Comprehensive mining policy is what Zim needs
THE reaction of investors here and abroad to Mines minister Amos Midzi’s announcement that government wants to amend legislation to achieve 51% ownership in mining houses was predictable.
ere was an understandable outcry, especially from mining firms which have made huge sacrifices to keep the sector running.
This week share prices of listed counters, especially Implats of South Africa, retreated while emergency meetings were convened to digest the impact of government’s intention to force mines to cede 25% of their shares to the state as soon as the Mines Bill becomes law and the remaining shares to be transferred over a five-year period.
In this apparently nefarious plan, government will not pay a dime for the shares. This is nationalisation by whatever name and investors and ordinary Zimbabweans are well aware of the results from experience. The government’s record of business management is evident in the poor state of parastatals which have become havens of corruption, nepotism and policies devoid of economic sense.
But more worrying to miners — existing and potential — is the fact that government has run down mines which it controlled through the Zimbabwe Mining Development Corporation.
The contribution to the fiscus and foreign currency receipts by mines under this group is negligible. It is this same outfit that tried to mine diamonds and other precious metals in the Democratic Republic of Congo six years ago, but has nothing to show for it.
It is the same parastatal that promised to revive Mhangura Copper Mine and to ship copper ore from the DRC for smelting here. We did not believe them at the time because we knew the institution’s capacity. We were right!
Then there is the perennial disaster at Ziscosteel, a mining and processing concern that the government has failed to run efficiently for over 20 years.
The outcry by key stakeholders in the mining sector is therefore justified because Midzi’s statement threatens a sector which has continued to attract investment amidst the doom and gloom.
With the expansion of platinum group metals exploration and exploitation, the sector has contributed significantly to foreign currency generation and to overall GDP.
Enter Midzi with the declaration that “government wants to be an active participant in the mining business” and the industry has caught a cold.
Evidence abounds that government cannot run a business and has no demonstrable intention to improve on its poor record.
But this has not extinguished its ravenous appetite to add more companies to the menu of once-efficient undertakings it has plundered, imposing a huge drain on the economy.
Only recently the government threatened fertiliser manufacturing companies with proposals to take them over. This ill-considered move which rocked the sector has been shelved but we do not know for how long. Then there is the deliberate policy to transfer all power vested in local authorities to central government. The control mania even includes private schools.
This has nothing to do with empowerment or wealth distribution. The quest to control the industry also has nothing to do with staunching leakages in the trade in precious minerals, especially gold since key players are known senior government officials.
A government takeover of mines will merely play a facilitating role.
What Zimbabwe needs is a comprehensive mining policy and not a plan that merely sets out shareholding structures in the industry. The country has to sort out bilateral investment protection agreements thrown out the window during the mad days of land reform.
It has to guarantee protection of investment by ensuring that courts are not compromised by politics and that police uphold the rule of law and that the tax regime is not punitive to new investors. There must be predictability in foreign currency retention policies and electricity supplies. And above all, government must consult industry instead of making policy on the hoof.
Zimbabwe’s neighbours, especially South Africa, Botswana and Zambia, have been working to achieve policies that attract investment. The Zimbabwe government is, on the other hand, erecting barriers to potential investors and treating them with suspicion.
This explains why despite the abundance of mineral wealth in our soils, we have remained a poor country. The proposed law can only make us poorer. Can reason prevail for once?