Govt backtracks on mines listing requirement

HARARE - Zimbabwe will drop a requirement that mining companies must list on the local stock exchange from a new mining act, Foreign minister Sibusiso Moyo said on Monday.

Industry lobby group, the Chamber of Mines, had expressed concerns about the proposal for mining firms to list locally, warning that the exchange might not be deep and liquid enough for companies to raise capital.

“Previously there was an indication that the new Mining Act would have a requirement to list on the local exchange,” Moyo said, speaking in London at a Chatham House event.

“But we can assure you that this qualification will be taken out.”

The original proposal was part of efforts under the country’s new President Emmerson Mnangagwa to boost investment and local ownership of Zimbabwe’s vast mineral resources.

This comes as experts and analysts had warned that the move to compel mining firms to list most of their shares on the Zimbabwe Stock Exchange (ZSE) would imperil property rights.

The amended Mines and Minerals Bill, which has been submitted to Parliament, reads: “No mining right or title shall be granted or issued to a public company unless the majority of its shares are listed on a securities exchange in Zimbabwe”.

It also states that foreign listed mining companies seeking rights to operate in the country should notify the minister of Mining and apportion 85 percent of company funds obtained from listings, wholly towards the development of the company’s local mining rights.

Failing to comply would result in a fine equal to 100 percent of the funds raised at the overseas listing or as much as 10 years in prison.

Many sceptics believe ZSE-listed companies will not be attractive enough to raise the required capital, nor will intra-day trading volumes after listing be high enough for a primary listing for some of the larger mining firms.

Such a lack of liquidity would remove the incentive — easy exit in case of trouble — that could be expected to attract portfolio investors in the first place.

“Structurally, many other problems still deter investors from the idea of moving to Zimbabwe. As things stand the country is suffering from a severe liquidity crisis marred by low foreign currency reserves, which means investors are having a hard time expatriating their funds,” said NKC African Economis analyst Jee-A van der Linde.

“It would therefore be an impractical, from a technical point of view, move for mining companies.”

Zimbabwe has the world’s second-largest platinum reserves after South Africa, as well as significant lithium, gold, diamond, coal, iron ore and chrome resources.

The world’s largest platinum miner, Anglo American Platinum, and number two producer Impala Platinum both have operations in Zimbabwe, while global giant Rio Tinto also has a diamond mine here.

Investments could help boost the country’s gross domestic product by $3 billion per year.

Veteran economist John Robertson told the Daily News that no doubt, the government believes that this demand will cause almost all the shares in new companies to be bought only by Zimbabweans.

“However, the demand exposes a serious lack of knowledge about the requirements for stock exchange listings, the amount of money needed to get a decent mine into operation and the fact that Zimbabweans don¹t have nearly enough money to pay for most of the shares,” Robertson said.

“As Zimbabweans lack the capital needed, it has to come from somewhere else and that means the money is owned by some foreigner. If we set up fences to keep out foreigners, we will prevent the development of properly capitalised mining operations that have prospects of becoming big forex earners, big taxpayers and big employers.”

— Reuters/Business Writer

Comments (1)

It would be good to follow up this story as further decisions are made on this matter . Investors are keen to invest in the country but are waiting for iron clad decisions which confirm the security of overseas investments into the country that cannot be changed overnight through the actions of some autocrat .

john booth - 27 April 2018

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