The glaring case for resource nationalism

Nick Mangwana

Government Up Close

Zimbabwe has taken significant strides in recent years to assert control over its natural resources. 

Through a series of Statutory Instruments, Government has implemented policies aimed at ensuring the country extracts maximum benefit from its resources.

This approach, known as resource nationalism, has sparked intense debate about its merits and potential impact on the economy but as a nation we know this is good for us. 

Those who do not want to deal with us on our own terms should know we are not under pressure. Our resources are under the earth beneath our feet and are going nowhere. We are patient.

According to experts, the value of a mineral can increase significantly if beneficiated locally.

For instance, the value of lithium, a key mineral in Zimbabwe, can increase by up to 500 percent if processed into lithium carbonate, a key component in batteries for electric vehicles. Similarly, the value of chrome ore can increase by up to 300 percent if smelted and processed into ferrochrome, a key alloy used in the production of stainless steel. 

By beneficiating these minerals locally, Zimbabwe can capture a greater share of the value chain and increase revenue from mineral exports.

While the most obvious benefit of beneficiation is the significant increase in value of the mineral, it also offers a multitude of other advantages. 

Beneficiation leads to employment creation, as local processing facilities require skilled and unskilled labour to operate. 

Additionally, beneficiation stimulates local economic growth, as the increased economic activity generates demand for goods and services, and fosters the development of downstream industries. 

Furthermore, beneficiation enhances technology transfer, as local companies acquire new skills and expertise through partnerships with foreign investors. 

Even the Reserve Bank supports beneficiation because it improves the country’s balance of payments, as the export of high-value processed minerals earns more foreign exchange than the export of raw minerals.

The Manhize steel plant in Chirumanzu is a shining example of mineral beneficiation in action. 

By processing iron ore into steel, the plant does not only increase the value of the mineral but also creates employment opportunities for the local community.

The plant’s operations have also stimulated local economic growth, with local businesses supplying goods and services to the plant. 

There are plans to construct a railway line to ferry the beneficiated product to the sea.

These are the secondary benefits of such a simple policy. As President Mnangagwa has emphasised, “Beneficiation is key to unlocking the value of our minerals and creating prosperity for our people.” 

Another good example is Afrochine. The Afrochine ferrochrome plant in Selous, Chegutu area in Mashonaland West, is another exemplary model of beneficiation in action. This plant, which processes chrome ore into high-grade ferrochrome, has not only increased the value of the mineral but also created employment opportunities for over 500 locals. 

The plant’s operations have also contributed significantly to the country’s foreign exchange earnings, while also stimulating local economic growth through the procurement of goods and services from local suppliers. As a testament to the success of beneficiation, the Afrochine plant has become a significant contributor to Zimbabwe’s economic development, demonstrating the potential for value addition to transform the country’s mining sector.

As we laud the contribution of companies such as the above for heeding Government’s call to beneficiate as well as supporting that policy thrust, it will be remiss of this writer not to touch on areas of improvement where they surely can do better. 

We are aware of the borehole programme for community members and other initiatives and we thank them for it. 

There is need to invest in paved roads for their own use and that of the community. 

Maybe there are plans for this but we are not there yet. There is an expectation that there will be social amenities and other programmes that promote the well-being and dignity of community members. 

All extractive and mineral processing companies must adopt environmentally sustainable practices that minimise harm to the environment and promote eco-friendly technologies. Where damage happens to the environment, they must implement proper reclamation programmes.

Importantly, they must foster a positive attitude towards the community, avoiding behaviours considered to be disrespectful, coercive, insensitive or repressive.

This will demonstrate that these companies are good corporate citizens contributing to the overall development of the areas in which they operate.

As President Mnangagwa has emphasised, “We want to beneficiate our minerals, we want to create jobs, we want to create wealth.” 

By forcing companies to process minerals locally, Government hopes to move up the value chain and capture a greater share of the mineral wealth. 

Government’s efforts to promote resource nationalism are evident in several Statutory Instruments. 

For instance, SI 27 of 2022 prohibits the exportation of unprocessed granite, while SI 189 of 2022 allows mining royalties to be paid in minerals. More recently, SI 213 of 2022 banned the exportation of unbeneficiated lithium and unprocessed lithium salts, and SI 5 of 2023 extended this ban to unbeneficiated base mineral ores.

Resource nationalism is not unique to Zimbabwe. 

Many countries, including Indonesia and Tanzania, have implemented similar policies to assert control over their natural resources. 

Further up to the Sahel region, they are experiencing something quite refreshing in the space of resource nationalism.

The Sahel region, which spans across several countries in West Africa, is witnessing a surge in resource nationalism. 

Countries such as Burkina Faso, Guinea, Mali, and Niger are taking bold steps to assert control over their natural resources, particularly minerals such as iron ore, bauxite, and gold. 

This trend is a welcome development, as it enables these countries to capture a greater share of the value generated by their resources. 

By emulating this approach, other African countries can also reap the benefits of resource nationalism and use their mineral wealth to drive economic development and reduce poverty.

For decades, Niger’s uranium was being exploited by French companies, with the West African nation receiving a paltry sum for its valuable resource. 

It is reported that Niger was being paid around US$3 000 per tonne of uranium, while France was selling the same uranium to energy companies for a staggering US$30 000 per tonne. This stark disparity in pricing meant that Niger was being short-changed by billions of dollars, with the country’s uranium wealth largely benefiting French energy giant Areva (now Orano) and other foreign companies. 

This exploitative arrangement has been cited as a classic example of the unequal exchange that often characterises the relationship between African countries and foreign corporations.

Critical minerals are essential components in the production of modern technologies, including renewable energy systems, electric vehicles, and digital devices. 

These minerals, such as lithium, cobalt, nickel, and rare earth elements, are crucial for the global transition to a low-carbon economy. 

Africa is endowed with an abundance of these critical minerals, with countries like the Democratic Republic of Congo, South Africa, and Zimbabwe hosting significant deposits. However, as the global demand for these minerals continues to rise, it is becoming increasingly clear that those who refuse to invest in building processing plants and value chains in Africa will be left behind. 

The writing is on the wall: Africa will no longer be content to simply export raw materials, and those who fail to adapt to this new reality will miss out on the vast opportunities presented by the critical minerals boom.

As the world’s attention turns to Africa’s vast mineral resources, it is imperative that African countries take control of their own destiny.

With over 80 percent of the world’s most important minerals found in Africa, the continent has a unique opportunity to leverage its resource wealth to drive economic transformation. 

By embracing resource nationalism, African countries can ensure that their minerals are extracted and processed in a way that benefits their citizens, rather than just enriching foreign companies.

These things would be simple in a utopian world where everyone is law abiding. But the reality is that there are some who are smuggling our minerals out of our country.

The smuggling of raw and unprocessed ore from Zimbabwe by foreign companies and individuals is a reprehensible act that deprives the country and future generations of their rightful inheritance. 

Those who are complicit in this illicit trade, including corrupt officials, smugglers, and foreign companies, must desist from their nefarious activities. 

By exporting raw minerals without paying royalties or taxes, these individuals and companies are denying Zimbabwe the revenue it needs to develop its economy and improve the lives of its citizens. 

Furthermore, the smuggling of raw minerals undermines the country’s efforts to promote value addition and beneficiation, which are critical for creating jobs and stimulating economic growth. 

Despite these challenges, Government remains committed to promoting resource nationalism. 

As President Mnangagwa has stated, “We must be the masters of our own destiny, we must be the owners of our own resources.”

By implementing policies that promote local value addition and increase revenue from mineral extraction, Government hopes to create a more equitable and sustainable mining industry.

As Africa’s natural resources continue to dwindle, it is imperative that the continent perseveres with resource nationalism policies.

The demand for these resources is not going away, and it is crucial that Africa takes control of its own destiny, ensuring that the benefits of its mineral wealth are shared equitably among its citizens. The consequences of not doing so are stark. 

Corruption and bribery have long plagued the extractive industries in Africa, with companies and individuals willing to pay handsome bribes to get their hands on the continent’s valuable resources. 

This not only deprives African countries of much-needed revenue but also undermines their sovereignty and ability to develop their own economies.

It is time for Africa to unite and take a strong stance against corruption and bribery. 

By doing so, the continent can ensure that its natural resources are used to benefit its own people, rather than lining the pockets of foreign corporations and individuals. As the African Union’s Agenda 2063 emphasises, it is time for Africa to take charge of its own resources and use them to build a prosperous and sustainable future.

The writing is on the wall: Africa’s resources are finite, and their demand is not going away. 

It is imperative that the continent acts now to ensure that it benefits from its own mineral wealth. 

By persevering with its resource nationalism policy and uniting against corruption and bribery, Africa can create a brighter future for itself and its people.

Nick Mangwana is the Permanent Secretary for Information, Publicity and Braodcasting Services