A comparative analysis of the security of mineral tenure in Zimbabwe under the 'Mines and Minerals Act (21:05)' and the 'Mines and Minerals Amendment Bill 2018'

Abstract

The mining Industry plays an important role in development. It provides raw materials for industrial development; it also provides huge resource rents which can be useful in funding infrastructure projects and budget deficits. Mining is also a labour-intensive vocation and may therefore, help in alleviating poverty through job creation. If managed well, mining resource rents may lead to sustainable development of economies. In Zimbabwe, mining is a major contributor to foreign currency earnings and contributes significantly to the Gross Domestic Product (GDP). The industry contributes 50% of the country’s foreign currency receipts and its contribution to GDP averages about 11%. To illustrate the importance of the industry to the economy, all post-independence economic blue prints have been anchored on resource rents to stimulate growth. Despite possessing an attractive geology, the country has not experienced any significant investment in the sector. No exploratory work has been undertaken in the past ten years. The country has failed to attract meaningful investment capital in exploration as a result of a general lack of investor friendly laws. The indigenization requirements for a free carried 51% local content participation has been cited as a major disincentive for investment in the sector over the years. However, other factors which have contributed to lack of investment include, a general absence of laws protecting private property rights. The government’s appetite for private property rights was demonstrated in the manner in which legislation was hurried in order to expropriate private property rights during the land reform program. The consolidation of mining concessions in Chiadzwa in 2016 also heightened fears of the security of mineral tenure in the country. The security of mineral tenure is an important consideration in the mining investment decision making. Studies have demonstrated that countries which have incorporated International Best Practice in the regulation of mineral resources by ensuring the security of mineral tenure have been able to attract significant investment. The prevalence of subjective discretion in the allocation and loss of mineral rights in Zimbabwe undermines the security of mineral tenure. Regulation of mining in the country is characterised by subjective administrative discretion. Unregulated administrative discretion breeds corruption and as a result affects the stability of mineral rights. In order to develop mines, huge capital investment is required. Mining right holders may be required by to securitise rights funders in order to raise funding for projects. Prohibition against securitization of mineral rights in Zimbabwe undermines the security of mineral tenure.