Lower indigenisation thresholds for minerals – Mashakada

The government should lower indigenisation thresholds for beneficiation if its ban on unprocessed mineral products is to succeed, says the MDC shadow minister of industry and commerce, Tapiwa Mashakada.

“The key to foreign direct investment and reindustrialisation is the business environment, which is presently inimical to the two. Indigenisation remains the biggest obstacle apart from the legitimacy of the government and the implication on investor confidence.” – Tapiwa Mashakada.
“The key to foreign direct investment and reindustrialisation is the business environment, which is presently inimical to the two. Indigenisation remains the biggest obstacle apart from the legitimacy of the government and the implication on investor confidence.” – Tapiwa Mashakada.

Beneficiation refers to processes that add value to materials. This includes separating minerals and the worthless gangue in ore and, in the case of diamonds, processes such as cutting and polishing.

The government has set the end of December 2014 as the deadline for exporting raw platinum concentrate and has set this Saturday as the closing date for firms to submit proposals for establishing value-addition facilities.

Producers of base metals, such as nickel and chrome, are also expected to comply with the requirements.

Mashakada told The Zimbabwean that mineral beneficiation would be a good policy for the country but warned that, because such undertakings required huge amounts of capital, the move could be destined to fail given the country’s indigenisation laws.

“Beneficiation of primary products, including minerals, is a good policy. It is no good for the economy to continue to export jobs to other countries let alone reimport the same stuff,” Mashakada said.

“The only problem is indigenization, which discourages foreign investors because setting up plants for value-addition costs millions of dollars, if not a few billion,” Mashakada said. “Investors will not set up businesses when they stand to lose controlling interest.”

Mashakada, who served as minister of economic planning and investment promotion in the inclusive government, said that indigenisation thresholds for beneficiation should be lowered to encourage investors.

Until the ban comes into effect in December, mining companies will be levied 15 per cent on exports of raw platinum.

Zimbabwe has the largest known platinum reserves in the world after South Africa. There are three major platinum mines in the country – Zimplats in Mhondoro-Ngezi, Mimosa in Zvishavane and Unki Mine in Shurugwi.

The expected beneficiation projects will be substantial in size with the companies required to set up their own infrastructure, including electricity supplies.

The directive from the mines ministry said the proposals from the companies should demonstrate expected partnerships with the government and set clear timelines for the construction of the refineries.

Meanwhile Mashakada said the country, which has recently seen a surge in company closures and retrenchments, was still perceived as a hostile environment for doing business.

“The key to foreign direct investment and reindustrialisation is the business environment, which is presently inimical to the two,” Mashakada said. “Indigenisation remains the biggest obstacle apart from the legitimacy of the government and the implication on investor confidence.”

He said that Zanu (PF)’s interest remained in retaining political power and not in improving the economy.

“We expect the deterioration of FDI and further deindustrialisation under Zanu (PF). Zanu (PF) has never been bothered by the economy but only by political power. The economic policies are for footnoting.”

Business analysts have castigated the party for moving from one economic blueprint to the next, leaving plans partially implemented. Recently the government embarked on the Zimbabwe Agenda for Sustainable Socio-Economic Transformation although the Medium Term Plan was yet to finish its course.

“There was no reason to abandon the MTP altogether because cabinet had adopted it for five years. However if Zanu (PF) wanted to incorporate their manifesto, they should have simply revised the MTP rather than throw the baby out with the bath-water,” Mashakada said.

According to the Zimbabwe Congress of Trade Unions, more than 300 workers are being laid off each week. More than 300 companies have been liquidated in recent months and149 companies have filed for liquidation at the High Court.

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