GOVERNMENT has withdrawn from Parliament the Mines and Minerals Amendment Bill that sought to cede 51% of all foreign-owned mining firms to Zimbabweans.
Mines and MiningÂ DevelopmentÂ permanent secretary Thankful Musukutwa said the draft law had been withdrawn to allow for consultation with all stakeholders.
“It is official that we have withdrawn the bill,” Musukutwa said. “This is to allow stakeholder consultation. There has been realisation that in its present form, the bill would not be able to attract meaningful investment. Zimbabwe competes with other countries for investors. What would be contained in the new bill is dependent on the consultations and input stakeholders would have put forward.”
Musukutwa said government would redraft the bill to make it more conducive to foreign investors.
He predicted an influx of foreign investors seeking mining opportunities if the indigenous bill is “corrected”.
“We need to look at the Indigenisation Bill and see where it needs to be corrected to attract foreign investors who have been shunning us in favour of other countries with favourable laws,” said Musukutwa.Â Â Â
The bill, among other investor-unfriendly facets, sought to transfer a majority stake in international mining houses to locals, including giving the Zimbabwe government a free 25% stake. Under the draft law, foreign firms mining strategic minerals such as coal and coal-bed methane were required to cede 51% shareholding to government, with the state taking 25% of that for stake free. Government was also entitled to take 25% shareholding in precious minerals such as gold, diamonds and platinum while 26% would go to locals.
The changes to the Mines and Minerals Act were approved by the cabinet in 2006, but never signed into law.
Mining accounts for about 4% of Gross Domestic Product (GDP) and 16% of total annual foreign currency earnings to the country.
Commenting on the bill Mines and Mining Development minister Obert Mpofu said: “It has been recalled for further scrutiny before final submission to parliament; our aim is to ensure that the bill does not discourage investment at the same time not compromise indigenisation. We are currently consulting with the relevant stakeholders, once it is done, it will be submitted to parliament.”
Mpofu said capacity utilisation in the mining sector was currently at 30% but hoped to achieve 60% by the end of this year.
“We are going to achieve our target and there is no doubt about that. Currently there is a lot of goodwill in terms of support as well as investors coming into the country. The fact that we have liberalised, people can now mine and market their precious minerals without restrictions. This is likely to work to our advantage,” Mpofu said.
Zimbabwe boasts huge deposits of platinum, gold, diamonds and coal among others.
President Robert Mugabe had thrown the economic future of stressed Zimbabweans into greater uncertainty and confusion with the declaration that the state intended to nationalise all 500 of the country’s large mines.
Mugabe at the time said the bill “would broaden participation in the sector by indigenous players”. Foreign firms that would have been affected include the world’s second biggest platinum producer, Impala Platinum, which has widespread operations in Zimbabwe; Rio Tinto which has diamond interests; the world’s top platinum producer Anglo Platinum,Â which is developing a mine in the country and Metallon Gold owned by South African tycoon Mzi Khumalo.
Several mines in Zimbabwe have shut down in the past year, suffocated by hyperinflation and shortages of skills, power and, foreign currency; and lack of investment.
Critics had warned that if empowerment was not handled carefully, the country could see a repeat of the “chaotic” land reforms.
Mining has become a pillar of the country’s economy, following the collapse of commercial farming, with gold alone generating a third of all export revenue.
Meanwhile, an international mining conference that was scheduled to be held in London will now be held in South Africa on Wednesday.
Having the conference in London would have jeopardised chances of some government officials and other participants attending as they are on the European Union travel ban.
Mpofu who was last month denied a visa to England said: “As Zimbabweans the change of venue has been a positive move in as far as luring lucrative investment in the country is concerned”.
BY PAUL NYAKAZEYA