Monday, August 29, 2011

August 28 2011 at 12:28
Independent Newspapers

Impala Platinum may invest as much as $10 billion (R72bn) in Zimbabwe to expand production if the government backs down on a demand that its business there be controlled by the black citizens of the country.
Zimbabwe, which has the largest platinum reserves after South Africa, passed a law earlier this year to force foreign companies to cede at least 51 percent of their local assets to black Zimbabweans.
Anglo American Platinum and Aquarius Platinum also mine the metal in the southern African country.
“It would run into the billions of dollars, probably between $5bn and $10bn,” chief executive David Brown said in an interview in Johannesburg on Thursday, where the company is based.

“Fifty-one percent equity just does not work.”

Impala first invested in Zimbabwe in 2001 when it bought 30 percent of Zimbabwe Platinum Mines for the equivalent of $47 million and later took control of the company. It is now the biggest investor in Zimbabwean mining, with the country in the third year of recovery from a decade-long recession sparked by the seizure of white-owned commercial farms for redistribution to black subsistence farmers.

The unit, now known as Zimplats Holdings, produced 182 100 ounces of platinum in the year to June and is in the midst of a $460m expansion of its Ngezi mine – southwest of the capital Harare – which will boost output to 270 000 ounces in 2014, according to a company statement.

“We could begin to look at phase three and beyond but this requires stability,” Brown told investors at a presentation.

The company has until Wednesday to revise its May proposal to satisfy ownership rules, after it was rejected over a week ago.

Impala also owns the Mimosa mine in the country in a venture with Aquarius.

Impala, which produces about 25 percent of the world’s platinum used to cut car emissions and make jewellery, is spending R35 billion over the next five years to expand production as rising demand drives up prices.

While most of its deposits are in South Africa, 11.3 million ounces, or almost a third of its total platinum reserves, are in Zimbabwe. That’s worth about $21bn at the current platinum price.

“It’s a huge disappointment that we find ourselves in this position – we’ve been a model investor in this country,” Brown said.

Impala believed that “an appropriate level of ownership will be the final result” of talks with the government, Brown told investors. The ownership rule could “retard” investment in mining and other industries at a time when it’s needed.

Economic expansion has been “largely confined to the mining and agriculture sectors”, the London-based Economist Intelligence Unit said in a report earlier this month.

Power shortages, uncertainty over the likely election timetable, as well as the “continued confusion about legislation requiring 51 percent local ownership of all enterprises, are likely to prevent more rapid gross domestic product expansion”, it added.

Zimplats signed an agreement with the government in 2006 to release a portion of its mining claims in exchange for a combination of black empowerment credits and cash.

Impala announced in a June statement that year the area contained 99 million ounces of platinum, palladium, rhodium and gold.

The area could support open-pit mining and “could be turned into quite a profitable concern”, Brown told investors on Thursday.

“They gave that ground to people who weren’t necessarily interested in mining it.”

The country also has the world’s second-biggest chrome reserves, as well as deposits of coal, gold and iron ore.

Impala gained 2.1 percent to R168.95 at 9.18am on Friday in Johannesburg, giving it a market value of R106bn. At 5pm, shares gained 1.81 percent to close at R168.50.

Meanwhile, Gold Fields said Peru’s decision to base a new mining industry windfall tax on operating profit rather than revenue was in line with the industry’s preference.

“The new tax, we believe, will retain Peru’s competitiveness and will guarantee the government’s support for the growth of mining investment,” Gold Fields said on Friday. – Bloomberg

Thursday, August 25, 2011

Choice in Currency Saved Zimbabwe

August 24, 2011 by Jeffrey Tucker

The country’s new finance minister, Tendai Biti, declared that the Zimbabwean dollar had ceased to exist: “Our currency,” he said, “is moribund.” On April 12, Zimbabwe suspended the use of its currency as legal tender.

“At first covertly, then in openness, and finally with the consent of the government,” Mr. Noko writes, “foreign currencies – the rand, the euro, the pound, the U.S. dollar, the [Zambian] kwacha – replaced Zimbabwe’s dollar.” Precisely as Mr. Hayek had imagined, Zimbabwe’s inflationary spiral ended. Within weeks, the country’s economy showed dramatic improvement. Businesses began to open. Banks began to function. Unemployment began to fall. GDP began to rise. Private credit began to increase. Foreign investment began to return. The human exodus ended.

Out of sheer necessity, Zimbabwe adopted the fiscal discipline known as “cash budgeting,” which meant that the government could spend and lend only the money it had in cash. Mr. Biti, the finance minister, said simply: “We will eat what we have gathered.”

ElectraCard Services signs agreement with Zimbabwe`s bank

BS Reporter / Mumbai/ Pune August 25, 2011, 0:21 IST

Pune based ElectraCard Services (ECS), a provider of software solutions for electronic payment systems, has signed an agreement with FBC Bank, Zimbabwe to provide an end to end processing for its MasterCard debit and prepaid cards.

With this, FBC Bank will be the first domestic bank to issue MasterCard prepaid card in Zimbabwe, since the introduction of multi-currencies.

"The FBC Bank MasterCard debit and prepaid cards will help the customers of FBC Bank to securely and conveniently transact anywhere in the world. ECS will not only assist the FBC Bank to provide more convenience to its customers but also help them strengthen their position as a market leader in electronic payment solutions," said Ramesh Mengawade, CEO, ElectraCard Services speaking on this occasion.

ECS is a preferred processor for prepaid for MasterCard in whole of Africa, Middle East and Asia-Pacific. As technology partners to FBC bank, ECS will handle complete processing of the debit and prepaid cards right from applications, card and accounts, transactions, billing, statements, payment and dispute resolution. It will host the solution from its World Class PCI-DSS certified data centre in Mumbai, India.

"We are committed to deliver value-added solutions to our customers in Zimbabwe and we are very excited about the partnership with ECS, which we believe has further strengthened our payment services to our customers. Through this partnership we are now able to deliver global convenience and security to the market. This will further assist us to constantly innovate and deliver the best for our valued customers," said Agrippa Mugwagwa executive director, retail banking and e-Commerce at FBC Bank.

Wednesday, August 24, 2011

Zimbabwe’s Biti in Bid to Create Separate Black-Ownership Rules for Banks

QBy Godfrey Marawanyika - Aug 23, 2011 5:52 PM GMT+0200 .

Zimbabwe Finance Minister Tendai Biti said he is in talks with Youth Development, Indigenization and Empowerment Minister Saviour Kasukuwere to develop separate ownership rules for banks operating in the country to those of mines.

His ministry is trying to agree a minimum ownership threshold for banks, where for mining companies it is 51 percent, Biti told reporters in the capital, Harare, today. The ministry is also consulting banks regarding the ownership law, Biti said.

To contact the reporter on this story: Godfrey Marawanyika in Johannesburg at

To contact the editor responsible for this story: Vernon Wessels at

Zimbabwe’s finance minister says rising food prices have driven up inflation

HARARE, Zimbabwe — Zimbabwe’s finance minister says rising food prices have driven up inflation in the ailing southern African economy.

Tendai Biti said Tuesday the inflation rate has risen from 2.9 percent in June to 3.3 percent in July. He blamed local businesses for inflating prices on basic foodstuffs.

Zimbabwe has experienced food shortages and record inflation since 2000 after President Robert Mugabe, the longtime ruler, ordered farmland seizures.

Mugabe formed a shaky coalition government with former opposition Morgan Tsvangirai in 2009 after disputed elections in 2008.

Copyright 2011 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Monday, August 22, 2011

Kasukuwere vows to grab companies

Sunday, 21 August 2011 15:00


YOUTH Development, Indigenisation and Empowerment minister Saviour Kasukuwere on Friday vowed to go ahead with plans to seize foreign-owned companies despite a stern warning by Reserve Bank of Zimbabwe governor Gideon Gono to refrain from disrupting economic revival.

State media had reported that 11 companies that failed to comply with the government’s empowerment laws, including Barclays and Standard Chartered banks had been given a 14-day ultimatum to do so or risk losing their licences.

Gono, in an uncharacteristic attack on a Zanu PF minister, warned against “irrational exuberance during these times of necessary soberness.”
Kasukuwere’s ministry is trying to enforce the controversial indigenisation regulations that seek to force foreign-owned companies to cede 51% of their stakes to locals over the next five years.

Caledonia Mining Corporation also threatened a legal showdown with Kasukuwere after he reportedly wrote to Mines and Mining Development minister Obert Mpofu instructing him to withdraw Blanket Mine’s licence.

The Canadian firm owns Blanket Mine, one of Zimbabwe’s top gold producers, which was named among the 11 companies that were on the verge of losing their licences.

“Caledonia believes the Minister of Indigenisation has exceeded his legal powers, both in terms of his assessment of Caledonia’s proposal and his request to the Minister of Mines,” the company said in a statement.

“Caledonia is seeking urgent clarification from the relevant ministers and is also consulting with its legal advisors regarding appropriate legal action.”
But Kasukuwere remained defiant, vowing to follow through his threats that have already given investors jitters at a time when the economy is desperate for foreign capital injection.

“As far as we are concerned, we are going ahead with the process and we shall effectively use the laws to empower our people,” Kasukuwere told Standardbusiness.

“They (foreign companies) have taken us for a ride for too long, we have tried to be accommodative and understanding so we shall deal with those that don’t want to co-operate.”

The minister announced recently that he had thrown out proposals by mining companies on how they intended to comply with the empowerment law.

On Friday Kasukuwere said Caledonia and other companies were free to consult lawyers from “heaven” and appeal to whoever they wanted, but his ministry was not going to look back.

Gono pointed out that the minister’s proposal flew in the face of the Southern Africa Development Community proposals of stabilising the banking sector, at a time when the world was facing a double dip economic recession. “To this end, therefore, the timing of any move that we may take or intend to take is important,” Gono advised. “May all stakeholders please be guided accordingly and take heed before it’s too late.”
He said he was issuing the statement in order “to avoid fly-by-night, reckless and excitable flexing of muscles and decisions that overlook certain fundamentals that could irreparably harm the nerve-centre of our recovering economy.”

2006 empowerment deal binding: Zimplats

21/08/2011 00:00:00
by Gilbert Nyambabvu

Contract binding ... David Brown

IMPALA Platinum – which owns Zimbabwe Platinum Mines (Zimplats) -- has insisted that the government honour the terms of an empowerment deal reached in 2006 as a cabinet minister threatened to cancel the company’s operating licence.

Empowerment Minister, Saviour Kasukuwere has given Zimplats and a number of other foreign firms operating in Zimbabwe 14 days to submit indigenization proposals complaint with the country’s laws or risk having their local assets seized by the government.

Foreign firms operating in the country are no required by law to give up at least 51 percent of their equity as part of measures aimed at economically empowering the historically disadvantaged black majority.

However, Impala, which owns 87 percent of Zimplats and has a 50 percent interest in Zvishavane-based Mimosa Platinum Mine – insists the three-part plan it has already submitted is compliant with the law.

Implats chief executive, Dave Brown said the plan involves a 26 percent equity transfer with the balance (to reach 51 percent) made of social investment projects and a prior agreement with the government.

“We reckon that’s somewhere between 25 percent and 26 percent – we’re quite happy with that. Still, people should understand there are real cost associated to that. If people give you a cheque up front there would be no cost associated,” Brown told mining publication,

“But in reality that’s not going to happen. Such a deal would usually entail some deferred payment method, using dividends or methodology to repay the purchase price. There is a cost associated to that. Us bearing that cost is part and parcel of our commitment to empowerment.”

He also insisted that a 2006 deal under which the company gave up 36 percent of its mineral resource in Zimbabwe in return for so-called credits should be honoured.

“There was a lot of emotion about those agreements. But we have a valid contract, we have a binding contract and that contract is in essence what I’d like to see honoured," he said.

“Because if that contract is honoured I’d certainly believe it would create a great faith that contracts and promises would be honoured. At the time when we discussed these matters it was accepted it would be taken into account.”

Still, Kasukuwere has said previous empowerment deals will not be considered adding offers for so-called social investments were also off the table.

However, Brown says he is not overly worried by what he considers political rhetoric.

"I think at the end of the day politicians will always indulge in populist rhetoric. I get that. I understand that’s their job mandate," he said.

“The President (Robert Mugabe) himself said on several occasions we are a model investor. He’s appreciative of our involvement in the social fabric of the country. That’s providing jobs, trying to enhance infrastructure and also various social projects in the areas we mine.”

A second phase expansion of Zimplats expected to cost US$450 million is already under way and involves building a third underground mine and a second concentrator at Ngezi, which will lift output to 270 000oz/year when the project reaches steady-state production levels in 2014.

“The sooner we can get clarity and finality (on indigenization) the better it is for investment,” Brown said.

“We have phases. We’re almost at full production at phase one. At phase two we’d ramp up by 2014. And then we’d be looking at phase three. And phase three would be quite a considerable investment. We’d be talking potentially of a $1bn capital injection.”

Tuesday, August 16, 2011

Zimbabwe to Use Special Drawing Rights Facility to Pay Off IMF Debt

Finance Minister Tendai Biti said Zimbabwe hopes for the release of US$93 million that was withheld by the IMF when the country got its share of global economic crisis adjustment funds in 2009

Gibbs Dube
.....Finance Minister Tendai Biti says Zimbabwe will use US$140 million of a US$500 million Special Drawings Rights facility to pay down debt to the International Monetary Fund which is preventing the country from obtaining any new loans.

Biti said in a statement that the payment will allow Zimbabwe to tap development funds under the global lender’s Poverty Reduction and Growth facility.

He said Zimbabwe hopes for the immediate release of US$93 million that was withheld by the IMF when the country got its share of crisis-adjustment funds in 2009.

But economists doubt the IMF will release the funds due to other debts.

Zimbabwe owes the African Development Bank some US$400 million and the World Bank US$1.2 billion, plus more than US$5 billion in other international loans.

Economist Daniel Ndlela said Biti has made the right decision to settle the debt to the IMF using the 2009 global crisis funds. “But as long as we still owe other institutions, we are still not out of the woods,” Ndlela said.

Economist Eric Bloch said Zimbabwe is not likely to receive financial support from international organizations until it has gotten current on its payments.

Biti said the SDR equivalent of US$150 million has so far been used for the purchase of agricultural inputs for the 2009-2010 crop season and infrastructural projects, and US$20 million for lines of credit for Zimbabwean industry under the Zimbabwe Economic and Trade Revival Facility administered by Interfin Bank.

The funds were spent to overhaul the Hwange Thermal Power Station, National Railways of Zimbabwe track and rolling stock, and Bulawayo City Council’s sewer and water distribution system, to upgrade broadcasting equipment, to resume construction of a Matabeleland water pipeline and for housing in Kwekwe and Harare.

Biti said SDRs equal to US$215 million are held at the IMF as national reserves

Tuesday, August 2, 2011

New VAT Refund Procedure - Beit Bridge Border Post


New VAT Refund Procedure - Beit Bridge Border Post
Effective 3 June 2011

With effect from 3 June 2011 there will be a new procedure for claiming a VAT refund for movable goods exported through Beit Bridge Border Post.

Qualifying purchases must comply with the following procedures:

The goods against which a VAT refund is claimed must be declared to RSA Customs in accordance with the Customs and Excise Act and relevant procedures.

• The goods must also be declared to the Customs authority in the country to which the goods are exported in accordance with that country's customs and excise formalities.

• After the movable goods have been declared to both customs administrations and exported, only then can the qualifying purchaser apply for a VAT refund.

The following documents must be lodged when making application for a VAT refund:

• The original tax invoice/s for which the VAT refund is claimed.

• Proof that the goods were declared to RSA Customs authorities

• Proof that the goods were declared in the country to which they were exported.

• A copy of the qualifying purchaser's passport reflecting entry and exit from the RSA.

• An address to which the VAT refund payment should be sent once approved.

In the case of claims by a foreign enterprise the following documents must also be lodged:

• The certificate of incorporation, trading licence or similar proof of registration.

• A letter of authorization on the foreign enterprise's letterhead authorizing an individual person to lodge the claim on its behalf.

• A copy of the authorized person's passport.

Refund claims may be posted to:
VAT Refund Administrator (Pvt) Ltd P O Box 107
O R Tambo International Airport, 1627, South Africa,
Physical address: 206/1 High Road, Bredell, Kempton Park 1619
Telephone: +27 873 100 200

Duty on food stuffs restored

Subject: Duty on food stuffs restored -

Business Reporters

FINANCE Minister Tendai Biti yesterday restored import duty on some food stuffs to protect local industry, as he expressed optimism on the economy achieving the targeted 9,3 percent growth figure by year-end.

Presenting the Mid Year Fiscal Policy Review Statement, Minister Biti said the re-imposition of duty has been necessitated by improved supply of basic goods and also the need to protect local producers.

He did not announce a supplementary budget preferring to go by the status quo.

For basic commodities such as maize meal and cooking oil, the proposed import duty will take effect from next month while for other food stuffs such as potato chips, baked beans and mixed fruit jam, the rates will start applying from the beginning of September.

The proposed duty will range between 10 percent and 25 percent.

Duty on salt, rice and flour will remain suspended until end of this year.

"Government will continue to monitor the supply of cooking oil and maize meal in order to ensure the availability at competitive prices," said Minister Biti.

He expressed optimism that the country would achieve the projected 9,3 percent economic growth rate this year. The growth would be largely supported by agriculture and mining sectors which are expected to expand by 19,3 and 44 percent respectively.

Inflation is expected to end the year at 4,5 percent on the back of improved production and fiscal discipline.

"I am pleased to report that economic growth remains on course, driven by robust performance in agriculture and mining, with moderate contributions from tourism and manufacturing," said Minister Biti.

He announced a US$40 million fund for distressed and marginalised areas in partnership with a local pension house. Government will avail US$20 million with the remainder coming from the partner.

Government is also putting together a US$40 million insurance and pension sectors housing fund from resources mobilised from the pension and insurance industry.

On the budget performance, Minister Biti projected a deficit of about US$700 million due to increased wage bill and huge cost of importing grain.

He said budgetary pressures compounded by unbudgeted employment costs were likely to reach US$404 million by year end.

Government had provided the wage bill of US$1,3 million under the US$2,7 billion 2011 budget.

"While the 2011 National Budget provided expenditure of US$2,7 billion, indications remain that, as pointed out above, the revenue performance to date shows a half year shortfall of US$65 million," he said.

"This is at a time when we face additional expenditure pressures totalling about US$550 million related to critical priority programmes in a number of areas.

"I have to appeal to my colleagues in the Cabinet committee on resource mobilisation to assist in raising this money."

Zimbabwe is set to import about 300 000 tonnes of maize to meet an impending shortfall.

Minister Biti said proceeds from diamond revenue have been earmarked to meet the additional employment costs for State workers.

He said there was a need for transparency over diamond revenue "as non-performance" of this sector poses serious budgetary and wage payment challenges.

Minister Biti expressed concern at the low uptake of funds by the private sector in the face of the existing liquidity crunch in the country.

He said during the first six months of the year, disbursements from approved facilities of about US$1,6 billion amounted to US$613,9 million.

About US$13 million was disbursed under the US$70 million Zimbabwe Economic Trade Revival Facility.

"The low uptake of lines of credit can be attributed to capacity issues, protracted approval process by the lenders and the delays in fulfilling conditions by the local banks," said Minister Biti.

In the six months to June this year, the country registered a trade deficit of US$1,4 billion with imports coming at US$3,4 billion against exports of US$2 billion.

On foreign direct investment, Minister Biti said the ability of the country to attract investment was being undermined by the perceived high profile country risk.

Government was finalising importation of coins from the US.

The coins are likely to be unveiled before end of this year.


• Duty on foodstuffs re-introduced

• 9,3 percent economic growth projection maintained

• US$40 million Distressed and Marginalised Areas Fund for industry

• US$20 million for SME support

• ZETREF to be democratised

• US$700 million budget deficit forecast

• Duty on raw material to be reduced by September 1

• Rebate of duty on prepaid meters granted

• No supplementary budget

• US$40 million housing fund from insurance and pension industry

• Rebate on duty for motor vehicles and capital goods for tourism sector reinstated

US dollar coins likely to be unveiled in Zimbabwe before end of the year

US dollar coins likely to be unveiled in Zimbabwe before end of the year
by Nare Msupatsila
2011 July 27 07:39:45

Presenting the Mid Year Fiscal Policy Review Statement, Minister Biti said
the Zimbabwe government was finalising importation of coins from the US. He
indicated that the coins are likely to be unveiled before end of this year.

Earlier this year there were some reports that the US govt agreed to supply
coins to Zimbabwe. The United States Federal Reserve is said to have agreed
to supply coins and replace soiled notes to Zimbabwean banks in a bid to end
change problems in the economy.

According to sources, representatives Bankers Association of Zimbabwe led by
its president and FBC Bank boss John Mushayavanhu met Finance minister
Tendai Biti sometime back to map a way forward in dealing with change
problems in the economy.

The sources, said the US Federal Reserve have "formally" agreed that
Zimbabwe's economy is now dollarised and will now supply Zimbabwe with coins
and replace notes.

Officials from the Finance ministry are said to have finalised all the nuts
and bolts to the US dollar coins with the Fed and will soon depart for the
US to airlift the coins to Zimbabwe.

Banks and government, according to the sources have agreed to charter an Air
Zimbabwe flight to pick up the coins in the US. The flight costs will be met
by both government and banks.

Zimbabwe has been saddled with change problems since the introduction of
multi-currencies in February 2009.

Retailers are offering consumers credit notes, tokens and even sweets to
settle small change.

Mushavanhu declined to comment on the matter referring all questions to Biti
who was unreachable at the time of going to press.

In his 2011 Mid Term Budget Policy statement, Biti yesterday said government
had engaged the United States Federal Reserve over possible provision of
coins and replacement of soiled notes to ease small change problems in the

Biti said: "I am pleased to advise on the fruitful interactions with the US
Department of the Treasury which stands ready to facilitate access to
acquisition of smaller denominated coins and replacement of soiled notes
through the US Federal Reserve and commercial banks. I will, therefore, be
finalising on this in conjunction with the banking system, that way
resolving the matter of challenges with change and coins."

"The availability of both US dollar and rand coins will do away with the
challenges posed by the current need to apply cross rates in giving change
in rand coins for transactions undertaken in US dollars," Biti said. "Whilst
this problem should be alleviated by electronic payment systems, the large
size of the informal sector and the lack of infrastructure for electronic
payment systems in rural areas necessitate the availability of large volumes
of small denominations".