Sunday, April 17, 2011

From John Robertson

Annual inflation went down to 2,67% in March from 3,04% in February, according to the latest Consumer Price Index table from Zimstat. However, the monthly rate went up from 0,49% in February to 0,75% in March. The biggest monthly increases were recorded by Education at 3,57%, Transport at 2,5% and Restaurant & Hotels at 1,44%. Of the annual increases, the biggest was for Transport at 8,44% and Education at 4,9%. The education figures do not include school fees, the line for which has been left blank ever since the rebased index was re-launched with the base set at December 2008 = 100.

Wednesday, April 13, 2011

From John Robertson

Mining output reached a value of US$1 381 005 628 in 2010, which compares very well to the US$671 593 936 earned in 2009. In the first two months of 2011, the not yet complete set of figures show earnings at US$240 million.

I have attached a table showing the 2010 monthly production figures for the principal minerals other than gemstones. Some production volumes are not recorded as systematically as in previous years, such as black granite and limestone, but hopefully the records for these will be restored in due course.

I have received two legal opinions on the demands made in the recent Government Gazette Extraordinary. One of these ends with this comment:

The mining notice is legally unenforceable and unintelligible.

However, ZANU PF supporters will threaten to use extra legal means to

enforce whatever interpretation they decide to put on it.

This threat will be sufficient for most companies to feel compelled to cut a deal.

The notice thus aids and abets this extortion. It is little more than racketeering by regulation.

The other concludes:

Finally, it is noted that there has been substantial criticism of the indigenisation legislation on a number of occasions by business leaders, the Zimbabwean Chamber of Mines, the Zimbabwe Congress of Trades Union, the Zimbabwean Reserve Bank Governor, the Zimbabwe Chamber of Mines, business leaders, economists, diplomats, potential foreign investors, the South African Reserve Bank Governor, the US Chamber of Commerce, the International Monetary Fund, European Union representatives and others.

The criticisms levelled include the following: that the legislation places the burden of empowering indigenous Zimbabweans on current owners of businesses irrespective of whether or not those owners benefited from past privileges; that the legislation aims to achieve empowerment through the transfer of ownership of assets rather than through the creation of an environment which enables indigenous Zimbabweans to earn for themselves; that devoting scarce funds to empowerment acquisitions will reduce the funds available for the much- needed capitalisation and expansion of existing businesses and for starting-up new businesses; that the programme is not going to empower ordinary indigenous Zimbabweans, as opposed to those who are well-off or well-connected; and that the programme is deterring foreign investment, to the prejudice of the national economy.

If you would like to receive copies of these two statements, please let me know.

It is my belief that the legislation is so flawed that mining companies have many sound reasons to challenge any demands made upon them. The best option would be to argue for the laws to be rescinded rather than amended. However, in the event of no progress being made on that course, the government’s belief that compensation for the 51% it is claiming of every company is met in full from its “contribution” of the minerals being mined, or yet to be mined, deserves to be challenged in the strongest terms. If this is not successfully challenged, new mining investment will very nearly disappear.