By Stanley James
The current fall in global stocks for mining conglomerates with business interest within the country in response to governmentâ€™s 51 percent indigenisation threshold for the mining sector has brought to limelight the reliance of foreign owned mining firms on the value of local resources to make profits.The latest development has also revealed that Zimbabweâ€™s platinum mining sector is a key player in the worldâ€™s resource market.
ZBC News Business Reporter, Stanley James, explores how the foreign owned mining firms have been dependent on Zimbabweâ€™s resources to make profits abroad at the expense of locals, a move which justifies governmentâ€™s policy to empower locals in the sector.
Foreign mining giants with business interests within the country have lost almost half a billion dollars in the global resource markets after government last week announced a 51 percent indigenisation threshold for the mining sector.
Resultantly, it has emerged that the foreign owned mining conglomerates are mainly depending on Zimbabweâ€™s value of resources
to hedge against their business portfolios abroad.
While official statistics from global stock markets such as Johannesburg Securities Exchange, Australian Stock Exchange and Toronto Stock Market show that mining firms with platinum investments in Zimbabwe, such as Anglo Platinum and Implats, are likely to lose more than a billion dollars as investors express jitters in response to governmentâ€™sÂ stipulated mining indigenisation requirements, stakeholders say Zimbabwe, which is ranked the third platinum producer in the world, is a mover and shaker on the global resource markets.
A stock market analyst, Mr. Albert Machando, said it is however disheartening to note that while the foreign mining conglomeratesÂ enjoy benefits of the local mineral resources ,Zimbabwe is not achievingÂ maximum returns – a move that has resulted in share prices of the mining giants plummeting by more than 30 percent because investors are uncertain on whether they will enjoy higher returns with Zimbabwe forging ahead with the 51 percent empowerment policy for the mining sector.
He said: â€œThis is just a tip of the iceberg, but the real issue is that for some time they have been enjoying and it is high time we take our resources.â€
But while global markets have experienced the dramatic plunge in the stocks of the resource counters, an economic commentator, Mr. Danny Masukuma, says this is also an indication that when Zimbabweâ€™s mining sector sneezes, the entire world coughs, as evidenced by fears from global investors on their stocks in response to the indigenisation policy, proving beyond doubt that the worldâ€™s resources market acknowledges the importance of Zimbabweâ€™s vast mineral endowment.
â€œThis is really an issue where Zimbabwe is now being feared and we hope more should be done to enhance such facility,â€ he said.
The Commissioner of Securities Exchange Commission of Zimbabwe, Cde Chris Mutsvangwa, said it has also come to the attention of the world that while the foreign owned mining firms are reaping profits within the country and investing in global markets, the value of their shares from local resources is not being reflected in the national accounts, the local stock market and the treasury, a move which therefore justify governmentâ€™s empowerment system.
â€œThis is really a true issue about how they are continuing to reap all the resources while we are not enjoying anything,â€ he added.
Given the fact that global resource markets are experiencing a slump in investor confidence mainly on platinum stocks for mining companies with business interests within the country in reaction to governmentâ€™s indigenisation policy, are we then likely to witness a situation where Zimbabweâ€™s key resources will determine global resource markets?
Only time will tell.