(NEWZIMBABWE) Miners to fund community development projects: paper

Wednesday, April 27, 2011

(NEWZIMBABWE) Miners to fund community development projects: paper

Miners to fund community development projects: paper
by Business Reporter
26/04/2011 00:00:00

ZIMBABWE is considering legislation to force miners to fund development in local communities, the state-owned Herald newspaper said on Tuesday, citing Ministry of Mines and Mining Development officials.

Mining companies would be compelled to pay for development in communities in the mineral-rich nation where they are based under proposed amendments to the Mines and Minerals Act. They would also need permission from local community leaders before starting operations.

"We know that we need the amended Act but it had to go through processes which could not be avoided," Thankful Musukutwa, permanent secretary in the Ministry of Mines, was quoted as saying.

Foreign mining companies are already facing a May 9 deadline to submit plans on how they will transfer 51 percent of their local equity to blacks in the southern African country.

The government threw out a counter offer by the industry of just under 30 percent of shareholding with the balance to make up 51 percent coming from so-called empowerment credits.

The credits would take into account social investments such as the development of infrastructure in localities where they operate.

Chamber of Mines President Victor Gapare has warned that the law my hurt growth in the sector by scaring away new capital.

"Most of the projects, particularly in gold and base metals, will not meet the required hurdle rates for investment, which will result in sterilisation of a number of ore bodies," he was quoted as saying recently.

He further noted that the mining sector needs an additional $5 billion (£3.1 billion) of investment to meet its potential adding this money will have to come from foreign sources as it simply does not exist in the local market.

Key foreign players in Zimbabwe mining sector include Rio Tinto and Impala Platinum.

Labels: INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), MINING, VICTOR GAPARE