Kgomotso Mathe
6 July 2009
Johannesburg — ZIMBABWEAN Finance Minister Tendai Biti shocked the markets on Friday when he announced that Zimbabwe would re- evaluate all mining contracts and introduce a "use it or lose it" policy for its mining industry under a proposed law.
The vetting of mining contracts by Zimbabwe's unity government of President Robert Mugabe and Prime Minister Morgan Tsvangirai is surprising, coming at a time when Harare is wooing investors to help repair a battered economy.
However, Biti was at pains to explain that the new approach would help revive the country's battered economy, hit by political turmoil and the introduction of laws limiting foreign ownership of businesses.
Mining has become the leading source of foreign exchange, with gold accounting for a third of exports, but political turmoil, lack of energy and unfavourable regulatory rules have led to several mines closing.
The unity government has prioritised policy stability to encourage international investors to unlock funds to revive business.
Biti also denied newspaper reports on Friday that Zimbabwe -- battling to raise $10bn it says is required to rescue the economy -- will receive $5bn in loans from China in return for platinum concessions.
He also denied a claim by Tsvangirai that Zimbabwe had won a $950m credit line from China. "There's no foundation at all in reports that we have received $950m from China."
Biti said Zimbabwe was seeking an $80m credit facility from the Development Bank of Southern Africa to revamp its Hwange thermal power station and increase coal output at a nearby mine that supplies coal to the plant.
Giving reasons for amending mining laws, Biti said Zimbabwe would be complying with the new standards for extractive industries the World Bank was insisting on.
The law would introduce the concept of "use it or lose it" for mining claims.
"It will also introduce the re-evaluation of every mining contract that has been signed in Zimbabwe."
Not all experts see the law negatively. Absa gold trader Byron Woods said yesterday the policy would give miners "an opportunity to grow and invest in their own mines without mediators. They no longer have to sell to the central bank, which is a good thing. And now miners can do what they have to do -- mine."
Woods said doing away with stringent laws that had crippled the industry over the years would mean that in common with other countries, Zimbabwean miners would now be expected to report to the central bank on their trading only monthly.
Big mining groups with interests in Zimbabwe include Impala Platinum Holdings ( Implats ), Anglo Platinum ( Angloplat ) and Rio Tinto.
Implats and Angloplat officials said they were not aware of Zimbabwe's plan to recheck mining contracts, and would wait for more details before commenting.
"We are not aware of that, and that's all we are going to say," said Implats spokesman Rob Gilmour.
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I hope this works out for Zimbabwe but if it does not do not blame the rest of the world!