HomeBusinessGovt’s fresh demands to mining firms

Govt’s fresh demands to mining firms

Deputy Prime Minister Arthur Mutambara told a mining stakeholders’ forum last week that it was unacceptable for mining houses to have primary listings and bank money elsewhere other than Zimbabwe.

“All mining companies must have a primary listing in Zimbabwe then secondary listing on JSE or London,” Mutambara said.
The mines that would be affected by the new requirement include Zimplats which is listed on the Australian Stock Exchange.

It would also force other mining houses such as Unki and Mimosa, among others, to list on the Zimbabwe Stock Exchange.

The mining sector, alongside agriculture, has been identified as the drivers for economic growth with the sectors expected to grow by 15,9% and 11,6% respectively next year.

 

Mutambara said the mining houses should also bank their money locally to help improve the liquidity situation in the country.
“We don’t want companies that are banking in Europe,” said Mutambara.
“Bank with local banks so that the money you bank allows us to function as a country. Zimplats, I hope you are listening and you must bank it in Zimbabwe.”

Although banking deposits are on the increase, most of them are in either demand or short-term and this means that financial institutions cannot lend money to companies on a long-term basis.

Due to a decade of recession, companies require long-term financing to retool and replace ageing equipment.

Mines and Mining Development minister Obert Mpofu told the forum his ministry would come up with punitive measures to stop holders of special grants from using them for speculative purposes. It takes between six to eight months to finalise on special grants, but Mpofu said his ministry would thoroughly vet prospective applicants to weed out speculators.

“We have realised that special grants given have been a source of serious speculation. Of the 16 that were issued only three are functional,” Mpofu said.
He said new application fees would now be in place to ensure that only serious people venture into mining.

For diamond mining, one has to fork out an application fee of US$1 million. Mpofu said the response was overwhelming notwithstanding what appeared a steep fee.

A registration fee of not less than US$5 million and mining fees would also be in place, according to Mpofu.
He said that the principals in the inclusive government have already sanctioned the new measures designed to raise more money from the mining industry.

In the 2012 budget, government projected to get US$600 million from diamonds, a figure Mpofu said is conservative as “we will make far much more than that”.

He said consultations are currently underway for input into amendments to the Mines and Minerals Act and the Diamond Policy Act.
Mining is capital intensive with a long gestation period. Estimates from the Chamber of Mines show that the industry requires between US$5 billion to US$7 billion to operate at full or increased capacity.

The funding is not available locally, as banks have only short-term deposits.

Statistics show that between January and September, mining companies received loans, predominantly short-term, amounting to US$157 million out of US$2,6 million total banking sector loans.

This means that the industry has to look for offshore financing, but analysts say the perceived high-country risk rating has made it difficult for local companies to access long-term loans on international markets.

The mining sector is increasingly  evolving into a dominant sector in the economy and accounted for two-thirds of exports recorded last year. It is estimated that it would contribute over 50% of exports this year.

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