Chamber of Mines president Winston Chitando told delegates at a mining indaba that the mining sector needed a capital investment of well over US$8 billion for it to meaningfully contribute to economic recovery.
“Last year we witnessed investment (in mining) of US$80 million but this year the figure went up to US$260 million,” said Chitando.
“These figures indicate an appetite for investment in the country’s mining sector,” he said.
The country’s mining sector currently accounts for 50% of total exports and is a major source of foreign direct investment.
Investors have probably adopted a wait and see attitude as they watch how the indigenisation debate, that requires foreign-owned companies to cede a 51% stake to locals, pans out.
Chitando said the “mining industry has been and continues to be in discussions with government seeking a broad framework that allows government and companies to meet their developmental goals”.
Economic Planning and Investment Promotion minister Tapiwa Mashakada, speaking at the same event, said that despite an improvement in mining sector investment applications, the challenge presently lies in their full implementation.
“Of the projects approved by the Zimbabwe Investment Authority as at June 2011, the mining industry had a total of US$1,7 billion worth of investment applications approved,” said Mashakada adding that this was the highest investment application figure.
“The challenge now is to ensure that these projects are consummated,” he said. He told delegates that the mining sector underpins the country’s economic revival efforts but investment was only 4% of gross domestic product (GDP).
He said Asian countries had investment standing at 30% of GDP. Ian Kramer, the director of Energy and Natural Resources at KPMG said governments must ensure and guarantee stability in terms of fiscal policy as the yearly introduction of taxes is a deterrent to smooth investment inflows.
“The mining industry is asking for security of tenure and the need to know the rules of engagement on an investment. “Efforts also need to be step-ped up in attracting massive investment in infrastructure development,” Kramer said.
THE TERMS OF INDIGENISATION
Under indigenisation regulations, a controlling interest of any foreign-owned mining company with a net asset-value of US$1 is required to be held by either the National Indigenisation and Economic Empowerment Board (NIEEB) or the Zimbabwe Mining Development Corporation (ZMDC), or any company incorporated by the two.
It can also be transferred to an employee share ownership scheme or trust, management share ownership scheme or trust or community share ownership scheme or trust.