HomeBusiness Digest‘Uncertainty pushes mining industry towards the brink’

Editor’s Memo: Hate-slogans cannot win the day anymore

Hokonya  told  journalists  in Harare that the ambiguity  surrounding  the implementation of the indigenisation policy forced mining  companies to  defer investment  plans, a move that is detrimental  to  the growth of the  industry.

He said investment into the sector continues to slow down, adding that government’s failure to review the policies would see the industry crumbling in the near future.

According to the indigenisation law, mining companies are compelled   to cede 51% of their shares to indigenous Zimbabweans. As a result, investors   are now  shunning  Zimbabwe  in favour  of  neighbouring  countries  which  are competitive  in terms  of legislative certainty.

The situation, he said, was worsened by government’s reluctance to restructure the country’s huge debt amounting to US$9 billion, a situation that renders Zimbabwe regionally uncompetitive in terms of   foreign investments.

“The  uncertainty  surrounding   the implementation  of  the indigenisation  law  comes  when  the country  is  carrying  a  huge   debt  overhang  and  the  combination  of the  two is  a  serious  drawback  in  attracting  investments,” he said.

“We, as a country, need to  be brave  enough  to  negotiate  with  our  creditors to restructure our debt and also put in place legislation which will allow the  development of the mining sector, which is key to our  economy,” Hokonya said.

“Mining remains the only sector that can revive the  economy because of the international competitiveness of the country’s  minerals in terms of pricing and quality,” he said.

Other sectors of the economy have lost competiveness globally in terms of quality and pricing, he added.

Mining last year accounted for 50% of the country’s total exports and contributed to more than 13% of GDP.

According to the Chamber of Mines, the sector is expected to contribute US$2,6 billion to national exports this year, but the figure could be higher if beneficiation plans come to fruition.

Last year, total tax paid by the mining sector to government was around US$311 million, about 12% of the revenue collected by government. However, the contribution would increase to around 18% should diamond revenues be incorporated.

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