ZIA approves US$1bn mining projects

with interest in the sector growing rapidly due to firming international metal prices.
But financial constraints have made it difficult for the country’s supreme investment approval body to monitor implementation of the approved projects.
Economic Planning and Investment Promotion Minister Tapiwa Mashakada said the Government would prioritise mining to anchor economic growth.
“Mining will be the future of investment. From January 2009 to date over US$1 billion worth of mining investments have been approved,” he said.

He said the investment was the biggest ever seen over a similar period and more could come if efforts were directed at attracting foreign investment.
Zimbabwe is blessed with over 40 mineral occurrences and there are sentiments that the extent of the country’s mineral is not fully established.
Minister Mashakada said it was critical to understand the role of mining, amid rising global metal prices, in the development of the local economy.

And Finance Minister Tendai Biti projected in his 2011 National Budget that mining would this year grow by 44 percent and underpin his 9,3 economic growth forecast.
Increased production from diamonds, gold, platinum, coal and nickel are expected to anchor growth in mining and overall economic expansion this year.
But fear abounds perceptions on the indigenisation and economic empowerment may scuttle the potential for more investment into the mining sector.

There is general feeling, especially among foreign investors, that Government’s indigenisation programme is meant to expropriate private assets.
In terms of the Indigenisation and Economic Empowerment Act of 2008 foreign-owned companies are required to sell at least 51 percent equity to locals.

Government says indigenisation is meant to bring previously marginalised indigenous Zimbabweans into mainstream economic activities.
However, Minister Mashakada said while foreign investors were required to sell a majority stake to locals, the indigenisation law was not cast in stone.

He cited Indian steel giant Essar Global’s 54 percent acquisition of NewZim Steel Limited, as exemplifying the flexibility of the empowerment law.
The minister said Government should balance the need to ensure Zimbabweans benefited from local resources without destroying the economy.

“This law is flexible. There is need for flexibility and pragmatism to ensure a win-win situation. Indigenisation is a challenge, but ZIA can do a lot to minimise its backlash on (foreign) investment,” said Minister Mashakada.

By nature investors do not want to relinquish control and many want other empowerment factors such as corporate social investments to be considered in part fulfilment of the indigenisation threshold.