An evaluation of the factors affecting export performance and value addition for Platinum Group Metals (PGMs): The case of Zimbabwe after the adoption of the multi currency system 2009 - 2015

Abstract

This study was aimed at identifying and evaluating the factors that affect the export performance of platinum group metals (PGMs) in Zimbabwe, as well as establishing the constraints and enablers to PGMs beneficiation in the country after the introduction of the multicurrency system in 2009. The study sought to address the problem of how to address the persistent balance of payments (BOP) deficit that the nation has been experiencing, through identifying the factors that need to be addressed in the PGMs mining sector as the major flagship. Addressing the problem and making appropriate recommendations sought to enhance the sector’s export performance and beneficiation in the medium to long term. The research objectives were: to identify and evaluate the supply side factors affecting PGMs export performance; to identify and evaluate the demand side factors affecting PGMs export performance and to establish the constraints and enablers of PGMs value addition in Zimbabwe and proffering appropriate recommendations. The research was carried out through a qualitative combined case study. The data was gathered through indepth interviews with representatives from the mining entities and the Ministry of Mines and Mining Development providing the key information. The research findings identify supply side themes as being operational factors, firm characteristics, industry factors, the macroeconomic factors and government regulations. Demand side factors evaluated were: access to export markets, entry barriers, competition, and the pricing structures. Value addition factors were raw materials, infrastructure, electricity and water availability, research and development, skills levels and market access. A number of factors such as abundant raw materials, low risk, ownership structures, and favourable exchange control regime and mining incentives were found to be export performance and beneficiation enablers. Electricity shortages, skills shortages, distribution channels, high interest rates and infrastructure shortcomings came up contributing negatively to export performance and beneficiation. The major recommendations were to resolve the electricity challenges, invest in infrastructure development, invest in relevant skills training and development, increase production and suspend the tax on non-beneficiated platinum in order to enhance export performance and long term beneficiation.