Zimbabwe mining companies stock market participation still low

via Zimbabwe mining companies stock market participation still low by Eshmaeil Mlambo and Victoria Mtomba for Newsday September 23, 2013

THE participation of mining companies on the Zimbabwe Stock Exchange (ZSE) is still low accounting for less than 2% of the total market capitalisation five years after the country introduced multi-currencies.

Statistics from the ZSE shows that market capitalisation for the four mining counters on the local bourse is $66,3 million, with Bindura Nickel Corporation (BNC) having the largest market capitalisation among mining counters.

BNC has the largest market capitalisation on the bourse, but it’s not yet operating at full capacity as some of its mines are still on care and maintenance as the company intensifies plans to look for funding.

In an interview, BNC chairman Kalaa Mpinga said the first reason why companies list on the ZSE is to raise money, but on the Zimbabwean market, liquidity is still a challenge.

“There is a significant liquidity problem in the economy and what is happening in the mining companies is not different from other sectors of the economy.

“If the liquidity situation changes, I think things will improve.

“More companies will be listed on the market,” he said.

A local analyst said there were no de-listings or new listings for mining counters in the five-year period, unlike other sectors of the economy.

“The reason why more mining companies are not participating on the local bourse is not known.

“Maybe they do not want to adhere to the rules of the ZSE or they want to avoid disclosure and bureaucracy,” the analyst said.

As of Friday, the total market capitalisation stood at $4,9 billion. The industrial index closed the week at 191,53 points after adding 1,96 points with gains being recorded in National Foods, Econet, Old Mutual, Delta, PPC and Fidelity Life.

On a week-on-week basis, the industrial index gained 3,18 points. On Friday, the mining index lost 0,22 points and closed at 48,34 points.

Mining companies in the country that were listed elsewhere include Zimplats, Mimosa, Unki, Murowa Diamonds and others.

Official figures show that the mining sector requires $5 billion for recapitalisation.