COMMENT - More neoliberal treason from the CHamber of the Mines, which is an organisation that shills for the mine owners. They want '$7 billion investment' because they want to see the privatisation of the mines, and HIPC is the way they want to go.
Zimbabwe mining sector needs US$7bn investment
This article was written by Our reporter on 13 September, at 14 : 00 PM
The Zimbabwe Chamber of Mines says the mining sector has been underperforming for the past eight months because of lack of long term investment.
In an interview on the sidelines of the Mining Indaba, Chamber of Mines President, Winston Chitando said the mining sector needs US$7 billion in the next five years to fully exploit mineral value.
He said several challenges continue to hamper the growth of the sector with financial institutions availing loans up to six months.
The Permanent Secretary in the Ministry of Mines and Mining Development, Prince Mupazviriho said government will soon issue exploration licences to the private sector to ensure that mineral deposits are accounted for.
Availability of power has been a major constrain in the mining sector which requires uninterrupted supply of electricity.
Government has not issued any exploration license for the past decade and the issuing of licenses will stimulate activity in the mining sector as there has been less exploration.
Despite underperforming, the sector has remained the major contributor to economic growth with 60% of export earnings and 13% of the GDP.
Labels: CHAMBER OF MINES ZIMBABWE, NEOLIBERALISM
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COMMENT - These people will set their own level of taxation next. They know what the law is, there is no reason to negotiate.
Mines offer 26 percent equity
by Alfonce Mbizwo I Reuters
11/03/2011 00:00:00
MINING companies would be comfortable with selling stakes of 26 percent to local owners under a government plan that aims to eventually transfer majority control, the head of the mining chamber said on Friday.
A minister from President Robert Mugabe's Zanu PF party said on Wednesday that Zimbabwe would set up a sovereign fund to own 51 percent of mines, but Prime Minister Morgan Tsvangirai said a day later cabinet had not adopted that decision.
The government has established committees to come up with ownership levels for different sectors.
"The sector committee on indigenisation in mining recommended a threshold of 26 percent, which is what the chamber is comfortable with," Victor Gapare, the Chamber of Mines president, told Reuters on Friday.
Analysts said impoverished Zimbabwe does not have the money to buy controlling stakes through the sovereign wealth fund but is likely to use the threat to force global mining giants to the table so the country with the world's second-largest platinum reserves can receive more money from its mineral riches.
Youth and Indigenisation Minister Saviour Kasukuwere said this week guidelines on local mine ownership would be published on Friday and take effect within a week.
The move is likely to discourage foreign investment and could hit foreign miners including Anglo Platinum and Impala Platinum, the world's largest and second-largest platinum producers, and Rio Tinto, which runs a diamond mine in the country.
The empowerment drive has split the unity government formed by Mugabe and Tsvangirai in 2009, as Mugabe's ZANU-PF vigorously pursues a take-over foreign companies while Tsvangirai's MDC is urging restrain, fearing this could cause economic chaos.
"Government must stop flip-flopping on this issue and come clean once and for all," Gapare said.
Gapare also said increased funding for gold mining companies would help increase production to 14 tonnes this year, up from 9.6 tonnes in 2010. He said the mining industry would need $7 billion in investment to fully recover in the next three years.
Labels: CHAMBER OF MINES ZIMBABWE, INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE)
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Indigenisation will help mining industry
By: Garikai Chengu
Posted: Friday, September 17, 2010 2:14 am
ZIMBABWE is undoubtedly the richest nation on earth with respect to untapped natural resources per person. With only 13 million people and over 40 exploitable minerals, vast gold deposits, the world's second largest platinum reserves and the capacity to be the world's top diamond producer, the nation will soon become the jewel of Africa.
Zimbabwe's Chamber of Mines
expects gold output to rise to 50 tonnes within four years from 3.5 tonnes last year, while
platinum output could reach 1 million ounces a year within 15 years from the current 170,000 ounces a year.
Zimbabwe is also expected to account for 25% of the world's diamond production within only three years.
The Indigenisation and Economic Empowerment Act will help, rather than hinder, the mining industry and ensure that 13 million Zimbabweans benefit from the nation's abundant natural resources.
In order to illustrate how the Act will serve as a catalyst for the mining industry, a popular misconception has to be rebuffed. Government's nuanced approach to individual mines as well as the importance of indigenous diamond beneficiation, must also be understood.
The flawed and yet popular misconception is the belief that potential foreign investors in the mining industry will be deterred by the 51percent local ownership requirement.
For a start, there are many extremely successful and wealthy investors that own far less than 50% of the corporations they invest in. For instance Warren Buffet, who is widely regarded as one of the most successful investors, with a net wealth in excess of US$50 billion dollars, does not own more than 50 percent of any corporation with a threshold over $500,000.
Secondly, foreign investors in the mining industry are steadily streaming into Zimbabwe for four main reasons. Firstly, they appreciate that the return on capital in their own nation is not adequate. Secondly, the potential return on capital in a nation whose mining industry is predicted to barrel along at 30% per annum is simply irresistible. Thirdly, they seek to reduce the cost of production by combining their capital with Zimbabwe's low cost labour; and finally, they seek to use Zimbabwe's abundant natural resources near their origin.
The Indigenisation Act will not change any of this.
Infact, in spite of the Indigenisation Act, Imara, the pan-African investment group, has reported steady increases in foreign direct investment (FDI) in the mining sector as old mines recapitalise and new mining projects begin.
RioTinto has announced that it has begun work on a US$300 million expansion programme for its Murowa diamond mine.
There has also been mention of Zimplats committing a further $500 million for a platinum smelter on top of its stage-two expansion of $445 million.
All in all, Zimbabwe's booming mining industry is too profitable to resist: It's a truth universally acknowledged that a zombie in possession of brains must be in want of more brains. International investors with money are no different.
Thirdly, the Indigenisation Act will prohibit high levels of foreign shareholding in mining companies. This is desirable because these levels result in excessive profits and dividends being repatriated by foreign investors and worsens the nation's Balance of Payments position.
Infact, ever since Zimbabwe was under the bondage of colonial misrule, it has failed to prosper from its natural resources - human and mineral - while the companies that mine or otherwise employ those resources have.
Indigenisation and empowerment Minister Saviour Kasukuwere said that last year mines had export receipts of over US$1 billion, but only US$44 million accrued to the State in taxes and royalties.
Opting to raise levels of corporate tax and mining royalties would merely stifle production.
Instead government should ensure that the nation benefits from mining production by making sure that those that produce, employ, pay taxes and are beneficiaries of government spending are Zimbabweans.
Fears that Government would use a bludgeon where a scalpel is needed by blindly enforcing the 51percent ownership rule across the board are overblown and unfounded.
Government has made it absolutely clear that it will not sacrifice much needed investment for indigenisation, nor will it scale back attempts to redress the wrongs of the past for investment. Government can achieve both simultaneously.
In order to achieve both objectives, government has set up 13 sectoral committees to look at the implementation strategies of the Indigenisation Act.
The mining sectoral committee is expected to submit recommendations to relevant authorities about the minimum net asset value threshold for specific mines required to comply with the regulations.
Crucially, the mining indigenisation committee will be flexible and not apply a once size fits all attitude towards the industry.
Such flexibility is shown by the committee's acceptance of empowerment credits that give companies the option to build schools, railways and pave roads in exchange for retaining greater foreign ownership in their businesses.
The final area that illustrates how indigenising the mining industry can catalyse the industry's growth is that of diamond beneficiation and value addition.
Zimbabwe is set to become the largest producer of diamonds in the world by 2013. The nation is expected to produce 40 million carats per year and earn annual revenues of approximately US$ 2 billion.
The importance of focusing on beneficiation lies in the fact that were Zimbabwe to cut, polish and retail the gems internally this figure would quadruple.
Currently, the government is struggling to deliver services and pay civil servants wages commensurate to their contribution on a meagre budget of US$100 million per month. Set alongside this, beneficiation has the potential to transform the nation’s fortunes.
Indigenous beneficiation's potential should be unlocked by firstly, ensuring that as many local small scale miners as possible are awarded claims within the the approximately 66,000 hectares that are potentially diamond rich.
Preference should be given towards women, youths , war veterans, aids orphans and disabled groups. This will not only empower the local population, but also provide a broad based catalyst for economic growth.
Secondly, the establishment of a multimillion-dollar Diamond Technology Centre should provide locals with the opportunity to venture into new industries associated with the cutting, polishing, dealing, jewellery manufacturing, and ultimately retail of diamonds.
Thereby serving as a catalyst for other downstream industries directly or indirectly related to diamonds, such as banking, jewellery making, security, information technology, and even tourism.
It is therefore heartening that the Affirmative Action Group has reserved units within the Diamond Technology Centre exclusively for indigenous people to be active participants in value addition and beneficiation activities.
The Indigenisation and Economic Empowerment Act is not merely a moral initiative designed to redress the wrongs of the past, nor will it hinder the mining industry's future. It serves as a pragmatic growth strategy for the mining industry that is designed to realise the nation's full economic potential.
__________________________
Garikai Chengu is a researcher at Harvard University's Faculty of Arts and Sciences. He can be contacted at chengu@fas.harvard.edu. The views expressed herein are solely those of Garikai Chengu.
Labels: CHAMBER OF MINES ZIMBABWE, INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE)
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Mining poised for 30 percent growth
by Business Reporter
03/09/2010 00:00:00
THE Zimbabwe Chamber of Mines has proffered a bullish assessment of the country’s mining prospects, predicting the sector could grow by as much as 30 percent in 2010.
Chamber president Victor Gapare said from Harare the figure could increase in 2011 if the Zimbabwe Power Supply Authority (ZESA) manages to meet demand and more power plants are constructed.
"As much as $160 million was spent by mines on local procurement in 2009 and this is projected to increase threefold in 2010 and significantly more in 2011 and beyond," Gapare said.
"The mining industry is on the verge of a mining boom, particularly if government retains the current mining fiscal regime and improves the investment climate, which is competitive and can attract the risk capital for exploration that is key for mining development."
Gapare also claimed that the easing of the economic restrictions in Zimbabwe should allow it to properly capitalise on favourable international platinum group metal (pgm) prices for the first time.
The country’s mining sector is seen as driving the country’s economic recovery after a decade-long decline on the back of a more enabling local operating environment and better world metal prices.
The ditching of the worthless Zimbabwe dollar and a raft of positive policy pronouncements by the coalition government saw several firms which had either completely closed their mines or scaled back to plant care and maintenance resume operations.
Platinum miner, Zimplats, has announced it is going ahead with a US$500 million project expected to boost output while diamond producer, Murowa has also indicated plans to implement a US$300 million expansion programme.
However some companies remain cautious about the expected boom.
DRA Mineral Resources, a South African project management and engineering group involved with the Unki, Mimosa and Ngezi mines said the expected boom depended on government implementing policies that presently remain on the drawing board.
"The Zimbabwe government is still getting back on its feet after the turmoil of the 2006 to 2008 economic meltdown," DRA director for projects Rodney Drew said in an interview with an industry publication.
"But, since Zimbabwe has decided that the mining industry is key to its recovery, we don't think it will be too long before everything falls into place, opening the way for new mines to be constructed."
Drew also explained that a number of bureaucratic hurdles are impacting on companies' plans to expand or bring their mining operations to Zimbabwe.
He noted that the Zimbabwe Revenue Authority (ZIMRA) and the Zimbabwe Immigration Ministry are putting pressure on both indigenous firms and their foreign contractors.
And with taxes remaining sky-high in the country - it has not signed a double tax agreement with South Africa since 1965 - Mr Drew claimed that mining projects are less appealing at present.
"DRA used to be able to brag that it could build a process plant more cheaply in Zimbabwe than it could in South Africa, but this is no longer the case," he added.
Labels: CHAMBER OF MINES ZIMBABWE, MINING, VICTOR GAPARE
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President slams KPCS
From Takunda Maodza in VICTORIA FALLS
ZIMBABWE voluntarily joined the Kimberley Process Certification Scheme and can just as easily leave the grouping if the country’s detractors continue to frustrate efforts to have its diamonds certified for export, President Mugabe has said.
Officially opening the 71st Chamber of Mines of Zimbabwe annual general meeting here yesterday, President Mugabe slammed the United States, Britain, Canada and Australia for trying to deny the country the right to benefit from its resources.
"To tell you the truth, I have not seen a single diamond from Chiadzwa. None, but I believe that we are piling them; obeying the rules that are set for us to obey since we decided to go voluntarily to the KP.
"It was our choice. Having gone into it and realising the organisation comprises countries not friendly to us, we should do some re-thinking.
"We want to be orderly, to do like what other countries in the region are doing but countries like the US, Britain, Australia and Canada want to take advantage of us by ensuring the process creates the same effect like sanctions on us; that we should not be allowed to sell our diamonds," the President said, adding: "It boggles the mind that you are working with developed countries and you would think that their consciences are also developed and they have a highly developed sense of morality, but no. They become little-minded, narrow and evil-hearted. They do not want us to sell our diamonds.
"They have been heard saying what happens to our sanctions if Zimbabwe sells its diamonds? It is the regime change agenda all the time."
President Mugabe said the regime change mentality had caused untold suffering to millions of Zimbabweans.
"Deal with Robert Mugabe your own way if you want, but he is a product of 14 million people.
"We say no. If our people are going to mine diamonds or gold, surely they should have an open market — an international market to sell their products without hindrance," he said.
President Mugabe once again told the country’s enemies to leave Zimbabwe alone.
"Please, please, please, leave us alone. God did not only create the white race. God also created the black people and gave them their share of wealth.
"We are saying let us be friends and not enemies," he said.
The Head of State and Government and Commander-in-Chief of the Zimbabwe Defence Forces assured investors that the Indigenisa-tion and Economic Empowerment Act and Regulations were not about nationalisation and should not ignite undue fears.
"Government has no intention of expropriating the mining industry. No mine has been nationalised since independence.
"The record speaks for itself. But it is readily agreed that the war of independence was fought not just for land, but also for our nation to own other natural resources in circumstances in which we can share with other friendly countries as equitable partners.
"Past business modalities and practices of companies that deny our people participation as partners in the ownership of their equity are repugnant to the principles of our national sovereignty."
The President said Government was creating a sustainable win-win partnership beneficial to both Zimbabweans and foreign investors.
"Local investors will have to demonstrate fair value for their equity stake in the process."
He said consultations with the private sector to improve the indigenisation regulations were progressing satisfactorily.
"Government has also accepted the principle of empowerment credits as an integral component of the 51 percent and this is detailed in Section 5(4)(c) of the regulations.
"I am thus amazed by the rush of negative
publicity towards this policy of indigenisation when, in fact, its regulations provide for flexibility where necessary.
"Local procurement and capacitating industries and new companies owned by indigenous persons constitute premier initiatives that qualify for empowerment credits.
"Corporate social investment in communities also creates a visible platform for local empowerment thus achieving broad based and transformative empowerment," President Mugabe said.
He said the construction of dams and irrigation schemes, approved scholarship and skills development programmes were among initiatives that qualified as empowerment credits.
President Mugabe singled out Rio Tinto and Zimplats on the social arena as illustrative of the merits of well-designed and beneficial community development projects.
The Rio Tinto Foundation has several projects like the Rupike Irrigation Scheme, Sanyati dam construction, Empress RioZim Agricultural College among others.
Zimplats has constructed roads, schools and clinics in Mhondoro-Ngezi.
President Mugabe took a swipe at Anglo-American Corporation for not engaging in such activities saying the conglomerate was "just taking gold away".
President Mugabe said the Chamber of Mines AGM was taking place at a very important time in Zimbabwe’s history with Government affirming the importance of mining and its central role in turning the economy around.
"Indeed, Government is aware of the current challenges constraining the growth of the mining sector, thus slowing down the recovery momentum.
"In response, Government has instituted a package of economic stabilisation measures under the Short-Term Economic Recovery Programme and having achieved stabilisation, will now roll out further economic reforms for sustainable recovery and growth of the economy."
The President said the finalisation of the Mines and Minerals Act was progressing well and the amendments would improve administration and management of mineral titles.
The 71st Chamber of Mines AGM was held under the theme "Rebuilding the mining industry for sustainable growth, development and empowerment".
Labels: BLOOD DIAMONDS, CHAMBER OF MINES ZIMBABWE, KIMBERLEY PROCESS, MUGABE
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Mining firms offer 15 percent for empowerment
by Gilbert Nyambabvu
19/05/2010 00:00:00
THE Chamber of Mines set itself on a collision course with the government after proposing that its members give up only 15 percent of their equity under the country’s contested empowerment regulations.
The government has insisted that foreign-owned companies should localise ownership of no less that 51 percent of their equity and warned that firms that fail to comply with the regulations could lose their operating permits.
However the Chamber of Mines which has been leading consultations with authorities on behalf of the mining sector announced on Wednesday its members were offering 15 percent equity.
Mining companies want the 36 percent balance to be made up in the form of infrastructural investment and social spend.
Chamber president Victor Gapare told a news conference in Harare that government should recognise that most mining companies built schools and roads in the areas where they operate, benefiting nearby communities.
"The position which we put together says a minimum of 15 percent equity. The rest to make up 51 percent will be in the form of social responsibility programmes.
"From a broad-based empowerment point of view, you have to look at things like schools, hospitals, roads and all the developments which take place around mining communities, and in our minds that's true empowerment,” Gapare said.
The Chamber of Mines boss warned that the regulations we likely to undermine the sector’s recovery as companies were already struggling to secure capital due to perceived country risk.
"The mining companies are finding it very hard to attract capital. What we hope is that as the perceived country risk of Zimbabwe comes down, companies will be able to attract capital," he said.
Under the indigenisation regulations which that took effect at the beginning of March foreign firms valued at more than US$500000 were given 45 days to report their plans ceding 51 percent of their shares to locals.
The deadline has since been extended.
Critics say the regulations could scare away investors from an economy battling to recover from years of decline.
However government insists there is no going back on the programme with President Robert Mugabe describing the maximum 49 percent equity foreign investors can keep as a “hell a lot of equity”.
Labels: CHAMBER OF MINES ZIMBABWE, INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), VICTOR GAPARE
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