Mining ZimbabweLatest Mining News, Policy and Industry Updates

Australia Stock Exchange-listed Invictus Energy Ltd achieved a significant milestone, securing over 90% shareholder approval for several key resolutions during its October 2024 General Meeting, Mining Zimbabwe reports.

By Rudairo Mapuranga

The ratification of shares under Listing Rules 7.1 and 7.1A received 93.43% and 95.59% approval, respectively. This reflects investor confidence as Invictus advances its oil exploration in Zimbabwe’s Muzarabani Basin, one of Africa’s largest undrilled oil prospects. These share issuances have been pivotal in securing resources to fuel ongoing exploration efforts.

While there was slight resistance concerning options granted to key management personnel, these resolutions passed successfully. Robin Sutherland, Chief Operating Officer, received 56.88% approval for his option issuance, while Managing Director Scott Macmillan garnered a stronger 64.87%. Although these percentages are lower compared to share ratifications, they demonstrate a general endorsement of the leadership team’s performance.

Moreover, the Remuneration Report saw overwhelming support, with 94.89% of votes in favour. This suggests satisfaction among shareholders with how the company structures executive compensation, particularly as it ties compensation to performance, aligning with investor interests.

These strong results provide Invictus Energy with the necessary backing to continue its ambitious exploration and development plans in Zimbabwe’s rapidly evolving energy sector. The company’s flagship Cabora Bassa Project in the Muzarabani Basin remains at the core of this strategy, attracting both local and international attention for its potential to unlock significant oil and gas resources.

The October 2024 meeting was crucial as it came at a time of immense opportunity for Invictus Energy. The robust shareholder endorsement of capital-raising measures and executive performance incentives ensures that the company is well-capitalized to navigate the challenges ahead. The Cabora Bassa Project, specifically, has been heralded as a potential game-changer for Zimbabwe’s energy independence, and the international spotlight on this project continues to grow.

The successful resolutions passed during the General Meeting confirm that shareholders are aligned with the company’s direction. With the financial and managerial backing secured, Invictus is poised to advance its exploration efforts and deliver long-term value for its investors, solidifying its position in Zimbabwe’s burgeoning oil and gas sector.

Despite the lower approval rates for related-party transactions, the overall outcome demonstrates significant trust in Invictus’ leadership. Shareholders’ slight caution toward the allocation of company equity to executives is not uncommon, especially in junior exploration companies where capital is critical for operations. However, the approval of these options signifies general satisfaction with the company’s governance practices.

As Invictus Energy moves forward, the approval of key resolutions at the General Meeting provides a strong foundation for future growth. The backing of shareholders will be essential as the company advances its ambitious goals, with the potential for oil and gas discoveries in Zimbabwe’s Muzarabani Basin making Invictus a significant player in Africa’s evolving energy landscape.

Implats owned Zimplats, is set to undergo a significant change in its auditing arrangements following the impending exit of Deloitte from the Zimbabwean market, Mining Zimbabwe can report.

By Rudairo Mapuranga

The announcement, made in the lead-up to Zimplats’ Annual General Meeting (AGM) scheduled for October 24, 2024, confirmed the appointment of Axcentium as the company’s independent auditor.

This decision follows Deloitte Zimbabwe’s announcement of its plans to exit the country by October 31, 2024. Deloitte Zimbabwe is part of the Deloitte Africa network.

According to Zimplats, the decision to replace Deloitte with Axcentium followed a comprehensive due diligence process led by the Zimplats board, which endorsed Axcentium’s appointment. The new firm will officially take over from Deloitte, pending shareholder approval at the upcoming AGM.

The departure of Deloitte from Zimbabwe marks the end of an era for one of the country’s most established professional services firms. Deloitte Zimbabwe has long been recognized as a major player in the audit and consulting landscape, operating as part of the broader Deloitte Africa network. However, senior partners within Deloitte Zimbabwe recently agreed to undertake a management buyout (MBO), which will see the firm exit the Deloitte network and operate independently under a new brand.

In March, Deloitte Zimbabwe issued a statement explaining that the exit was the result of a mutual decision reached after extensive discussions between Deloitte Africa and its Zimbabwean branch.

According to Deloitte Zimbabwe Managing Partner Charity Mtwazi, the move signals a new phase for the firm, which will continue serving its clients in the country under the new brand identity—Axcentium.

Mtwazi emphasized that while departing from the global Deloitte brand marks a transition, the firm’s commitment to delivering high-quality services in Zimbabwe remains unchanged.

“With Deloitte’s exit from Zimbabwe, we will enter a new phase. We are excited to continue our legacy of serving clients in Zimbabwe, but under a different brand,” said Mtwazi.

She added that rebranding to Axcentium would allow the firm to tailor its services more closely to the unique needs of the local market.

Axcentium will retain the core team of professionals that clients have relied on at Deloitte Zimbabwe, ensuring continuity of service.

The rebranding is seen as more than just a change of name, reflecting a shift in focus toward aligning the firm’s offerings with the specific challenges and dynamics of the Zimbabwean market.

Axcentium’s leadership has stressed the importance of maintaining the highest professional standards, even as it exits the Deloitte Africa network.

“Axcentium represents a new chapter in our story. It is a strong statement of agility, growth, and a bold vision for the future. Our goal is to leverage our deep-rooted expertise and local knowledge to deliver solutions that resonate with the Zimbabwean business community,” Mtwazi said.

Axcentium plans to embrace innovation and thought leadership as it navigates Zimbabwe’s challenging economic environment, characterized by currency volatility, inflation, and regulatory shifts. The firm has pledged to stay ahead of industry trends and employ cutting-edge technologies to enhance client value, particularly through the use of real-time data analytics to inform decision-making.

For Zimplats, the appointment of Axcentium represents a strategic decision to ensure continued audit excellence amidst the changing professional services landscape in Zimbabwe. Deloitte has served as Zimplats’ independent auditor for many years, providing audit and assurance services for one of the country’s most significant mining operations. With the transition to Axcentium, Zimplats aims to maintain the same high standards of financial transparency and accountability that are critical for its operations, particularly in an industry where investor confidence is paramount.

The decision to appoint Axcentium follows a period of strategic introspection for many Zimbabwean companies, as the country’s economic and regulatory environment continues to evolve. For Zimplats, a leading player in the mining sector, ensuring that its financial operations are audited by a reliable, experienced firm is essential for maintaining investor trust and securing future investments.

Zimplats’ management assured stakeholders that Axcentium had been selected after a rigorous evaluation process and expressed confidence in the firm’s ability to provide the same level of expertise that Deloitte had offered.

“We are confident that Axcentium will deliver the high-quality services that Zimplats requires, and we look forward to working with them as we continue to grow our operations,” a Zimplats representative stated.

Zimbabwe’s mining sector is struggling to attract substantial investment from U.S. companies, despite its rich mineral resources. Experts cite policy inconsistency and currency volatility as the primary reasons for investors’ reluctance to enter the market. In stark contrast, Chinese companies have increasingly dominated the sector, raising concerns about the long-term implications for Zimbabwe’s economic independence and development.

A significant challenge facing potential investors is the government’s history of policy flip-flops. Frequent changes to regulations and incentives create an unpredictable business environment, causing uncertainty for companies considering long-term investments. This lack of consistency can deter investors who seek stable conditions to mitigate risks and ensure the viability of their ventures.

U.S. companies often weigh the rule of law, contract enforcement, and regulatory stability heavily when making investment decisions, and Zimbabwe’s policy inconsistencies have not provided the assurance they seek.

The Victoria Falls Stock Exchange (VFEX) was initially viewed as a beacon of hope for attracting mining companies. Launched with incentives, such as exempting firms from a 25% export levy if they were listed on the exchange, VFEX successfully attracted notable players like Caledonia Mining and Padenga.

As investment analyst Tafara Mtutu, head of research at Morgan and Co., explained,

“When the VFEX was commissioned, mining companies could save significantly by keeping all their USD if they listed there. However, within a year, the government reversed these incentives, and since then, we haven’t seen a mining company listing on the exchange.”

The abrupt removal of these incentives, made without prior consultation with industry leaders, has severely impacted investor confidence. This lack of stability has led many to question the investment climate, and since these benefits were withdrawn, no new mining companies have listed on the VFEX, underscoring the urgent need for stable and predictable policies.

Currency volatility further complicates the investment landscape. Over the past six months, Zimbabwe has experienced a rapid transition between three currencies: the U.S. dollar (USD), the Zimbabwean dollar, and the Zimbabwe Investment Currency (ZIC). Such fluctuations create an unsettling environment for investors who prefer to operate in stable currencies.

While bringing capital into the country can be relatively straightforward, challenges in withdrawing funds deter potential investors. Many fear that barriers to capital mobility could prevent them from recouping their investments, further contributing to the hesitancy surrounding U.S. investments in Zimbabwe.

In contrast to the U.S. challenge, Chinese firms have aggressively expanded their presence in Zimbabwe’s mining sector. However, the majority of these investors often do not engage in meaningful corporate social responsibility (CSR) initiatives, which leads to limited benefits for local communities. Additionally, there have been reports of human rights abuses associated with Chinese mining operations, raising serious ethical concerns. The growing dominance of Chinese companies raises questions about the balance of power in the sector and its implications for local communities and the environment.

The benefits of attracting U.S. investors, as opposed to relying heavily on Chinese firms, are manifold. U.S. companies often prioritize ethical practices, adhere to stricter environmental standards, and engage more meaningfully in CSR activities. This could lead to improved local infrastructure, better community relations, and sustainable development practices. Furthermore, U.S. investment could enhance Zimbabwe’s international standing, potentially opening doors to more diverse sources of investment and trade.

Experts warn that as Chinese investments continue to grow, Zimbabwe may find itself increasingly dependent on foreign powers, potentially undermining its sovereignty and long-term economic goals. The influx of Chinese capital also raises concerns about the transparency and sustainability of mining practices, as local regulations are often overlooked.

As Zimbabwe’s mining sector holds significant potential, addressing these pressing issues will be crucial for revitalizing U.S. investment and ultimately benefiting the country’s economy. Balancing foreign investment sources will be vital for ensuring sustainable development and protecting Zimbabwe’s interests.

The Government of Zimbabwe has called on stakeholders within the mining sector to collaborate and strengthen the value chain by implementing the local content strategy, Mining Zimbabwe can report.

By Ryan Chigoche

Currently, the local manufacturing sector contributes just 15% to the mining industry, with approximately US$2.1 billion of the US$5.4 billion in revenue generated being spent on imports, indicating a troubling reliance on foreign products and minimal local procurement.

In June 2019, the Government of Zimbabwe approved the Local Content Strategy (LCS) to promote the utilization of domestic resources across various value chains. This strategy aims to create a supportive ecosystem within industries, aligning with the vision of transforming Zimbabwe into a highly industrialized economy. Key objectives of the LCS include increasing average local content levels in prioritized sectors from approximately 25% to 80% by 2023, raising capacity utilization from around 45% to 75%, and boosting manufactured exports in these sectors by at least 5% annually between 2019 and 2023. However, these objectives have yet to be fully realized, as the mining sector continues to heavily rely on imports, underscoring the need for more effective implementation of the local content policy.

Addressing industry suppliers recently, Thomas Wushe, Permanent Secretary in the Ministry of Industry and Commerce, emphasized the necessity of collaboration to ensure the success of the local content policy. Local manufacturers in Zimbabwe are predominantly small-scale and often face challenges due to limited resources and outdated equipment. This not only hampers efficiency but also affects product quality, making it difficult to meet the mining sector’s standards.

“I urge each one of you—government officials, industry leaders, and community representatives—to collaborate toward realizing this vision of enhanced local content in Zimbabwe’s mining sector. Together, we can ensure that our rich mineral resources contribute not only to national wealth but also uplift every citizen from different angles,” Wushe stated.

He further added, “To enhance local procurement in Zimbabwe, we propose the following: establish a local content rating system for tenders, enforce a mandate that at least 60% of government procurement comes from local manufacturers while limiting imports to non-locally produced items, institutionalize the Buy Zimbabwe Programme, harmonize standards and specifications to promote the procurement of locally available goods, and engage with the Procurement Regulatory Authority of Zimbabwe to refine tender modalities and revisit the definition of a local producer. Together, these measures will support local industries and foster economic resilience.”

Mining is a core sector of the Zimbabwean formal economy, significantly contributing to GDP, employment, and export receipts. Both the African Union’s Mining Vision (AMV) and the Southern African Development Community’s (SADC) Regional Mining Vision (RMV) emphasize the importance of enhancing mineral extraction and processing linkages, particularly in the mining supply chain, through increased local content.

Success stories of local content policies from countries like Angola, South Africa, Zambia, Tanzania, Nigeria, and Brazil highlight the potential benefits. South Africa, for example, identifies local content as a strategic industrial policy instrument to reduce the trade deficit, foster emerging industries, and increase the tax base. The South Africa Mining Charter of 2019 stipulates that a minimum of 70% (by value) of mining goods must be manufactured or assembled in the country, requiring at least 60% local content during manufacture or assembly, and 80% of services required by holders.

To bolster local procurement and foster economic development in Zimbabwe, several key initiatives can be implemented. One primary strategy is to prioritize preferential local procurement. By favoring local suppliers in government contracts, this initiative aims to boost local economies and ensure financial resources circulate within communities.

Another essential component is funding to capacitate local suppliers. Allocating financial resources to enhance their capabilities will enable these suppliers to meet public procurement demands effectively. This approach will improve the quality of goods and services while creating numerous business opportunities for local firms, fostering a competitive and innovative marketplace.

Inclusivity is also critical. By creating opportunities specifically for women, youths, and people with disabilities, the framework promotes broader economic participation, leading to significant advancements in entrepreneurship and contributing to a more equitable economic landscape.

Capacity building and employment creation are vital aspects of these efforts. Investing in training programs will enhance the skills of the local workforce, preparing them for the demands of modern industries, strengthening local businesses, and creating jobs.

The transfer of technology is another important facet. Encouraging technology transfer to local firms can improve efficiency, productivity, and competitiveness. Coupled with a strong emphasis on research and development (R&D), this will drive innovation, leading to the development of new products and services tailored to local needs.

Fiscal support plays a crucial role in this framework as well. By providing fiscal incentives and support to local businesses, the government can help them thrive in a competitive environment. This support, along with local production and consumption awareness programs, will raise community awareness about the benefits of supporting local businesses, encouraging greater investment in local economies.