- December 21, 2018
- Posted in LOCAL
…a major blow to the mining sector
S&P Dow Jones announced that they will be removing Zimbabwean domiciled companies from its indices from 24 December due to serious cash shortages in the country, high inflation of the bond money and foreign currency shortages.
What does this mean for the miner?
Dickson Rudairo Mapuranga
Miners are of the view that the move to remove Zimbabwean companies from Standard and Poor African indices will negatively impact on Zimbabwe’s development and investment opportunities in the mining sector, according to S&P Dow Jones Indices statement, Zimbabwean companies will be rated at zero price in 14 different indices thereby reducing the chances of Zimbabwe attracting foreign investors, the move according to experts will lead to Zimbabwe only attracting bogus investors mainly who have nothing to lose but more to gain due mining exploits.
According to one mining expert, this will to some extent affect Large Scale Mines particularly those partnered with publicly traded companies and small scale miners to a greater degree are safe, although the effect will be felt by every Zimbabwean, this will have a slim effect on Zimbabwe’s economy which already is in shambles.
“The truth is our risk rating was already unfavorable. Small Scale Mines will not be affected as much, private investment has always been measured differently regarding investment decisions into small scale operations, potential for return on investment being the major driving factor. Investment prospects for the Small Scale Miner in Zimbabwe will remain unaffected because of the great growth potential in our sector and opportunity to obtain significant returns, besides our type of investment has a higher risk tolerance and does not necessarily rely on S&P when making decisions.”
Some miners are of the view that, Standard and Poor is an American firm, under the authority of Americans, therefore, with United States’ current stance on Zimbabwe, it is bound to negatively portray Zimbabwe to the international community. However, miners are positive that this move will not affect the mining industry in anyway, since miners have been operating without the influence of S&P, and the fact that not all investors abide with S&P.
‘’… it’s an American company. America currently doesn’t view us in a good light, so I’m not surprised. Do you think all investors abide with this S&P thing? Definitely not. That’s why the Chinese and Russians are making so much headway into Africa.” Said one miner.
One mining expert said that, miners do not care about these ratings which mainly focuses on other firms that are not in the mining sector, the mining industry will sustain itself and can even go to become bigger and attract attention from these rating organisations.
“Personally I don’t care about S&P ratings, they never rated China until China was already too big for them to ignore. Anyway, what I do agree on is the fact that we are going nowhere slowly” he said.