Gapare told local and international investors that the regulations had made life very difficult for the mining industry in Zimbabwe – especially coming at a time when most mines had been closed during the past two years and had to be reopened at huge cost.
“The mining industry needs between $5 and $6 million right now to get back on track,” he said. “As you know most mines were closed and were on care and maintenance for most of the period.” This was when Zimbabwe experienced record hyper-inflation at more than 231 million percent at the time of the last check by the Central Statistical Office (CSO).
“Immediately after the Indigenisation Act was passed the Rio Zim share price was down,” Gapare revealed. “Investors are still very worried about it and we need to come clean about it.”
He said it was difficult for an investor to come in at 49 percent as is currently the regulation. Under the new Indigenisation Act locals have to own at least 51 percent of any business operating in Zimbabwe especially firms listed on the Zimbabwe Stock Exchange (ZSE).
The Minister, Saviour Kasukuwere, has repeatedly warned that failure to adhere to these stringent regulations would result in government simply taking over the firms since they should be owned and operated by “indigenous Zimbabweans” anyway. Rio Zim has foreign shareholding and is among the wealthiest mining counters in Zimbabwe. Led by Josh Sachikonye, it has a market capitalisation of $43 474 166.80 on the bourse.
The share price currently stands at $1,40, but has been seriously “battling” to survive due to negative publicity from the local and international media about its huge debt. Press reports revealed that the mining giant was “over-borrowed” and could not service its debt resulting in financial institutions refusing to dish out more cash to the entity. Insiders say the mining concern could be in the red to the tune of more than $50 million, a debt which accrued at Barclays Bank of Zimbabwe Limited (Barclays) during the past months.
They said this was seen as a sign of “gross mismanagement” by the Rio Zim bosses, whose head office is in Harare. Rio Zim has, however, decided to down play the revelations, claiming that they were “alarmist”.
Post published in: Economy