Lawrence Gudo, CEO, Tarcon Zimbabwe, and Director, XCMG Zimbabwe

“Most of the Tarcon’s competition comes from South Africa.”

Tarcon does a tremendous amount of work across many industries in Zimbabwe. Please provide us with an overview of Tarcon’s operations and its involvement in the mining industry.

Lawrence Gudo (LG): Tarcon is one of the leading construction, mining, and property-development companies in Zimbabwe, and has been in operation for the past 35 years. In regards to mining, Tarcon provides turnkey, opencast mining, contract mining, and infrastructure development services to some of the major mining houses in Zimbabwe. Rio Tinto, through Murowa Diamonds, has been our client for the past 11 years. We have invested heavily in earthmoving equipment and mining expertise, and our specialty in hard rock, opencast mining alleviates some of the investment risk. Tarcon focuses on improving efficiencies, leaving our clients to concentrate on processing. Mining contributes significantly to our revenue base, as we not only offer traditional support, but auxiliary services as well. Tarcon is capable of providing the necessary surrounding infrastructure, with vast experience in constructing dams, pipelines, and housing infrastructure for companies such as Zimplats and Impala Platinum. Tarcon has a regional presence and has delivered projects in Zambia and Mozambique.

How has Tarcon enabled itself to rise above the highly competitive market and adverse economic conditions?

LG: Over the past two years, our competition has mainly been from South Africa. Due to the instability of their market, South African companies have moved north in hopes of servicing Zimbabwean multinational operations. More so, the lack of a consistent power supply has put a strain on the cost of production. An inefficient and inaccessible power supply has a negative impact on many operations. Tarcon’s model is based on a fixed price for what can be up to five-year contracts, meaning reduced tonnage can significantly reduce profit margins. We have adapted and are moving forward to work through the downswing.

Prices will continue to be depressed for the next 13 months, but once normalized the industry will experience tremendous growth, as will Tarcon. Resource exploitation is going to be a major driver for Zimbabwe’s economy, and we are strategically situated to enable that process. Tarcon is also 100%-indigenous, making us a more attractive choice for foreign alliances.

Contract mining requires a highly skilled workforce. How does Tarcon attract, train, and maintain skilled locals? And what policies are in place to promote safety?

LG: Tarcon has built an internal retention and training program for key mining skills. We recruit graduate trainees and qualified engineers, but we need to ensure that they have the right hands-on skills. Our best workers are exposed to the regional operations to broaden their skill base and challenge them mentally. Tarcon has a competitive salary structure, which is supported by the mining houses as a means to maintain productivity. Since Zimbabwe’s dollarization in 2009, our currency has been a major pull-factor for the best talent within the region. Given the downsizing of the economy, Tarcon has been able to easily pull from the local labor pool.

Tarcon’s health and safety program is very dense and always evolving. When our company began, we invested heavily in health and safety skills and in setting high standards to ensure a solid foundation for health and safety procedures. Over the past 35 years we have been continually reinvesting and updating our methods. Base lining our policies with our clients’ expectations has proven to yield the best results, and we notably have zero recorded fatalities to date.

Under the purview of XCMG, what is being done to catalyze development of Zimbabwe’s small-scale miners?

LG: XCMG Zimbabwe focuses on high-performance equipment and supply of spares. One of the programs that XCMG Zimbabwe is championing is the support of small-scale miners. We have consolidated funds for a $100-million facility that will provide small-scale miners with the necessary capacity to produce gold or chrome. The Ministry of Mines and Mineral Development fully supports this program by assisting with geological support as well as granting viable mining claims, while XCMG grants the miners the equipment and the support needed to properly operate it. Repayment terms for the facility are linked to the revenue generation from the mining activities. As such, the repayment terms for the equipment have considered such factors. The loan tenure is therefore sufficiently long-term to make it affordable and accessible to small-scale miners.

What is your final message about Zimbabwe to potential investors?

LG: The Zimbabwean mining market is most comparable to a blank check. We do not explicitly know the resource quantities underground, due to limited financial capacity for geological exploration and resource estimation, but we do know that we are endowed with gas, platinum, gold, chrome, and coal, among many others. There is no better time than now to come to Zimbabwe to invest in resources at a discounted price. When you do join us, Tarcon is a great resource to utilize as a trusted, local partner that understands the legislative spectrum and operational environment and is a service provider with tried and tested mining models.

This article was written as part of research being conducted by GBR for its upcoming Mining in Africa Country Investment Guide (MACIG) 2016. A pre-release report on the Central African Copperbelt was released in October 2015 and can be accessed here. To participate in this report, please contact Sharon Saylar