The minimum compliance requirements by foreign owned mining businesses...
On 25th March 2011 in a Government Gazette Extraordinary, the Government issued amended Regulations detailing the minimum compliance requirements by foreign owned mining businesses. The regulations issued by the Ministry of Youth Development, Indigenisation and Empowerment are summarised as follows:
- A controlling interest or 51% of any foreign owned mining company with a net asset value of at least US$1 is required to be held by the following designated entities:
(a) the National Indigenisation and Economic Empowerment Fund ("NIEEF"); or
(b) the Zimbabwe Mining Development Corporation ("ZMDC"); or
(c) any company or other entity incorporated by the ZMDC or the NIEEF; or
(d) a statutory sovereign wealth fund that may be created by law; or
(e) an employee share ownership scheme or trust, management share ownership scheme or trust or community share ownership scheme or trust.
- All foreign owned mining companies are required to submit indigenisation plans in compliance with the regulations within 45 days of the issue of the regulations, namely by 9th May 2011.
- The approved indigenisation plan should be achieved within a period of 6 months, namely, issue of shares or interests to the designated entities. The Minister responsible for indigenisation may however grant a 3 month extension for compliance.
- The value of the shares to be disposed of to the Government agencies - NIEEF, ZMDC and the sovereign wealth fund when created, shall be calculated on the basis of valuation agreed to between the Minister and the company concerned and shall take into account the State’s sovereign ownership of the mineral or minerals exploited or proposed to be exploited by the company.
The Regulation detailing the Minimum Requirements for Indigenisation are counter to an earlier declaration of support for the mining industry.
"Government has no intention of expropriating the mining industry. No mine has been nationalized since independence. The record speaks for itself."
President Robert Mugabe,
3rd June 2010
The latest Regulations also established sector-specific boards to advise the Minister for Youth, Indigenisation and Empowerment on the levels of indigenisation and the periods over which indigenisation should be implemented on a sector-by-sector basis. The mining sector board has been appointed but it has not yet made its recommendations to the Minister