MINING JITTERS
…Zim miners fret over new law that seems to give state power to take control of mines
HARARE - Zimbabwean miners are fretting over amendments to ownership laws that seem to be reintroducing the country’s controversial indigenisation laws on the mining sector.
Zimbabwe scrapped its controversial empowerment laws in 2018 and allowed foreigners to hold up to 100 percent ownership including in the mining sector.
Only platinum and diamond mining remained a preserve for locals with foreign ownership only allowed for a 41 percent stake. Promises were, however, made that the two sectors would also be opened for increased foreign ownership.
However, amendments brought through the Finance Act 2021 seem to have reintroduced indigenisation to the entire mining sector.
Section 3 (1) following the amendments in the Finance Act 2021 now reads:
“The State shall, by this Act, or through regulations under this Act or any other law secure that at least fifty-one per centum of the shares or other ownership interest of every designated extractive business, that is to say a company, entity or business involved in the extraction of such mineral as may be prescribed by the Minister in consultation with the Minister responsible for Mines and the Minister responsible for Finance shall be owned through an appropriate designated entity (with or without the participation
of a community share ownership scheme or employee share ownership scheme or trust, or both).”
In a statement to its members, the Chamber of Mines of Zimbabwe (Mines Chamber), which represents mining houses in the country, said the resultant wording of the amendments as introduced leave room for government to prescribe
minerals that shall be owned through appropriate designated entities.
The amendments, the Mines Chamber said, means the Indigenisation and Economic Empowerment Act is still a factor in play to be considered when assessing investments into Zimbabwe.
It said while on the surface it appears that no mineral is mentioned for compliance with the equity provision, all minerals are at risk of being prescribed for compliance.
“This appears to be a reversal of the policy position where the equity provision was removed in favour of empowerment requirements,” the Mines Chamber said.
Veritas Zimbabwe, a group of lawyers that provide information on the Laws of Zimbabwe, said the new amendment has “potential effect on the economy and also because of the surreptitious way it was enacted.”
“Foreigners will not get investment licences to engage in mining operations unless controlling interests in their businesses are held by an appropriate designated entity,” Veritas said.
The Mines Chamber is however hoping that it is the wording that did not come out as intended something which was corroborated by a senior government official who said the interpretation by some was “completely wrong.” – FIN24.