Maravi

(ZIMPAPERS) Mining firms seal deals with locals

Mining firms seal deals with locals
Saturday, 08 October 2011 23:33 Business
By Kuda Bwititi

TWENTY-ONE major mining companies operating in Zimbabwe have so far agreed to establish community trusts worth more than US$2 billion, raising hopes that communities across the country will reap huge benefits from the Indigenisation and Economic Empowerment Programme.

It is understood a further 120 firms are finalising negotiations with Government after which they are expected to roll out the shareholding ventures.

The companies that have struck deals with communities are

Murowa Diamond Mine,
Marange Diamonds,
Mimosa Mine,
Unki Mines,
Zimplats,
Freda Rebecca,
MultiBay Investments,
Kwekwe Consolidated Gold Mines,
Blanket Mine,
Quali Exploration and Mining,
FA Stewart (Private) Limited,
Biometallurgical,
New Dawn (Casmyn and Falcon Gold Mines),
River Ranch,
Farvic Consolidated and
Sentinal Energies (Exchange B Mine).

Others include Ishpid Investments (Master Cecil Mine), Sharity Investments (Pinefore Mine), Jing Mining, DTZ-OZ GEO and Metallon Gold.

In an interview last week, Youth Development, Indigenisation and Empowerment Minister Cde Saviour Kasukuwere said each of the companies would cede a minimum of 10 percent of their shareholding to local communities.

He said the development gives greater impetus to the indigenisation and empowerment drive, which will officially begin with the launch of the US$120 million Royal Mhondoro-Ngezi Community Trust this week.

“We have since decided, as a ministry, that all the major mining companies in the country should have community trusts that will benefit the people living in their areas,” he said.

“It has become mandatory for every significant mining company.

“This means communities across the country will benefit through the billions of dollars that will be channelled towards developmental projects.”

Cde Kasukuwere said the companies were expected to implement their respective plans soon, adding that the firms would each invest between US$100 million and US$150 million.

“It is as though we have started the process of indigenisation by picking the hanging fruits from the tree.

“We have proposed that companies can start to roll out the trusts as soon as possible so that communities can start to reap benefits as early as next year or even by the end of this year.

“What we are saying is that the indigenisation law says a company should relinquish 51 percent over a number of years, but they can start to comply with the law now and relinquish the 10 percent for the community trusts immediately.

“On average, the big companies have offered us between US$100 million and US$150 million.”

The minister added that developmental projects will not be limited to social services but will address the individual needs of people living in resource-rich areas.

“Over and above the development of key sectors and, for instance, the refurbishment of schools and hospitals and road construction, the trusts will also avail funds for income-generating projects.

“For example, some youths who may wish to start a piggery project can have access to the fund and get capital directly from the trust.

“The trust will cater for the needs of the people and uplift their standards of living.”

Minister Kasukuwere said the community shareholding venture would yield benefits for locals even where companies do not declare a dividend.

“In the event that a company does not declare a dividend, we are proposing a share structure which says that as long as there is profit, the communities will benefit,” he said.

“We are proposing that the community should have Class B ordinary shares. We are also proposing that the payout structure will be calculated on the value of the community shareholding; that is on a straight line basis, compounded annually and payable quarterly or half-yearly.

“Upon declaration of dividends, the money that would have been paid out will be deducted from the dividend. The entire legal framework for the community trusts will be embedded in the Deeds of Trust.

“This will ensure the Fund is not abused and will also make it criminal for anyone to abuse the Fund.”

Economic analyst Mr Brains Muchemwa said the trusts would “democratise” the mining sector and increase the economic growth rate.

“These community trusts may stand out to be the best thing that has ever happened to the country because they will address the fundamental needs of the people,” he said.

“There is going to be democratisation of the mining sector. The trusts will ensure broad-based benefits for people living in different communities.

“The inequalities in these communities will be addressed and the disparities, from an inter-generational perspective, will also be tackled.”

Mr Muchemwa said the trusts would also compel foreign companies that declare dividends abroad to remit profits to Zimbabwe.

“Most of the foreign companies bank their export proceeds in offshore accounts and their dividends are also paid offshore.

“These community trusts, therefore, will help address the liquidity challenges in the country. Once they are in place, companies will remit dividends back to the country.”

- The Sunday Mail

Labels: INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), SAVIOUR KASUKUWERE

posted by MrK @ 4:45 PM