Foreign miners urged to list on ZSE

Exchange.
Such an arrangement would ensure that capital yielded from mining activities would help to ease liquidity challenges in the market.
“Mining companies should primarily list in Zimbabwe, which should help improve liquidity in the country,” he said.
“We also don’t want companies to be banking offshore. Money from mining should function as Zimbabwe’s capital.”
Currently, there are only two foreign mining firms – BNC and Falcon Gold – listed on the ZSE. Major mining firms such as Zimbabwe Platinum Holdings and Caledonia Mining Corporation (which operates the Blanket Gold Mine) are listed on the Australian Stock Exchange and the Toronto Stock Exchange, respectively. New Dawn Mining Corporation, which runs a number of gold mines in the country, is also listed on the TSX.
Another major gold producer, Metallon Gold, is listed on the Johannesburg Stock Exchange.
Economists believe that investment in shares on a stock exchange (through an initial public offering or the issuance of new company shares of an already listed company), usually leads to rational allocation of resources.
This is because funds, which could have been consumed, or kept in idle deposits with banks, generally benefit the companies themselves, but more importantly may promote business activity with benefits for several economic sectors, such as agriculture, commerce and industry resulting in stronger economic growth. This means that as Zimbabwe’s top performing sector, the larger players in the mining sector, can improve the economy by listing primarily on the local bourse.
Official figures show that market capitalisation on the ZSE was US$3,9 billion by the close of September, down from US$4,3 billion at the beginning of the year.
Some firms, such as Zimplats and New Dawn, had earlier indicated they would list on the ZSE as part of their indigenisation compliance strategy. But this seems to have been overtaken, instead, by community and employee share ownership schemes.
Another bone of contention between foreign companies and the Government is that the companies rarely use the local banking system, opting for offshore accounts, which has perpetuated the constrained performance of the banking sector. The financial sector deposit base is estimated at US$3,3 billion, which means long-term funding is still a high-risk matter.
The Bankers’ Association of Zimbabwe has estimated that 92 percent of available credit is short-term financing, which comes back to choke the mining companies who require extensive and long-term funding.