Zimbabwe trying to win back investors’ trust

Author: Mining Weekly
Date: 2018-05-08
Link: http://www.miningweekly.com/article/zimbabwe-trying-to-win-back-investors-trust-2018-05-07

JOHANNESBURG (miningweekly.com) – Zimbabwe is committed to introducing mining policy certainty to win back investment and revive the industry following the swearing in of President Emmerson Mnangagwa late last year. Mnangagwa is seeking to revive the economy and attract mining investment and has pledged investor-friendly policy changes and partially rolled back a law requiring miningcompanies to be majority locally owned.

Under his leadership, the Zimbabwe government amended the Mines and Minerals Act in March, to restrict compulsory indigenisation to the diamond and platinum sectors. The amended Act is designed to ensure that, in the course of time, at least 51% of any designated extractive business is owned through an appropriate designated entity, with or without the participation of a community share ownership scheme or employee share ownership scheme or trust.

The Act will, however, enable investors to apply for a waiver to the 51% ownership requirement, which will be considered on a case-by-case basis.

Despite this, investors and analysts feel that more time is needed to gauge the direction the country is headed in. “Investors will not invest simply because the country has seen a regime change; trust needs to be built. A single event is not going to mean everything will be different overnight,” EY mining and metals leader Wickus Botha told MiningWeekly Online.

Botha noted that Zimbabwe’s Indigenisation and Economic Empowerment Act has had a negative impact on foreign direct investment into the country. Shareholders will need to see if this will be a short-term or long-term solution, he noted.

“Mining is a long-term capital investment industry. Developing a new mine takes decades. Buying a new mine doesn’t mean the industry is bigger, that won’t help the industry grow,” he said, adding that there will be spin-offs, as people will be more confident and probably willing to invest. To grow the mining industry, Botha noted, investors and shareholders must be willing to expand operations, restart mines that are idle or build new mines, "which is a long-term game".

Zimbabwe Mining Minister Winston Chitando has said that, in terms of policy issues, it is important to attract capital to improve capacity utilisation and to invest into the country’s mining industry. Zimbabwe’s Mines and Minerals Bill, which will replace the principal Act crafted in 1961, was reviewed early in March and is expected to be finalised soon.