In the company’s interim results for the six months ended September 30 2011, ACR Executive Chairman Roy Tucker said effective empowerment would best be served through the encouragement of business enterprise and the generation of employment.
“However, in their present form, it is widely recognised within many elements of government and in the investment community that the regulations do present a disincentive to inward investment, at least on large- scale projects,” said Tucker.
He said the regulations do not by any means lead to a path of true empowerment of the people.
“We find that in practice there is scope for flexibility in the indigenisation regulations in such a way that in smaller projects at least, they can be compatible with a fair return to the investor and risk-taker.”
Zimbabwe has hit the spotlight in the international arena following its promulgation of indigenisation regulations that allows locals to have at least 51% in all foreign-owned companies operating in Zimbabwe.
The threshold has to be achieved in five years.
A number of foreign-owned mining companies have to date submitted their indigenisation proposals to government and are awaiting results. ACR has interest in 12 projects covering gold, nickel, platinum, copper, phosphate and diamonds in Zimbabwe.
Tucker however pointed out that the company remains committed to full compliance with Zimbabwe’s empowerment regulations.
“Although there remain many political hurdles, and not all elements of Government speak with the same voice, we believe that there are increasing signs of green shoots in the economy and in people’s thinking,” Tucker said.
He said that he remains confident that the regulations would be rationalised towards a more universally accepted commercial regime within the medium term.
ACR said that its focus of activity in the interim has centred on the advance of the Pickstone gold production project and the Gadzema Gold resource development, both in Zimbabwe. According to ACR, Gadzema Gold would develop into a major mine but the ongoing resource definition would run in parallel with research on funding the large-scale operation, given the internationally perceived political risk to finance opportunities in Zimbabwe.
Andrew Cranswick, ACR chief executive officer said that the indigenisation model provides the company with a template that can be modified to suit the circumstances and implemented gradually at project level as each project approaches production, ensuring full compliance with the law.
“ACR has rightly stated that indigenisation does not affect an exploration company until production revenues at a project level have accumulated sufficiently to absorb the expenditure that has been written off against them,” said Cranswick.
“At such a point, where the project or subsidiary crosses the net equity threshold, indigenisation becomes lawfully required. And indeed this is what we have worked upon and will comply with early next year in our first producing asset.”