Miners seeking meeting with government to debated indigenisation

The Zimbabwe Chamber of Mines (ZCM) is seeking a meeting with government to discuss the effective implementation of the country's hotly debated indigenisation requirements.

This comes after government rubbished the chamber's previous recommendations, stating that it would not consider the proposals "under any circumstances".

Zimbabwe's new indigenisation law requires foreign companies to cede 51% of their equity to black Zimbabweans.

Chamber president Victor Gapare reports that the quest for clarity on the implementation of indigenisation has been gruelling, with no clear resolution in sight.

The chamber's last recommendation was for an equity quota of 26%, with the balance (25%) made up of credits emanating from corporate social responsibility activities, local procurement, skills development and the release of mineral rights.

Subsequent to the recommendations, the Ministry of Mines and Mineral Development established a Mining Sector Committee, from which Gapare was dismissed, to recommend an appropriate score for mining.

"Today, the most topical issues in the Zimbabwe mining industry are indigenisation and economic empowerment. The debate is not about whether we should do it; rather, it is about how we should implement it," says Gapare.

At the seventy-second annual general meeting of the ZCM, in May, Gapare suggested that, as a nation, Zimbabwe needed to re-examine the processes and outcomes of consultations.

"Zimbabwe needs to establish a genuine consultative and collaborative approach to engagement as stakeholders if it is to rebuild its country. The processes which have taken place in coming up with the implementation modalities for the indigenisation and economic empowerment process can hardly be described as genuine consultation of stakeholders at all," said Gapare.

The view of the ZCM has always been that the focus of indigenisation should be on value rather than merely on 51% equity.

"Let's focus on the value of the equity instead of just the 51% shareholding in a company. Industry should also concentrate on creating new businesses, thus growing the industry, rather than just sharing the existing mines, " said Gapare.

He adds that the chamber was surprised by the gazetting of General Notice 114, of March 25, which required mining companies to file an indigenisation plan within 45 days and implement the plan for the disposal of 51% to mostly State entities within six months.

"This notice set several capital raising initiatives back, and listed Zimbabwe-focused operations like New Dawn and Zimplats lost between 30% and 40% market value immediately. Several legal problems in General Notice of 114 were highlighted to government and the chamber looks forward to the resolution of those matters, as we must all cooperate to achieve indigenisation and economic empowerment," said Gapare.

This sent a strong message to international investors that had Zimbabwe on the expansion radar in Africa.

Gapare noted that this message was one of caution, rather than an open invitation for new business. This would be detrimental for the industry in the long run, considering the industry's current recapitalisation requirements.

When Mining Weekly attended the 2009 Zimbabwe Mining Indaba, held in Harare, Finance Minister Tendai Biti reported that the industry needed $5-billion to recapi- talise the industry. However, it seems that the recovery from the 2009 global financial crisis has been hard on Zimbabwe as this amount has increased significantly.

Gapare points out that the industry now needs $6-billion, with gold and platinum- group metals (PGMs) the industry sectors that need the "lion's share".

"Of the $6-billion needed for recapitalisation, the gold sector requires $1-billion, with PGMs needing $2,5-billion. The diamonds sector is in less need, only requiring $0,7- billion, while coal only needs $0,3-billion," said Gapare.