By
Daniel chigundu
THE Indigenisation
Act and Regulations have rendered the operating environment unattractive to
investment especially in platinum mining, Tetrad Securities has said.
Under the Act (indigenisation)
foreigners with businesses operating in the country are required to cede 51
percent of shareholding to locals, reportedly at no cost.
High ranking Zanu PF officials
have repeatedly ascertained that by virtue of being indigenous Zimbabweans,
locals are automatically entitled to free majority shareholdings in any foreign
own business because they own the country and the resources being exploited.
However this type of
indigenisation has been castigated by both local and international economists
who argue that it is not suitable for the current economic situation obtaining
in the country.
Earlier in the year Paul Jourdan,
a consultant hired by the Ministry of Mines to craft the country’s Mineral
Policy said the current indigenisation policy was wrong because the country is
desperate for FDI to address skills and capital gap.
In its weekly market watch for the
week ending November 15, 2013 Tetrad said while the country could benefit from
the anticipated platinum deficit, the lack of investment in platinum mining due
to indigenisation presents a worrying situation.
“We are encouraged by the platinum
report in as far as Zimbabwe’s export earnings are concerned. With Zimbabwe
having the second largest deposits of platinum, we believe the deficit position
will somehow support prices.
“With platinum prices expected to
trade between US$1,360 and US$1,580 an oz we are of the view that Zimbabwe will
be able to lift its export earnings.
“Our major worry however relates
to the indigenisation regulations which have been reported to be dragging down
total production from Zimbabwe.
“Whilst the platinum sector has to
a larger extent not been affected by indigenisation compared to other mining
sectors, we maintain our view that the investment climate is not conducive.
“There is need for policymakers to
formulate policies that encourage investment inflows in platinum production and
also need for value addition so that Zimbabwe generates more value from its
minerals,” said Tetrad.
Overall, the interim platinum
market is set to record a much wider deficit of 605,000oz in 2013 compared to
last years’ 340,000oz.
This will be the third consecutive
year in deficit for the metal. Platinum prices have however been soft during
2013 as they have been unresponsive to supply side concerns mainly from strikes
in South Africa.
The metal’s prices have fallen
from a peak of US$1,730 in February to trade below US$1400. Into the future,
Johnson Matthey forecasts another deficit for 2014 as demand will continue to
outstrip supply.
Global supply for platinum on the
other hand is expected to grow by a marginal 1.59 percent to 5.74million oz in
2013. According to the report much of the 1.59 percent growth is expected to
come out from Zimbabwe.
This country is expected to register
a record production of 400,000oz of platinum, which is an 18 percent increase compared
to 2012’s production of 340,000 oz.
The growth is expected to emanate from Zimplats’
Phase 2 expansion which is expected to ramp up production at the mine. South
Africa’s production which accounts for close to 75 percent of platinum supplies
is expected to remain largely unchanged mainly affected by the legal and illegal
strikes that have hit the sector.-
