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‘Create enabling legal framework for investors’

ZIMBABWE’S diamond output rose last year from 145 000 carats to 260 000 carats, Murowa Diamonds managing director Niels Kristensen said.


Kristensen hopes to lift production from last year’s level but uncertainty over ownership legislation could put the brakes on the company’s plans.

“We achieved record production in 2008. Production was in the region of 260 000 carats in 2008 and there is potential to increase that substantially,” Kristensen said on the sidelines of a mining conference.

Murowa had the potential to expand production six-fold from current production, Kristensen said.

But De beers, the world’s largest producer of rough diamonds, has cut output after the global financial crisis lowered prices.

Kristensen, however, said plans to raise production from last year’s levels were being curtailed by uncertainty over Zimbabwe’s empowerment laws which require foreign companies to give 51% shareholding to locals.

“The local environment has improved in Zimbabwe . . . but there are a number of changes that are needed to improve confidence and we are watching what happens in the medium and long-term,” said Kristensen.

He added that government needed to build investor confidence, which he believes is fragile at the moment.

Zimbabwe’s policies are said to have lowered the country’s potential to revive its mines and increase foreign currency inflow in the country.

Government is being advised to finalise the Mines and Minerals Amendment Bill to create a policy framework that boosts investor confidence in the mining industry.

Geo Associates managing director Paul Chimbodza said it was important for the country to have an enabling legal framework to lure investors.

The Mines and Minerals Amendment Bill was passed by Parliament some five years ago and only remains to be signed into law.

“There is need for speedy resolution (of the Bill) as it should include policies that stimulate current and future investment while supporting existing investors and operators,” he said.

“The reviewed Bill should encourage long-term investments in the mining industry,” Chimbodza said.
He said there was also need to include new mining organisations on the Mining Affairs Board, which deals with mining rights.

“We are lobbying for the inclusion of Zimbabwe Miners Federation, Youth in Mining and Environment Trust, Women in Mining and other players,” he said.

“Confidence needs to be rebuilt but it is easily destroyed and that’s what the country needs to work on,” Kristensen said.

“The current legislation is not practical and workable. It will not lead to investment in the country. We fully support the principle of indigenisation but it should be done in a workable way.”

Speaking at a mining conference last week, Jack Murerwa, immediate past president of the Chamber of Mines, said it was important that government comes up with policies that encourage investment in the mining sector.

Indigenisation minister Saviour Kasukuwere last month played down fears saying the government’s empowerment would not be implemented “carelessly”.

Kasukuwere said fears of the 51% shareholding were unfounded because the law would not apply to all investments.

BY CHRIS MURONZI

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