Small-scale miners told Minister of Provincial Affairs Mandi Chimene at a mining indaba here last week that some of them have found foreign investors but it was difficult to convince them to sign agreements because the law was a major barrier.
They said the 51-49% threshold should be revised downwards as it makes life hard for locals who do not have sound financial backing to make deals with foreigners. “Government should not just stick to 51-49 threshold because it does not work. We expect government to support us during such negotiations and give financial assurance,” said small-scale miner Douglas Maringe.
Other miners said they still need a lot of expertise and capital to invest in their business so it was difficult to arm-twist a potential investor to take up the 49 percent shareholder in such a scenario.
In response, Chimene, who does not have an economics background, was adamant that miners should not cry to partner foreigners. She said the resources belong to local people and therefore locals should form consortiums amongst themselves.
“We should not just rely on foreign partnerships. Let’s form consortiums of local people. These are our natural resources,” said Chimene.
Local economist Terry Douglas said the miners did not have sufficient leverage to negotiate with foreign investors because they had nothing to offer on table. For the 51-49 shareholding to work, government should avail adequate funding to local indigenous so that they could become financially independent.
“Government should relook at the Indigenisation model because as it stands no investor will invest his funds and expertise to become a minority shareholder. Government should flex its muscle because the economy is shrinking and its citizens are suffering,” said Douglas.
He added that Chimene was speaking from an uninformed point of view. He said it was impossible to have a partnership of financially crippled people without equipment and expertise in a specialised line of business such as mining.
Post published in: Business