Tuesday, April 10, 2012
Mutambara: Natural resources important in debt reduction
Posted by By Brett Mashingaidze at 9 April, at 01 : 17 AM
ZIMBABWE can leverage its natural resources to settle its debt and harness development if it carefully enters into deals with foreign firms, Deputy Prime Minister Mutambara has said.
Addressing a seminar on “Debt, diamonds and development in Zimbabwe,” in Harare last week, DPM Mutambara said one “good” deal could offset the country’s sovereign debt of US$9,1 billion. However, Zimbabwe is losing billions of dollars in “bad” mining deals and Government will soon revisit these transactions.
Mutambara said big foreign mining companies were not declaring the value of the unmined assets, whose value could help in debt reduction.
This, he said, was prejudicing the country.
He said iron ore miner Essar of India had not declared the US$20 billion asset as it entered into a deal with Government, while Zimplats also made no mention of US$4 billion worth of unmined platinum.
The deputy premier also gave an example of diamond concern, the Diamond Mining Company, which did not declare the value of the US$500 million and went on to recoup its US$43 million investments in two transactions.
“This is a case against mining laws obtaining in most African countries, we as deal makers and our systems of investment,” he said.
Zimbabwe, Mutambara said, must now take steps to know the value of its assets and enter deals with open eyes.
“Zimbabwe’s mineralisation or geology must be quantified for all minerals,” he said. “Valuation of these assets must be done and capacity must be built in an internal team to advise on deals with investors.
“Alternatively, independent consultants must be hired to advise on deals and they must be paid in cash.
“What is the point of not paying a million dollars for a deal worth billions?”
Mutambara called for amendments to the Mines and Mining Development Act, which should entail the right to mining as linked to payment for the value of the unmined asset, the decriminalisation of informal miners and the enactment of a new Diamond Act.
He emphasised the need to know the value of claims saying the country gets capital for development and investors have a sense of reasonable quantum to inject.
“We must review all existing mining contracts, align them with this new thinking and indigenisation and change or create necessary laws, Statutes and instruments,” he said.
Meanwhile, Prof Mutambara said Zimplats should pay Zimbabwe US$3.5 billion for the platinum resource the mining giant got “for free” and whose US$4 billion value it did not declare.