The mining sector is the engine for economic growth. NewsDay reporter Blessed Mhlanga (ND) spoke to Wilfried Pabst (WP), chairman of Southern Africa Metals and Minerals Limited, which owns a controlling stake in Bikita Minerals. They discussed the challenges of doing business in Zimbabwe and foreign investors’ fears. Find excerpts below.
By Blessed Mhlanga
ND: Tell us about your company and what business you have in Zimbabwe
WP: We are a holding company in Europe and we have controlling shares over Bikita Minerals, which we acquired in 2014, and spent a lot of time getting capital to get this company to where it is right now. This year, we will be producing and selling about 100 000 tonnes of petalite, a product used in the glass and ceramic industry.
This is a lower grade, which is where we hold, I would say 75% of the global market and a niche and it’s a very important business to us.
ND: How much have you invested into the business?
WP: Well, that’s a private company, we are not telling the public how much money we are putting, many millions — if you think of it — that we have drilled about 25 km of holes for exploration and every hole is anywhere from $40 to $100. You will see that, for example, we have new machinery, we have doubled production, but we are a private company, we don’t divulge our financials.
ND: What are the challenges facing the mining industry today?
WP: The challenges in Zimbabwe are very clear, you don’t have a convertible currency that means if you put in capital from shareholder’s loans, it’s like putting money into a bank account but you can never withdraw it. You know there is no cash in this country, it’s the same for us, as foreigners, we are putting in hard dollars, we would like to see dividends but we can’t get them out of the country. If you put in shareholders loans, the loans have to be repaid, that’s also currently very difficult and I have noted clearly that unless we are convertible in international terms it’s very difficult for people to invest in terms of real hard cash in this country.
ND: Do you see this challenge of convertibility changing for the better anytime soon?
WP: Yes, it will change from my point of view. It’s very clear that it will change. I am very close to the Germany and European ambassadors and several others. We in Europe would like to see free and fair elections coming and all kinds of rights that need to be respected for civil society. I think His Excellency the President (Emmerson Mnangagwa) seems to be committed to going that route. If he does, it is very clear to me that Europe will re-engage and will do what is required and this country does require foreign investment.
I think one of the biggest challenges we have is free and fair elections and the engagement on prior debts, the Lima plan. The current government is engaging on those fronts, so I see a lot of good signs but it’s not something that happens in the next two weeks, but that will be probably in the next six to eight months or more and money will start flowing, which will kick-start the ability to have dollars in and dollars out.
ND: Are you happy with the Reserve Bank retention levels?
WP: I don’t even know why he (central bank governor, John Mangudya) talks about retention, but if he is retaining any of my monies, any of my hard currency coming in, frankly I say it’s nonsense, because it’s our money. Government must please leave us alone to get on with what we get on with. We do that everywhere else in the world except for a few countries like Zimbabwe and Austria. What right does the government have to retain any of my money? My problem is retention means you are taking something away from someone and if that means $100 of ours comes into the country and $50 of ours is going to a nostro account or wherever, it is and gets converted to a pretty useless currency and we can’t even withdraw cash, how am I going to get back money to buy new machinery and equipment? So, how do you run a company?
ND: With these challenges why did you come into Zimbabwe in 2014?
WP: I didn’t come into Zimbabwe in 2014; I came in 1992 and I am the largest land owner in the country probably. You look at this wrong colour (pointing at his skin) I am a land owner of the Sabi Valley conservancy, Sango and I love wildlife. I love the people and we were in mining before and we decided to come in here and that was a good move, difficult as it was, because of the bureaucracy around this, it is stifling, really our big challenge is to walk around getting permits for this, getting permits for something else, getting people to understand is very difficult.
ND: What is the challenge on permits?
WP: Tell me, if I am exporting, why do I have to reapply for an export permit every three months, I am exporting, who cares, I am earning money for the country, hard currency coming in, have you ever heard of any country in Europe that has an export permit, maybe for weapons, but certainly not for anything else. It’s nonsense. You have a mining lease, which is valid for one year, why is this not a 99-year lease? How do you use this sort of thing as collateral, for bank loans, how can they lend money to us, we have no collateral, they say to us government can cancel your mining licence, then what? That is nonsense, a socialistic attitude. We need an economic model that is based on social responsible capital, free market societies, that’s what we really need in Zimbabwe but we haven’t got it.
ND: Has there been any meaningful engagement to iron out the challenges you speak about, since there is talk of ease of doing business reforms?
WP: The ease of doing business is manned by a lot of good people, the new minister of Mines (Winston Chitando) is a really good person, I am impressed with the permanent secretary of mining, but you know there are lots and lots of people below, who have been doing their thing for the past 20 to 30 years and their thing just doesn’t work. We also said we are also not here to moan and groan. We are here to engage and see how we can help you change. I find the attitude, the climate in the country has changed dramatically, people are listening, but to get it down to the lower levers of bureaucracy is going to be mission to do that but you know they are on the way. This is the time to invest in the country and I feel strongly about it.
ND: It is not a secret that the cost of production has been pushed up by corruption.
WP: It is very basic, yes there is corruption very clearly, and we don’t do corruption. If my government finds out that I am bribing people in this country, they will jail me in Germany, apart from that principle, I don’t bribe anybody, why should I? Yes we have corruption, for example, we bring machinery, the ministry of Industry and Commerce requires that it gets pre-cleared, so somebody in South Africa, somebody in Europe from the consulate or some organisation that belongs to the State is now investigating this machine, which we are bringing in, he probably knows about that machine as much as you and, I know about it, probably nothing and yet he is supposed to certify it and he doesn’t and why doesn’t he? Maybe this is a way of saying if you pay me, I will certify it. Well this is slowing down what we are doing, we are importing big pieces of machinery that are supposed to enhance our productivity, increase our production volume, it’s often a two three months delay.
I have to tell you the department of trade and industry, Zimbabwe Revenue Authority and Reserve Bank have a lot to learn. They need to become service-oriented.