond players could not trade and deal directly with Chiadzwa diamond companies under their normal banners / names for fear of retribution. They had to find other entities to trade with, a serious business and cost implications.
To date,a total of 1.2 million in producer funds and Government royalties have been blocked on the diamonds companies, the sanctions have made it difficult for them to effectively market and trade their diamonds at effective prices. The companies trade their diamonds through unconventional means because major international banks, insurance companies and courier did not want to be associated with diamonds from Chiadzwa.
Despite suffering immensely from the embargo, The Government has made huge strides on improving the mining sector. Through the National Development Strategy (NDS1), the Government is going to enhance investments in mining towards exploration, beneficiation and value edition of minerals.
Zimbabwe’s mining sector is diversified with close to 40 different minerals. Predominant minerals include platinum group of metals, chrome, gold, coal and diamonds. Zimbabwe has the second largest platinum deposits. The sector accounts for about 12 percent of the country’s gross domestic product (GDP), and the Minister of Finance has recently claimed the sector has the potential to generate USD $12 billion annually by 2023.Imagine if the country was not on sanctions whilst rich in all these minerals.
The mining sector is exploring possibility of oil and gas deposits in Muzarabani. According to African Mining Market, Zimbabwe’s lithium deposits are the largest in Africa, and the country will become one of the world’s largest lithium exporters due to growing world demand for rechargeable batteries. The Government says the country will meet 20 percent of the worlds’ total demands for lithium when it fully exploits its known lithium resources, and four major lithium projects are currently under development.
The Anti-Sanctions march to be held today, presents a perfect opportunity for Zimbabwe and progressive nations of the world to call for a stop on these sanctions. Through the march and the musical gala that is scheduled to take place this evening, the USA and the EU will have no option but to listen to these calls.
On another positive note, regional leaders have also weighed in with calls for these economic embargoes to be removed with immediate effect as they do not only affect Zimbabwe but also the region at large. Removal of sanctions will surely allow the mining sector to blossom and reach its full potential.