Walk the talk, Gapare tells govt

IN his conclusion at the just ended mining indaba, Chamber of Mines chief Victor Gapare had a few words for all delegates, particularly those in government;  stop talking and start doing something.

Aided by a PowerPoint presentation, the chamber chief took the delegates into the future of mining and back into its past.
With output graphs and illustration for various sub-sectors from gold to ferrochrome dating back to 1990, the figures showed an industry in trouble and desperately in need of capital.
But did Gapare really knock the point home in government? Will bureaucrats walk the talk? Time will tell.
Gapare highlighted the need to attract investment in mining and the need to straighten out the legislation relating to mines ownership, and showed delegates how the wheels of Zimbabwe’s once vibrant mining sector came off.
At the same conference, President Robert Mugabe and other government officials again claimed that Zimbabwe was a safe investment destination. This was despite reports that farm occupations were escalating.
How did the wheels come off?
Gapare gave a myriad of causes ranging from mines being forced to surrender foreign currency at sub economic exchange rates by the central bank.
He cited the RBZ’s failure to pay gold producers as having led to the total collapse of the sector coupled with unstable monetary policies.
The industry saw limited capital development as a result of foreign currency shortages that resulted in serious capital consumption.
Now, “virtually all mining operations urgently” require recapitalisation, he said.
In addition, power shortages, sub-economic tariffs charged for electricity and failure on the part of government to invest in additional capacity despite projections in early 1990s showing there would be a power shortage in the future.
A shortage of skilled manpower also worsened the plight of mines during the turbulent decade with artisans leaving for better paying jobs elsewhere.
Analysts say even if Zimbabwe hosts a million investment and mining indabas, the country cannot attract serious investors before instituting major political reforms as stipulated in the Global Political Agreement.
Prime Minister Morgan Tsvangirai and President Mugabe are still to iron out outstanding issues relating to the appointments of central bank chief Gideon Gono, Attorney-General Johannes Tomana and provincial governors, among others.
Former chamber of mines chief Ian Saunders and now CEO of New Dawn Mining Corporation, a company with a listing on the Frankfurt Stock Exchange and trading under title 3DM, recently gave the Zimbabwe Independent an insight into investor perception on Zimbabwe.
He said: “Currently, 3DM is performing a little lower than expectations. Certainly with some of the political and economic issues being unresolved there is some hesitancy on the part of certain investors to aggressively invest in Zimbabwe. Once these matters are resolved we see a very bright future for 3DM.”
Deputy Prime Minister Arthur Mutambara admits government is lacking credibility because of failure to halt farm invasions and uphold the rule of law.
He said: “For you to be trusted, credible to investors, we must resolve that matter (outstanding issues) because if we don’t, we lose credibility. How can we convince investors if we don’t respect our own agreement?”
What does the mining sector need?
Gapare believes road and telecommunications infrastructure in mining areas needs improvement and supported by a stable macro-economic environment to allow long term planning through supportive fiscal policies.
Apart from that he said there was need for reliable infrastructure such as electricity and recommended that Zesa and its subsidiaries must be allowed to raise capital internationally since government has no money to capitalise it.
The chamber believes that empowerment laws must not inhibit growth and development of the local mining sector and that Zimbabwe needs to examine experiences in other countries like Turkey, South Africa, Namibia, Tanzania, Zambia, Australia, Canada that embarked on such policies.
The Zimbabwe government wants laws compelling foreign shareholders to surrender 51% shareholding in mines to blacks as part of its empowerment programmes.
Gapare argued that laws “must be crafted in a way that attracts exploration and development” from current and new investors.
He said: “What is needed is a political and economic environment which helps them to raise money to develop their mineral rights.”
But analysts say Gapare’s dream might never be realised judging by the disharmony in government. Mugabe has been threatening to takeover land from the remaining farmers despite his claim that he will protect the sanctity of property rights.
Investors, particularly from South Africa, have since demanded commitment from Mugabe in the form of bilateral business agreement, before committing any investment.

 

Chris Muronzi

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