When one looks at the world map, Zimbabwe is very far away from Russia and Ukraine. Harare is actually 11,145km away from Moscow, Russia’s capital. If it was year 1300, we probably would not be worried at all about the happenings between Russia and Ukraine, and neither would we have probably known about it.  But since Zimbabwe is an open economy that engages in trade, investment as well as other economic activities with other countries across the globe, a mere cough from those places may result in the country sneezing.  

A change in conditions abroad can affect our domestic economy either positively or negatively. It is important to understand the impact of global dynamics in order to come up with relevant interventions, where necessary. The Russia-Ukraine conflict is one such development that has changed some of the initial fundamentals and assumptions that were underpinning 2022 economic projections locally, regionally and globally. 

Since 24 February 2022 when Russian missiles hit military installations and civilian targets inside Ukraine, with its armoured convoys crossing into Ukraine, 1 800 buildings have been destroyed, over 10 million people displaced, with 23 000 people also losing their lives, to date. This triggered different trading blocs and countries to strict sanctions on Russia, restricting trade with Russia and the use of some international payment systems, among other punitive sanctions.  

From the initial negotiations to resolve the conflict, some of President Putin’s demands were that Ukraine should remain neutral and change its constitution to guarantee that it will not seek to join NATO; Russian to be second official language of Ukraine; and that Ukraine should recognize Crimea as Russian territory and acknowledge Donetsk and Luhansk as independent states. However, his demands seem not to reconcile with Ukrainian President’s demands which include sovereignty and restoration of territorial integrity.  

It is important to first understand what Russia and Ukraine mean to Zimbabwe and the rest of the world, before we look at the economic impact of the conflict between these two European countries. Russia is Zimbabwe’s 12th top import market and 19th top export market. Last year alone, Zimbabwe imported merchandise goods worth US$54 million from Russia, and exported goods valued at US$5.66 million to the same country, resulting in a trade deficit of US$48.7 million. Russia is Zimbabwe’s source market for strategic goods such as fertilizer, wheat, agricultural implements and chemicals. Zimbabwe currently has a BIPPA with Russia which was signed in 2012, guaranteeing investment promotion and protection. Zimbabwe also hosts major gold, diamond, platinum and chrome investments by Russian companies, running into billions of dollars. Zimbabwe also abstained on the UN General Assembly resolution on Ukraine which was proposing sanctions and other tougher penalties on Russia.  

When we look at Russia in the global scheme of things, it is not only the largest country in Europe, but it is a huge exporter of petroleum oils, gold, coal, gas, wheat, iron and steel products, among others. Russia is the second largest crude oil producer in the world. It is also the world’s largest exporter of wheat, accounting for more than 18% of international exports; and the world’s largest exporter of gas, accounting for about 45% of EU’s imports. Russia is the world’s second largest arms exporter, accounting for 20% of global weapon sales. Last year Russia produced 75 585 000 tonnes of crude steel, making it the fifth biggest steel producer and iron ore producer globally. The European Commission has since banned all steel imports from Russia. Russia is also the world’s top producer of diamonds, nickel and palladium; and the world’s sixth largest producer of coal, with annual output of 400 million tonnes. Again, it is the third largest producer of gold in the world, accounting for 10% of global gold production. 

Ukraine, on the other hand, is Zimbabwe’s 8th top export market; and a distant 53th import market for Zimbabwe. Last year, Zimbabwe’s merchandise exports to Ukraine totaled US$16 064 851, with imports from the country totaling US$3 million, resulting in a trade surplus of about US$13 million. 


Ukraine is the second largest country in Europe, after Russia. Last year, Ukraine produced 21 366 000 tonnes of steel and it is the 14th biggest steel producer globally and the 7th biggest producer of iron ore in the world, and the third largest exporter of pig iron and spiegeleisen in pigs. Ukraine is also the ninth largest exporter of ferro-alloys. Ukraine is the largest exporter globally of sunflower seeds and the ninth largest producer of soya-bean oil. In terms of cereals, Ukraine is the fourth largest exporter of maize globally. It is also the 4th largest exporter of barley, accounting for 12% of total world exports, and the fifth largest exporter of wheat and meslin. 

Against the above background, the global economy has been affected by the Russia-Ukraine conflict. Global trade contraction has been occurring main because Russia’s exports and production have been affected by sanctions; while Ukraine’s exports and production have been also affected by war disruptions and displacements of millions of people. This resulted in global imbalances for commodities and products supply and has also taken a toll on the post-Covid recovery that we were beginning to see. Before the conflict, the International Monetary Fund was already projecting a weak growth of 4.4%, and is now set to revise it further downwards. The conflict also caused supply chain disruptions; and caused slowdowns and congestions on air, sea and road transportation; also resulting in increases in insurance and transportation costs as well.  

We have already started to see commodity prices going up. Fuel prices have gone up due to the supply disruptions; with other factors such as hoarding, concerns around supplies and speculation also fueling prices further. Fuel is Zimbabwe’s biggest import, and its price has already gone up from US$1.30 to US$1.60. Last year, we imported fuel worth US$958 million. If the conflict persists throughout the year, putting upward pressure on price, our fuel import bill for 2022 might rise to around US$1,3 billion for the same quantity imported last year. This is already pushing up local transportation costs and will also add to costs of production. 

Cereals prices have not been spared as well. Wheat prices hit a 14-year high on global market. The Grain Millers Association of Zimbabwe has also raised flour and maize meal prices by 15% already. The landing price has increased from US$475 to US$675. Last year, Zimbabwe’s wheat imports totaled US$81 million and wheat was one of the top 10 imported products. Given the long dry spell that was experienced in February and March, maize production is likely to be lower this year, which means that more is likely to be imported. About US$230 million was spent on rice importation last year, which means that more foreign currency will be needed to import these two cereals this year. Government will also need to spend more social expenditure on food aid to areas that were heavily affected by the dry spell.  

Because of some of the above factors, inflationary pressures have been building up with prices rising for different commodities and products; eroding values of incomes and reducing consumer spending power and weakening demand. Already we have seen inflation rising from 60.6% in January to 66.1% in February and 72.7% in March. A supplementary budget is likely to be announced by government as more money is now needed to cater for the same expenditure projects that were planned for the year, and if no adequate revenue is raised to cater for that, a budget deficit might arise. 

The Russia-Ukraine conflict has also sparked some market volatilities which are creating uncertainties, speculative behaviors and also affecting investor confidence. Take the price of gold which at some point in March breached US$2,000 per ounce only to retreat to about US$1,900 per ounce.  

But one would wonder whether all this is just a sad story for Zimbabwe, and whether Zimbabwe is just going to be negatively affected. The good news is that Zimbabwe is also a notable producer of some of the products that are currently in limited supply and whose prices have been rallying, such as nickel and gold. Last year, Zimbabwe’s nickel mattes exports totaled US$1.04 billion, with nickel ores and concentrates exports recording receipts of US$1,25 billion. Zimbabwe’s gold exports stood at US$1,6 billion last year. These three products above contributed US$3,9 billion to our total exports of US$6,1 billion or 65% of total exports last year. Nickel prices have increased 77.75% since the beginning of the year; with gold prices rising from US$1,798/ounce on 3 January to US$1,935/ounce at the moment. It has already hit levels as high as US$2,051/ounce on 14 March. Therefore, Zimbabwe can also benefit from high export receipts for some of the commodities, if the current conflict persists throughout the year. 

The question many have been also asking is whether China and the United States can take up the market ceded by Russia and Ukraine, by increasing more production and exports in order to stabilize the global steel market. China is the largest steel producer and last year produces 1 032 790 000 tonnes of steel, accounting for over 50% of global production. However, China is currently undergoing a decarbonisation programme in its steel sector to reduce emissions. China’s steel sector accounts for not less than 15% of the country’s total emissions and there are fears that increasing steel production will raise emissions. China has since taken a position to cap steel production at 2020 levels for the next five years, which means that China is not likely to come to the party. That’s why some Chinese companies are also starting to invest in other countries that have abundant raw materials. 

The United States, which is also the fourth largest producer and last year produced 86 million tonnes of steel, is likely to require more steel for its domestic use as part of President Biden’s Build Back Better programme. While it might require more steel for its infrastructure and construction projects, its steel might also be affected by the fact that American iron and steel industry was depending on imports of pig iron from Russia, which is now under American sanctions.  

The engineering, iron and steel sector is also feeling the pinch of these global developments. Globally, the sourcing of steel raw materials has been complicated and sent their prices skyrocketing. Globally coking coal surged from about US$300 to above US$600 per tonne, with iron ore ranging between US$130-$155 per tonne. There are also incidences of raw materials hoarding, speculative holding of bulky raw materials in case they will be in short supply or their prices will rise further, and all of this is causing market distortions and price increases. In the case of Europe, 85% of its semi-finished steel was being imported from Russia, and now with Russia’s steel under sanctions, it has also left a huge demand.  

Zimbabwe, which is a net importer of iron and steel products is likely to also face a higher import bill for steel this year. In 2021 alone, Zimbabwe spent US$410 million importing iron and steel products. And now with the higher prices for imported steel, which is also bringing imported inflation on the domestic market, more foreign currency might be needed to import steel. There is also slow movement due to port congestion and poor vessel availability. In light of the above, the cost structures of steel producers globally are going through major changes. 

The question some captains of industry have been asking is whether the current conflict is a threat or opportunity for Zimbabwe’s engineering, iron and steel sector, and the extent to which players in the sector are going to be affected by the current conflict. While some generic factors are likely to increase the cost of doing business, these are not going to be unique to Zimbabwe alone, but it’s a tide that is lifting all boats in the sea. For Zimbabwe, some of the shocks will be absorbed by the country’s abundance of key raw materials such as iron ore and coking coal. On the optimistic side, this can therefore be a huge opportunity for local players to take up some of the global markets by speeding up new investments taking place, increasing existing capacity utilization, enhancing competitiveness and product range of existing firms. More efforts should also be put on attracting investors from China. We should ambitiously take the current conflict as an opportunity to grow exports and meet international best practices. 

In terms of prospects for demand and supply in the engineering, iron and steel sector this year, there are a number of factors that are likely to contribute. This year, the construction sector is likely to grow by an average 17.4%. The construction sector is one of the largest consumers of engineering, iron and steel (EIS) products. The manufacturing sector is also projected to grow by 5.5% this year and mining 8%. These sectors also have strong linkages with the EIS sector and their growth also signals more demand for EIS products. Diaspora remittances also play a huge role in creating demand for EIS products. Last year alone, Zimbabwe diaspora remittances totaled US$1.43 billion. 

Government is also planning to operationalise a Special Economic Zone (SEZ) for the steel sector: The Steel Industrial Park in the Midlands/Masvingo area, and this might result in EIS players benefitting from incentives from the SEZ. Government has also pledged to resuscitate Zisco Steel, with some of the funding secured already. The EIS sector can also benefit directly or indirectly from some of the following budgetary allocations: US$30 million allocated towards industry support and US$10 million for housing development, ZWL$43.9 billion for Roads Development Programme, ZWL$20 billion set for Harare-Beitbridge Road and ZWL$ 23.9 billion for other priority projects, ZWL$29 billion is being allocated towards housing delivery and institutional accommodation projects, ZWL$22 billion for dam construction and ZWL$5.7 billion for rehabilitation and construction of Higher Education Infrastructure. 


Going forward, it is important that EIS players place themselves in the momentum for growth. It cannot business as usual. Players should mainly seek to address fundamental perennial challenges affecting the sector; such as low capacity utilization, stiff competition from imports, unsophisticated machinery and technology, lack of new product development and innovation, among others. They should also strive to switch to renewable energy, where possible, and invest in energy efficient technology and implement effective energy management systems. Captains of industry in the EIS sector should also asses the profile of iron and steel products with global demand and incorporate them in their product range in order to appeal to export markets. For those who are experiencing price increases for some inputs that they import, they should also recalibrate their source markets, to identify new market sources with better offerings, to minimize their vulnerability to external shocks. Following the expiry of the Engineering, Iron and Steel Sector Strategy (2015-2020), captains of industry in the EIS sector should also craft a new Strategy define a growth and development path that is underpinned by current and concrete fundamentals.  

It is also imperative for players in the EIS sector to explore opportunities for high mix low volume steel manufacturing, for the export market. Given the strong need to recapitalize, EISAZ should also negotiate a revolving facility from the SDRs money from the central bank, for modernization of plants and machinery for players in the sector. It is also important for them to demand policy action arising from proposed strategies in the National Development Strategy 1, Industrialisation Development Policy, Local Content Policy and others. Oil drilling works in the Muzarabani areas should also be expedited in order to reduce the country’s vulnerability to external shocks for fuel and gas; with ethanol production also enhanced for the same reasons. It is also imperative for authorities to also reduce taxes on some of the imported products whose prices have increased on the international market and are in critical need locally, to absorb some of the imported inflation. Government should also enforce and ban the exportation of scrap metal, including smuggling of scrap outside the country. The shortage of scrap metal has resulted in prices shooting up to between US$250 and US$300 from US$80 per tonne in the past two years. 

While the Russia-Ukraine conflict persists, with no end in sight yet, it remains to be seen how the global economy will be affected as the year progresses. What is clear is that players in the EIS sector should strategically position themselves to maximize gains and minimize losses.  


Author: Team EISAZ


  • Graham Bryce

    Ref the ZISCO revival. We hear of the intention to revive ZISCO and the recent selection of an investor and the initial USD300m kick start plan. We hear words like “ZISCO, a giant in Steel production” etc. We hear about some hopeful production at the end of the year. All good propaganda stuff, and I hope it comes true. It would be good to know exactly what is going to be done to the plant to get this kick start going. Is it all brand new equipment and machinery or reconditioning the existing, or a bit of both. To my recollection in 2008 when it closed the entire plant was in a somewhat dilapidated state. And remained so when we visited some years ago when ESAR (The Indian Co) were looking at getting it going.

    Again to my recollection ZISCO produced a very small range of product –Angles 100mm, Flats 230mm, only four sizes of channel the biggest being 152mm and a few other steel sections. ZISCO never produced any beams, or heavy sections, never any flat product (Plates). Additionally all was produced as Commercial Quality grade. No good for the construction industry. All right for quality for carports, burglar bars, etc but limited for heavy Steel Construction.

    ZISCO did produce plenty tonnage of coil for their subsidiary, Lancashire Steel and for Haggie Rand. Not sure about Lancashire whether they are still manufacturing, but i know Haggie is and they are importing rod for draw down to wire. ZISCO did export Blooms and Billets, so that would add beneficiation and with the Rod milling would d be good for the country. However we would still have to import many many tonnes of Sections and Plates and to the correct quality specs.

    So, it would be interesting to hear exactly the plan and what and when is going to be done at ZISCO. AND, very importantly making sure that Steel Construction companies in Zimbabwe benefit from the reconstruction. We hear of a team of experts and Engineering people. Do they have names and under what grouping/consortium do they operate. How do we engage with all these faceless entities???
    Just a thought.

  • Gsa Proxies

    Thanks foor finally talking about > Russia-Ukraine Conflict: Whither Zimbabwe’s iron and
    steel sector? – Engineering Iron and Steel Association off Zimbabwe < Liked it!

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