Capital/financial markets should buttress mining aspirations: Chitando
MINES and Mining Development Minister, Winston Chitando, has called on capital and financial market services in the country to align their models with the national vision to unlock increased value in the extractive sector.
The mining industry is one of the key economic drivers and the Government expects the sector to realise US$12 billion earnings by year 2023. This will be realised through increased mining investment and fostering robust value chains across different minerals.
Speaking during the official launch of the Victoria Falls Stock Exchange (VFEX) on Friday, Minister Chitando bemoaned lack of synergy between mining and finance sectors, which he said was prejudicing the economy of the desired milestone. The mining sector is a key target under VFEX and will be denominated in foreign currency. The move to set up VFEX is regarded as a low hanging fruit meant to attract increased foreign investment into the country.
Minister Chitando said lack of alignment between financial markets’ operations in the country makes it difficult to unlock funding for key projects hence most financial institutions were reluctant to fund exploration activities which are key to the development and expansion of the mining sector.
“The language is ‘you are doing exploration, banks don’t fund exploration’. Stock exchanges don’t fund exploration. But you are not doing exploration, you are doing resource definition,” he told delegates.
“In my own personal view the markets are not aligned with the aspirations of the industry and to some extent the language used also is not aligned to the needs of raising funding for the industry.
“Unfortunately the development of the country is constrained because of the lack of that appreciation. There is much potential in this country to develop beyond the US$12 billion by 2023 if we realign our thinking and also to some extent realigning the terminology of listing requirements.
“We would want to see the Victoria Falls Stock Exchange funding exploration,” said Minister Chitando.
Australian mining company, Arcadia Resources, Blanket Mine parent firm, Caledonia, Seed Co International Limited are among 80 companies that have shown interest to list on the VFEX. This represents a step in the right direction for the new platform, which will start official trading of securities on Monday.
Going forward Minister Chitando said his portfolio would work closely with the Chamber of Mines of Zimbabwe to push for the flexibility of listing requirements and their alignment with the mining sector vision so as to allow more companies to participate at VFEX.
The Government expects to leverage on VFEX, a wholly owned subsidiary of the Zimbabwe Stock Exchange (ZSE), to reduce foreign currency and settlement risks facing the economy.
“This will reduce foreign currency and settlement risk for our international investors. The launch of VFEX will also deal with exchange rate risk from portfolio investment into the country,” said Finance and Economic Development Minister, Professor Mthuli Ncube, in his opening remarks.-chronicle.co.w
