CAPE TOWN: ZIMBABWE is not expropriating mining businesses and investors can still make money despite a controversial ownership law, a top government official has said.
Under its indigenisation programme which has been under the international spotlight since 2008, and is blamed for hurting investment, foreign owned businesses would shed controlling stakes to locals.
The government defends it by saying this allows Zimbabweans to benefit from their resources, while critics say it is meant to line the pockets of the ruling party and its supporters.
“Is 51%-49% the best model? Frankly I don’t know, but we need to make sure our communities benefit as much,” Zimbabwe Mines and Mining Development minister Walter Chidhakwa said here.
“I think what is important to for us to give you the confidence that will run your mine [profitably] even as a minority shareholder,” he said at an investment forum organised by, among others, Mail & Guardian Africa on the sidelines of the Mining Indaba.
The plan has been also criticised for sending conflicting signals to investors, uncertainty which may have combined with falling global prices to cut Zimbabwe’s mineral export revenue by 7.2% last year.
The country has the second largest reserves of platinum after South Africa and nearly 8% of the world’s chrome.
It also has gold, diamonds, coal, gas and iron ore, but minister Chidhakwa said of the country’s estimated 60 minerals, only 11 were contributing to the national purse.
Mining is the biggest source of foreign exchange for Zimbabwe, but revenues fell to $1.81 billion in 2015 from about $1.95 billion the previous year, the country’s Chamber of Mines, which represents producers, said in a report last month.
The industry is “more concerned with political, policy and regulatory risk than conventional business risk,” the chamber said in its 2015 State of the Mining Industry Survey Report.
But several investors in Zimbabwe remain bullish about the industry’s prospects.
“Investment in Zimbabwe is opportunistically speaking more inexpensive compared to other parts of the world,” Wilfried Pabst, the chairman of Bikita Minerals, which mines lithium in the country, said.
“I think the indigenisation policies will change, they have to, that’s why I am invested in Zimbabwe.
“If you survive in tough times like this, you will only have sharpened your pencil and will be competitive when it recovers,” he added.
Noah Matimba, the chief executive of Zimbabwe Stock Exchange-listed RioZim said that bumps in the industry should be seen as opportunities as an upturn in fortunes could be forecast.
View from the west
“The industry will survive and continue to contribute to the economic development of the country,” he said.
German ambassador to Zimbabwe Ulrich Klockner said the West was not in toto against the spirit of the ownership laws.
“No European is against indigenisation, we only seek it be economically viable, and that it is transparent.
Zimbabwe Investment Authority chief Richard Mbaiwa cited the country’s highly-skilled literate labour force, its central strategic location in southern Africa and its use of multiple currencies to manage fluctuations as attraction for investors.
Following an economic crisis that has its roots in a controversial land reform in the early 2000s, Zimbabwe is seeking to re-engage with both multilateral and bilateral lenders, a process that is increasingly being seen as coloured by succession politics around long-term leader Robert Mugabe.
It has also aggressively courted China in recent years, culminating in the high-profile visit of president Xi Jinping to Harare in December.
Chidakwa said western firms were missing out on mining opportunities by seeing the obstacles first.
“The Chinese see the deficiencies of power, roads, railways and identify them up as opportunities. They then say we will help you fix these to help in mining,” he said, describing this as a win-win outcome.
—This article has been amended to correct the spelling of Mr Pabst’s name.