EDITOR: | December 17th, 2012

Zimbabwe’s Rare Earth Elements (and Tungsten)

| December 17, 2012 | No Comments
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Africa-InvestLast week a rare earth elements  announcement caught my eye, that struck me as either a move of genius or a move of great folly. London Alternative Investment Market listed Premier African Minerals raised £1.5 million and is setting out to explore for tungsten and rare earth elements in Zimbabwe. “The initial focus being on continuing exploration work at the former operating RHA tungsten mine and the Katet rare-earth-elements project, both in Zimbabwe.” Zimbabwe, successor to the former British colony of Southern Rhodesia and the unrecognised state of Rhodesia 1965-1979, is something of a pariah state in Africa, run into the ground after independence by dictator/President for life Robert Mugabe. But President Mugabe is 88, and after a lot of pressure and sanctions from America and the European Union, Zimbabwe is now governed by an uneasy power sharing agreement between Mr Mugabe’s political party and the opposition parties.

Given the advanced age of the President, there is much speculation as to what happens after he either dies or retires. One suggestion is that Zimbabwe will be fast tracked in from the cold, and that European Union and British aid funds will be fast tracked to help rebuild Zimbabwe into something closer to the Republic of South Africa model. Under this approach, Zimbabwe’s abundant natural resources will be quickly surveyed and where commercial, brought into production. Under this scenario, the last great scramble for one of Africa’s vast deposits of natural and critical resources gets underway by the world’s great mining companies including Russia and China’s. By 2020 or thereabouts, a reformed Zimbabwe will again be one of the leading economies of Africa. Premier African Minerals move might look like genius.

But another outcome is also a possibility. After Mugabe goes, a factional scramble for the Presidency breaks out among the military and Zimbabwe politicians. Anarchy and near civil war breaks out, with tribal scores to settle. Far from being fast tracked for aid funds, and put on the road back to wealth building and prosperity, along the South African model, Zimbabwe moves towards something closer to the Congo model. Premier African Minerals move would then look closer to folly.  I have no crystal ball that shows which path Zimbabwe is likely to follow, and can only hope that Zimbabwe gets a statesman willing to put Zimbabwe back on the path to prosperity. For me, Premier is too much of a risky investment, but to other higher risk investors, this Zimbabwe play might look attractive and be an early way in.

Note: Premier does have some non-Zimbabwe African interests.

Premier African Minerals
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