Mining Journal > Reports > Zimbabwe: Not so risky?

Reports

A recently-published report has rejected the commonly-held view that Zimbabwe is an extremely risky destination for business.
In an 89-page document on the mining industry in Zimbabwe, Peter Southwood concludes that the general climate for mining investment in the country is favourable. Mr Southwood says that he uses a unique research method, developed over 30 years, to predict "stability and prosperity for Zimbabwe in the long term".
Mr Southwood describes himself as "a consultant on the direction of conflicts", and that his consultancy is able to predict the direction of conflicts towards peace or war, in both the short and long term. Mr Southwood notes that the report is self-funded and does not represent the views of any particular party or company.
Albeit with certain caveats, as set out in the report, Mr Southwood is optimistic for the long-term prospects for capital investment in the mining industry of Zimbabwe. He gives special attention to platinum group metals.
His technique involves two very different concepts of power: coercion and co-operation. These interact, as he explains in the report, "in immeasurably complex ways to produce very different long-term outcomes". Rather unusually, he illustrates the concept by comparing Darwin’s theory of natural history with Hitler’s ideas on achieving power in Germany.
In essence, Mr Southwood argues that the prospects for a failed state (war) reflect a balance of the coercive and co-operative powers.
With regard to 'coercive' powers, the more the ‘balance of power’ between parties in dispute favours one party, rather than another, the greater the likelihood of war (because either the more powerful side will be tempted to use that political and military might to enforce its will, or the weaker side will resort to political violence and indirect military methods).
With regard to 'co-operative' powers, the more the balance between each party’s peaceful methods of conflict-resolution favours one party, the greater the likelihood of war (because lack of reciprocity tends eventually to undermine peaceful methods).
Mr Southwood accepts that "significant levels of violence in the country since 2000 justify as a first hypothesis that Zimbabwe is heading for a failed state (ie war), so long-term investment in its mining industry is likely to be uneconomic, even if other factors are favourable." He adds, however, that "once the international dimension is included, an alternative hypothesis may supplant the first; namely that Zimbabwe is heading for stability and prosperity (ie peace)."
The report accepts that the importance of political stability for long-term capital investment in the mining industry "can scarcely be doubted". Indeed, a total of 98% of respondents in a recent Fraser Institute survey of mining companies took the lack of political stability in Zimbabwe as a reason for not investing (or being very unlikely to invest). Yet, as Mr Southwood notes, predicting ostensibly political developments, which by their very nature can be unforeseeable, has been well illustrated to be difficult.
The report predicts stability and prosperity for Zimbabwe in the long term. This is the conclusion even if the current 'inclusive' government collapses, or there is a military coup ("unlikely") in the next ten years, since "the climate for a coup's survival is hostile".
Offsetting this prognosis, though, is a series of caveats about the extent of any such stability and prosperity due to the threat of a serious impasse on the constitutional and cultural issues. Mr Southwood says that these "fundamental political and educational questions are affected by a legacy of physical force and violence in the country, which increases the risk of civil strife".
Mr Southwood warns, however, that the report "deals with only one fundamental aspect of the investment decision-making process. Naturally there may be the promise of political stability in a particular country or region but a mining company may still decide not to make long-term capital investments for any one of a number of other reasons." 

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The report is published in PDF and hardcopy versions (the latter is priced at £250; ISBN 978-0-9564480-0-2). For details, e-mail: peter.m.southwood@btinternet.com