Source: Foreign miners to invest more locally | The Herald
Business Reporter
AMENDMENTS to the current legislation governing Zimbabwe’s mining sector will require foreign listed mining firms to invest over 85 percent of funds raised offshore towards developing local mines. This forms part of new provisions in the Mines and Minerals Amendment Bill, presently going through Parliament, which also requires public companies to have the majority of their shares listed on the local stock exchange to be given a mining rights or title.The new mines legislation empowers Zimbabwe’s Minister of Mines and Mining Development to cancel the mining right or title of any company discovered to have falsified information on their listing and the utilisation of proceeds from such listing.
Zimbabwe has only four mining companies listed on the local stock exchange despite the central importance of mining to the economy and Government’s push for locals to benefit from the exploitation of the minerals as a finite natural resource.
The mining sector contributes about 12-16 percent of Zimbabwe’s Gross Domestic Product and accounts for more than half of the country’s export earnings while it employed thousands of people.
“Any company that requires a mining title, which is listed on a foreign exchange (outside Zimbabwe) shall be obliged to notify the minister of such listing and eight five per centum of funds raised from such listing shall be used solely for the development of the mining rights and title in Zimbabwe.”
The mines and minerals legislation says anyone who breaches the requirement shall be guilty of an offence and liable to a fine equivalent to one hundred percent of cash raised at the foreign listing or to imprisonment for a period not exceeding 10 years or both such fine and prison term.
The law also requires holders of Zimbabwe mining right or title to exclusively use financial institutions registered to carry out banking activities in terms of Zimbabwe’s Banking Act or any related legislation in conducting transactions relating to its mining.
Also, no mineral (including industrial scrap) derived from Zimbabwe shall be exported raw or unprocessed except with the written consent of the Minister to the exporter: provided the minister shall prescribe exemptions and applicable taxes thereof in terms of set down rules.
Any mining company holding a mining title or right shall notify the Mines Minister in writing, of changes in its shareholding structure within fourteen days of such change in the firm’s shareholding.
Subject to any other law, the draft bill says no shareholder of a company holding a mining right or title shall sell, dispose of or transfer a Zimbabwe registered security to a non-indigenous person without written approval of the Minister of Mines, with any such sale, disposal or transfer done without the ministers approval regarded as void.
COMMENTS
Oh, here’s a winner! This will definitely make foreign companies flock to Zimbabwe, to spend their FDI! Not!!!
If a foreign company has mining holdings in say, Zimbabwe, SA, Mozambique, New Guinea, and Canada, why should they be compelled to spend 85% of their external profits exclusively in Zimbabwe?
First you tell foreign companies that they have to ceed 51% of their company to locals, for no compensation. Then you tell them that 85% of their external profits must be spent in Zimbabwe. And finally you tell them that once they get the minerals out of the ground, they may not export them in their raw form, but must be locally refined, at prohibitive cost.
Think about this for a minute. If 49% of the company is owned by foreign businessmen, and the company has a foreign profit of $100,000; then 49%, or $49,000 should be paid to those foreign investors. But government now wants the country to return 85% of that profit to Zimbabwe. How are the foreign investors to be paid their profit in the company if only 15% or $15,000 of the profit is available to pay them? If you were a foreign mining investor, would you consider risking your money in the country, under this government.
In most successful countries, government tries to create an open and enabling environment that is equally accessible to all businesses, so that they may succeed. And in so doing, those businesses create jobs and both they and their employees pay taxes which in turn, leads to more prosperity for the entire country.
However, in Zimbabwe, government views private companies as their subjects, to be told what to do and how to do it. And don’t complain, even if it makes no sense economically!
And, once more, Zimbabwe proves that it does not respect private property, by insisting that only black Zimbabweans may own domestic shares in these foreign firms. WTF? Ever heard of RACISM? As in, “We’re black locals and don’t want any white, or yellow, or brown skinned foreign money. We’ll just nibble on our minerals, thank you.”