The country’s biggest platinum producer, Zimbabwe Platinum Holdings (Zimplats) says the Indigenisation and Economic Empowerment Act (Chapter 14:33) is yet to be amended to give weight to Government pronouncements to remove platinum miners from the reserve list.
This is despite the amendments that were made via the 2018 Finance Amendment Bill.
“Government, through the 2018 Finance Amendment Bill amended the Indigenisation and Empowerment Act and platinum and diamonds are now removed from the reserve list and shareholding will depend on negotiations with investors,” said the Treasury boss while presenting the Mid-Term Fiscal Policy Review.
“Subsequently, the Indigenisation and Economic Empowerment Act will be repealed and replaced by the Economic Empowerment Act, which will be consistent with the current thrust “Zimbabwe is Open for Business”.
The Indigenisation and Economic Empowerment Act is, however, yet to be repealed.
Zimplats, in its 2019 Integrated Report said it was still in engagement with Government over the matter.
“Following the amendments made by the Finance Act, 2018, the Government made a number of public pronouncements that reflected new thinking, indicating Government’s intention to repeal the 51 percent indigenous equity requirement for the diamond and platinum mining sectors.
“On August 1, 2019, the Minister of Finance and Economic Development presented the 2019 Mid-Year Budget Review and Supplementary Budget to the Parliament of Zimbabwe.
“The minister announced that platinum and diamond miners would now be removed from the reserve list and essentially that the 51 percent/49 percent shareholding structure would therefore no longer be required for platinum miners,” said Zimplats.
“The minister stated that the Indigenisation and Economic Empowerment Act would be repealed and replaced with an Economic Empowerment Act, which the Minister stated would be consistent with the “Zimbabwe is Open for Business” thrust.
“However, the law is yet to be amended in line with these pronouncements. Zimplats will continue to engage the Government for clarity on this matter.”
The Indigenisation and Economic Empowerment Act worked to discourage and alienate much-needed foreign direct investment (FDI) and investment as the way it was implemented threatened business closures.
Around 2013, the Indigenisation programme threatened a lawfully and morally binding agreement between Zimplats and Government.
Meanwhile, Zimplats reported an increase in full year profits to US$144,8 million for the year ended June 30, 2019 from US$2,6 million in the prior comparable period.
Revenue for the period increased from US$582 million previously, to US$630 million in the period under review.
Zimplats has determined to use the United States dollar as its functional currency according to Group auditors, PricewaterhouseCoopers Chartered Accountants (Zimbabwe).
“We performed the following procedures to assess whether the US dollar is the appropriate functional currency of the operating subsidiary: We noted that the group’s revenue is generated from sales of Platinum Group Metals. We traced, on a sample basis, payments received in US dollar to the relevant bank statements, noting no material exceptions.
“We considered factors impacting the operating subsidiary’s access to foreign currency by inspecting relevant exchange control regulations and underlying agreements and obtained an understanding of the underlying terms and conditions. We found management’s conclusions to be reasonable.
“We inspected the expenditure disclosed for the operating subsidiary and noted that the operating subsidiary transacted using a combination of United States dollars, bond notes and RTGS.
“We inspected underlying agreements and noted that all long-term debt and borrowings were denominated in US dollars,” said PricewaterhouseCoopers_Business Weekly