THE new Minerals Policy should contain a clause which states that the right to mine should be linked to payment for the value of the un-mined asset, according to Deputy Prime Minister Arthur Mutambara.
In a keynote address to the Chamber of Mines’ annual conference, Mutambara said Zimbabwe had been shortchanged in most of the mining deals it had entered into because of lack of knowledge on money. He said deals such as the Essar/Ziscosteel and Zimplats ones should have taken into account the difference between working capital and equity capital.
Essar was charged US$750 million, which would be used only to pay the debts Zisco owed as well as provide some working capital, but the Ministry of Industry and Commerce had not put a value to the resource underground. He quipped that this was because civil servants, including the minister (Welshman Ncube) were so lowly paid that they didn’t know about money.
On the Zimplats deal, Mutambara said the company had been given a US$4 billion resource at the time, and invested US$400 million, which was borrowed from local banks. Yet when they were negotiating for indigenisation they charged government for the US$150 million for the ground they gave up, yet they never paid for it.
“They were not charged for the resource underground when they came to invest in Zimbabwe,”Mutambara charged.
He said overall, the stamp from the Mining Commissioner on claims and rights does not guarantee ownership, but only gives the investor the right to do a certain activity. Mines permanent secretary Prince Mupazviriho concurred, saying the stamp would not guarantee ownership as all mineral rights in the country are vested in the President.
These remarks follow an objection made by Zimplats over government’s move to seize 27 000 hectares of the platinum miner’s claims.
Mutambara also said government would not pay for indigenised mining stakes from dividends declared by the company, but would pay from the asset underground.
He said if greenfields are obtained for free, then government should not pay for anything. Mutambara said the 51% equity empowerment law is the foundational law which will be followed by government, adding that it was not possible to use the supply side model to ensure compliance as this was only a supplement to the equity model.
He said the 51% being asked for by government was too low a threshold as other countries such as Norway were asking for 93%. “Companies flock to Norway because 7% of value is a lot of money. Foreign companies should be grateful for the 49% because it was a lot of money.”
Youth Development and Economic Empowerment and Indigenisation minister Saviour Kasukuwere told the same meeting that indigenisation of the mining sector was still work in progress following the signing of most term-sheets. He said his ministry was involved in negotiations and companies were committed to the programme, “even though it is in the nature of capitalists to drag their feet.”
He said the process was irreversible and after agreeing to the principle, government would proceed to the next level and find consensus on the other structures of the deal.
Mutambara said overall there must be analysis of the value of the land before such deals are signed so as to ensure that the country is not shortchanged. He said private investors know more about the geology of the country than does government because not much had been done in terms of exploration.
He said private investors who know about the geology of a particular area raise money and list in countries such as Canada and Australia against the claim.