On Wednesday this week, Zimbabwe Platinum Mines (Zimplats) publicly announced that it had amicably resolved a six-year long dispute with government which was seeking to compulsorily acquire part of its mining claims measuring 27 948 hectares. This dispute was pending in the courts of Zimbabwe.
Consequently, Zimplats agreed to release 23 093 hectares to government “to ensure participation by other investors in the platinum mining industry”.
Zimplats now owns 24 632 hectares with a new special lease valid for the lifetime of the mine. This is a significant development that warrants public scrutiny into how well the country’s mineral wealth is governed for the benefit of all Zimbabweans.
It is a positive development that this dispute was amicably resolved. But it must be noted that the dispute had been going for six long years, and such a lengthy period riddled with uncertainty for the country’s largest ever investor certainly raises questions on government’s commitment to property rights and Zimbabwe as an unattractive investment destination. Such disregard for investment agreements also provides scant comfort to existing and prospective investors.
Notably, Zimbabwe is one of the least attractive investment destinations according to Fraser Institute’s Policy Perception Index. Interestingly, Zimbabwe’s mineral potential is ranked among the top under the same organisation’s Mineral Potential Index.
This partly explains why, despite Zimbabwe’s abundant mineral wealth, the country is struggling to attract FDI to realise a sustainable development dividend from its mineral endowment.
One could also spin the agreement between Zimplats and government as positive in that the released land creates space for the entrants of new players in the platinum industry. In all mineral sectors, the entry of new players is largely problematic as most of the land has been taken.
It is noteworthy that the new Minister of Mines, Winston Chitando publicly stated during the Chamber of Mines annual general meeting held last month that from next year, government will enforce the law on renewal of mining titles.
Paying ground rental and mining inspection fees will no longer suffice, but evidence to back capital expenditure will be required. He stressed that this is not a new requirement at all.
Perhaps Zimplats was concerned by this development and it had no option but to release the ground. In this regard Chitando’s leadership is coming to bear, a man with strong private mining sector background.
Worryingly, however, Zimplats got a new mining lease valid for the life span of the mine. Its special mining lease was due to expire in August 2015. Terms and conditions of the new special mining lease has not been disclosed.
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