NewZimbabwe.com has invited Mr. Vengai Madzima, the Senior Partner at Madzima Chidyausiku Museta Legal Practitioners (MCM Legal) to discuss with us legal issues that affect Zimbabweans living in the diaspora. The discussions are general and those seeking specific legal advice should contact their lawyer.
Reporter: Welcome back Mr. Madzima, you were the lead presenter at the recently held African Influence Exchange masterclass on Zimbabwe mining law and investment in Johannesburg, South Africa, what did the masterclass cover?
VM: The masterclass zoned in on the legal investment climate in Zimbabwe. We discussed the laws applicable to mining investments, areas included were environmental law, labour law, investment protection, foreign exchange control and mining law including recent legislative amendments and a general discussion on the proposed Mines and Minerals Bill as gazetted in 2023.
The attendees were also educated on the geological formations of Zimbabwe, the various minerals available for investment and the factors motivating the rapid growth of the mining industry, which peaked at US$5.6 billion in 2022 from US$2.9 billion in 2018.
Reporter: Who attended the Masterclass?
VM: The Masterclass was open to any attendee on registration, I noticed however that it was mainly attended by South African potential and current investors and lawyers from Zimbabwe. This is good in that it shows the interest foreigners have in investing in Zimbabwe, however, it was disappointing to see that there were no attendees from Zimbabweans living in South Africa who wanted to take advantage of the huge investment potential in this sector. It is an industry with serious upside potential that has made a lot of nationalities wealthy who have the same access to capital and equipment as fellow Zimbabweans in the diaspora.
Reporter: You raise an interesting point, how can diasporans participate in this industry?
VM: The opportunities for investment entry are varied, for instance, there are over 40 mineral occurrences in Zimbabwe with gold alone having over 4000 recorded gold deposits. The first part would be to ascertain the mineral of interest and then investigate the common requirements for investment for that particular mineral. The majority of mining title holders are individuals or private companies or entities. A significant number of these mines or claims are not being fully utilized to potential as a result of undercapitalization. It is my opinion that this industry is ripe for joint ventures, especially with investors who have access to equipment and capital.
Reporter: Will these joint ventures be subject to the Indigenisation and Economic Empowerment Act?
VM: The Indigenisation and Economic Empowerment Act was never really meant to affect the Zimbabweans in the diaspora. However, our laws have been amended to become more investment friendly with the Act itself having had provisions that relate to the mining industry amended to allow more investments. The current position is that there are no minerals that are subject to indigenisation. Any person can freely invest or enter into open negotiations when investing in mining.
Reporter: What other amendments to Mining laws have been made that may potentially affect investments?
VM: We have had notable amendments to the Mines and Minerals Act with an example being the classification of some minerals as strategic to the economic, social, industrial and security interests of Zimbabwe. Such minerals being diamonds, rare earth minerals, lithium, iron ore, coal, nickel and gaseous hydrocarbons require a special mining lease before they can be mined by a new investor. Further, laws have been introduced to encourage beneficiation of base minerals so that the country moves away from exporting raw ore.
Reporter: How do you propose the diaspora investors protect themselves when investing in joint ventures in mining?
VM: Like every other investment, due diligence of the potential mine and title must be made. This may include the investor conducting his or her own exploration or geological survey of the mine. All the papers and previous agreements relating to the mine will have to be reviewed to determine whether or not there may be issues which may potentially affect the smooth flow of the project going forward. Each investment will have its own unique circumstances which have to be taken into account when drafting agreements et cetera. You will find that where critical and thorny issues are addressed and mitigated during contract formation, such issues tend not to cause joint ventures or investments to abruptly come to an end.
Reporter: Thank you Mr. Madzima for this insightful discussion. We look forward to next week’s discussion.
VM: Thank you.
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Vengai Madzima is a Senior Partner at Madzima Chidyausiku Museta Legal Practitioners (MCM Legal) in Zimbabwe and can be contacted at vengai@mcmlegal.co.zw
NewZimbabwe.com will have another discussion on legal issues affecting our readers in the diaspora next week, share your comments and experiences with us.