A sure way to kill mining
GOVERNMENT has gazetted the Mines and Minerals Amendment Bill which seeks to redistribute the country’s mineral wealth. This is a piece of legislation which follows hard on the heels of the Indigenis
ation and Empowerment Bill which went through parliament almost three month ago.
President Mugabe is yet to sign the Bill into law and there is speculation that the legislation could be reintroduced in another form. A reformist alternative proffered by Reserve Bank governor Gideon Gono in his mid-term monetary policy statement in September raised hopes that the Bill might not become law.
The introduction of the Mines and Minerals Bill however could be a sure sign that government is going ahead with its not-so-well thought-out indigenisation plan. The two laws are inseparable.
Of significance this week however was the spin that the government is now vending regarding the implementation of the Mines Bill. Mines minister Amos Midzi said government was not proposing to give away mines for free but that beneficiaries should demonstrate an ability to raise capital to acquire stakes in mines. He also said government would repossess claims being held for speculative purposes.
“Those who do not use their claims will simply lose them,” said Midzi. “The principle will be applied without fear or favour.”
Two key issues arise from this explanation by Midzi. Firstly, the government is keen to allay fears that this will be another free for all crafted on the template of the fast track land reform. The worry which gripped the industry is understandable because of careless statements by senior government officials when advertising the impending tabling of the Bill last year. Ministers — in a threatening manner — said after the farms, government was angling for the mines. The effects of the destruction of commercial agriculture after the fast track land reform programme are still with us.
Secondly, the minister tried to sound reassuring by saying that unproductive claims would be repossessed and given to those with resources and knowledge to exploit them productively.
These are promises which we have heard before. When the land reform started, government promised that no farmer would be left landless. It said the land would be given to those with the resources to utilise it.
Lately there has been talk that land lying fallow — which is the state of the majority of resettled farms — would be repossessed and given to deserving farmers. The government has also talked of a one farmer on farm policy — another fallacy. All these promises have been broken with impunity to the extent of enacting legislation to legitimise the departure from original policy guidelines.
The failure of the land reform programme — manifesting itself in food shortages and very low production of primary goods — is going to be the bane of any future government plan to indigenise the economy. It would be naïve to believe Midzi’s assurance that there will be order in the quest to increase local ownership in the mining sector. Verbal assurances are not a sufficient guarantee that productivity in the sector can be enhanced through the transfer of assets to black owners.
There has been failure by black businessmen to raise the requisite capital for them to participate in empowerment facilities; a notable one being the 15% stake reserved for black players in Zimplats.
Problems are set to arise if indigenous people cannot raise capital to participate meaningfully in the mining sector. Government on the other hand will not allow a situation where it finds itself stuck with redundant empowerment legislation because would-be beneficiaries do not have the resources.
History has shown that the Zanu PF government, when faced with such a scenario, starts to cut corners. In the case of agriculture, the judiciary was suborned, laws protecting property rights were trashed, compensation for loss of assets became subservient to the need to transfer assets to black farmers.
There is nothing at the moment to dispel fears that this will not happen in mining, which requires much larger investments — huge chunks of it in foreign currency. The land reform programme was a very poor advert of government’s indigenisation plan. The government now finds it very difficult to build trust between itself and business.
All plans in that realm will be judged against the soiled stencil in farming. The success of the indigenisation thrust in industry, commerce and mining will be determined by government’s ability to pick itself up and lead a revival in agriculture.