‘Govt won’t revoke mining licences’

Act as opposed to cancelling their licences, Minister of Mines and Mining Development Obert Mpofu has said.

Speaking during the first day of the third edition of the Zimbabwe Mining Indaba yesterday, Minister Mpofu said the Government had no intention of cancelling any licences.
“We have no intention of cancelling any licences. There are some negotiations taking place with some parties. No licence has been cancelled. We have no such intention,” said Minister Mpofu.
The minister added that issues surrounding indigenisation and cancellation of mining licences were being overplayed because indigenisation was largely targeted at ensuring that locals benefit from bona fide foreign investments in the sector.

“Most of the new investments in mining are being taken up on a shared basis,” he said.
Despite the indigenisation emerging of late as a major concern for foreign investors with and without operations in the country, Zimbabwe has continued to attract potential new investments in the minerals sector.

Minister of Youth Development, Indigenisation and Economic Empowerment Saviour Kasukuwere said significant progress had been made regarding negotiations with foreign mining companies.
“With the mining industry, we have had our running battles, but we have now made tremendous progress,” he said.

Responding to a question to the effect that globally most mining companies typically require majority ownership, Minister Kasukuwere said special cases would be dealt with “in a manner that allows our country to move forward”.

“We are aware of the capital requirements in mining, we are alive to those realities,” he said.
The ministers’ comments come as several mining companies including Zimplats have had their indigenisation proposals rejected with the Youth Development, Indigenisation and Economic Empowerment Ministry giving them a reprieve to come up with acceptable proposals.

Addressing participants at the same event, Minister of Economic Planning and Investment Promotion Tapiwa Mashakada concurred with Minister Mpofu.

“There have been fears that mines will lose their licences, but that is not the view of Government.
“The relevant authorities are working on a rational solution that will not destabilise the mining sector,” he said.

Minister Mashakada said potential foreign investors have shown a huge appetite for mining projects in the country, with the sector topping the list of Zimbabwe Investment Authority approved new projects between January 2009 and June this year.
He, however, pointed out that there was need for the country to build up infrastructure stock that would support the anticipated growth in the mining sector, especially in terms of energy, water and transport.

Chamber of Mines president Mr Winston Chitando said mining projects worth US$260 million had been approved by the first half of this year, over triple the same period last year.
The country has an abundance of minerals including the world’s second largest platinum reserves.
“The Zimbabwe Investment Authority has indicated that projects valued at US$941 million have been approved in the first six months of 2011 compared to US$131 million during the same period last year,” said Mr Chitando.

‘The mining industry projects accounted for US$260 million in 2011 compared to US$80 million in 2010,” he said.
Mr Chitando, however, lamented the funding challenges that the sector was still facing, reiterating that mining requires more than US$8 billion over the next five years to operate at optimum levels.
“The challenges around funding are still there. Financial products are short-term and limited, hence loans are available only for working capital, which is inadequate.

“For instance, the mining industry received 18 percent of disbursed loans during the first half of the year compared to sectors such as telecommunications, which got 40 percent of these loans. We urge both Government and the private sector to prioritise the mining sector because of its strategic importance to the economy,” he said.
Mr Chitando also said the chamber was working closely with the Zimbabwe Electricity Supply Authority to ensure adequate energy supplies to mines.

Other delegates at the event urged the Government to properly communicate the indigenisation programme to the public.
Vunani Capital (Zimbabwe) Ltd (one of the transaction advisors appointed by Government) chief executive Mr Andrew Mari said the indigenisation programme was not nationalisation, as some circles believe.

“Most people are going to be surprised by the eventual outcome of the indigenisation drive.
“Government needs to highlight and give assurance that it is structuring transactions for equity disposal by the foreign companies. This indigenisation is not nationalisation,” he said.