17 January 2013

Zimbabwe: Panic Grips Mining Firms

ANXIETY has gripped mining companies as Government prepares legislation to give farmers the right of first refusal on minerals discovered on farmland. Mines and Mining Development Minister Obert Mpofu recently said farmers would have the right of first refusal over minerals on their farms.

The decision is designed to both empower indigenous farmers and to prevent bitter clashes that have erupted between farmers and miners over minerals in or discovered on resettlement farms.

Such instances were most common in resettlement areas where companies and individuals already held mining titles for minerals in the areas.

Previously, miners had exclusive rights to peg or prospect for minerals once they obtained permission from Government, even without consulting the farmers, but the new legislation will require that the farmer be consulted and grant their consent first.

Dr Mpofu said right of first refusal would be bestowed on farmers once amendments to the Mines and Minerals Act have been approved by Parliament. Cabinet has already approved the proposals.

"We are saying that minerals found on the farms or pieces of land acquired by Government under the land reform programme will be offered to the owners of that land who will be given the first right of refusal," Dr Mpofu was quoted as saying.

Mining sector sources told Herald Business the plans to give farmers priority over minerals on their farms had sent shock waves across the sector.

This is particularly the case, considering that the new legal provision would include existing mining claims in areas Government acquired for resettlement.

"This, if introduced, will affect investment in the mining sector unless the provision is well articulated," said the sources.

"This also sounds like usurping the power of the President, as mineral rights reside in the hands of the State, but practically the claims are now being given to the farmers through right of first refusal.

"The challenge is that this will give farmers the right of first refusal and who would decline the offer where diamonds or gold have been discovered?

"What will happen to the likes of Zimplats, Rio Zim and other investors who do not own farms? Big gold mines such as Metallon Gold's Red Wing and Mazowe mines are located on farms," the source said.

However, inevitably, this would give farmers bargaining power, for those that could seize the opportunity to enter into mutually beneficial partnerships and joint ventures for mine development

But Geo Associates director Mr Paul Chimbodza also contends that transferring mineral rights to landowners would create complexities as other big landowners, such rural district authorities, would lay claim to minerals found in areas under their jurisdiction.

However, the biggest challenge would be the painstaking process of convincing farmers to agree to release claims to investors to mine on their land.

Mineral rights are vested in the State and only the President has authority to grant them after one has applied through the Ministry of Mines and Mining Development.

While mining houses, especially the big ones that held several but undeveloped titles, whine as mineral rights slip away to farmers, it will be the biggest empowerment platform for farmers who will seek to fully exploit the lucrative opportunity.

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