25 May 2012

Zimbabwe: RBZ Blacklists Zimplats - Blocks Platinum Mine's Access to Banking Services

Photo: Zimplats
Mining underground at Ngezi, a Zimbabwean platinum mine

THE Reserve Bank has directed banks to stop offering banking services to Zimplats after the platinum producer defied an order to repatriate funds in its offshore accounts. In February, the Government put in place a policy compelling mining firms to close offshore accounts and transfer the money into local accounts, but Zimplats did not comply.

RBZ Governor Dr Gideon Gono said this will not be allowed to continue, warning that any bank that did not take heed will face "serious penalties".

RBZ senior division chief (Exchange Control) Mr Morris Mpofu yesterday directed banks not to process any transactions from Zimplats.

"Due to failure by Zimplats to adhere with the provisions of this directive to close their offshore accounts and transfer their funds to a bank onshore as directed, exchange control has taken corrective administrative measures to enforce

compliance," read part of the letter.

"In this regard, authorised dealers are hereby advised to stop processing and facilitating international or any cross border payments on behalf of Zimplats . . . (and) to stop processing and facilitating any exports, including the issuance of export documentation, electronic or otherwise on behalf of Zimplats."

Zimplats spokesperson Mrs Busi Chindove yesterday said Zimplats had received the RBZ directive and had no objection to it.

"Zimplats acknowledges receipt of the RBZ directive. However, we must say we were surprised because in reality Zimplats had no objection to the initial communication from the RBZ. To this end, the company is now paying for 75 percent of its expenditure in Zimbabwe. The remaining 25 percent related to observing the tenets of its foreign loans that were raised with the knowledge, support and approval of the monetary authorities. Zimplats is urgently liaising with the Monetary Authorities to resolve this matter amicably," Mrs Chindove said.

Earlier yesterday, Dr Gono had told a Parliamentary Portfolio Committee on Small to Medium Enterprises that he will take drastic action on Zimplats.

"Just this morning, before I came to this meeting, I had a running battle with one of the companies that sought to defy the central bank directive," said Dr Gono.

"This company is Zimplats. I have said no to that. If it defies, everyone else will defy. I will not accept a situation which causes anarchy."

Zimplats once resisted the indigenisation policy, but later submitted an acceptable plan on how it intends to allocate at least 51 percent of its stake to indigenous people.

In an interview after the session, Dr Gono said other big mining companies like Mimosa had complied.

Dr Gono said Zimplats accounted for at least 25 percent of the country's mining exports.

Zimplats, said Dr Gono, was the only firm in this country that sought to defy the RBZ, saying executives from the company were now inciting other firms to disregard the directive.

Mimosa, owned by Implats, the majority shareholder in Zimplats, had complied.

"The same shareholder is now questioning why Mimosa management should not learn from Zimplats' management style, political and other connections.

"We are not taking their operating licence . . . That's for Minister (Dr Obert) Mpofu. I am merely expelling them from using the country's financial infrastructure of which I am the chief superintendent," said Dr Gono, adding Zimplats was free to appeal to the Minister of Finance.

"They are free to appeal to my Minister and only when and if the Minister gives me instructions otherwise, then they can operate a bank account but without that, they must comply with my directives borne out of exchange controls and directives of the central bank," said Dr Gono.

He said defiance by any bank to the directive will not be tolerated.

In March, Mines and Mining Development Minister Dr Mpofu said Cabinet resolved that all mining firms should bank with local banks after it emerged that billions of dollars in export earnings were kept offshore.

This was happening at a time when the economy was facing serious liquidity constraints.

In February, Dr Gono and Finance Minister Tendai Biti also announced that with effect from March 1 2012 banks will be required to maintain a maximum of 25 percent of their nostro accounts balances offshore to meet their day-to-day international payment obligations while repatriating the balance. The maximum will rise to 30 percent with effect from June 1 this year.

This was intended to increase liquidity in the local market, which has been suffering from shortfalls since the introduction of multiple currencies in 2009.

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