The Sunday News
THERE are many reasons why one will need a partner or investor for a business to take off or grow. It must be understood that an investor is not necessarily required when operations have started.
An investor is a person or consortium with an input that would enable a mining venture to thrive, sustainably and this may be in the input of finance, expertise or mechanisation. From time to time you may find that a mining venture on viable mining site may fail to prosper, yet one or two of the necessary inputs are available only to lack capital.
So it is very important for a miner to be aware of what exactly is required for his or her mining venture to be successful. The ‘‘when’’ part is also important, due to the fact that you need to get the right investor at the right arrangement.
You may find that a miner may just opt for an investor without him or her, clearly defining whether the investor is to need at the start of the business or to grow an already existing one. For example you will find that most mining venture arrangements lead to court cases because of poor arrangements when seeking investors.
In most cases, an investor might have obtained more shares than his or her input is precisely worthy, only for the miner to realise this at a later stage or even vice-versa, leading to share structure disputes. In mining, a miner must also know which areas need an investor to come in. Some seeks investors for the wrong operations, for example someone might need an investor to inject money in milling or processing yet production has not yet reached levels to satisfy increasing milling.
Problems might then arise if the investor’s share will depend on the output milled.
There is need to do proper valuations in terms of capacity of the business. There is also need to ensure correct valuations of operations so that no one will be short-changed in the future. The how of this issue has two main aspects related to it, which are the administrative and technical aspects respectively. The administrative aspect requires that the mine owner should have the necessary paper work required and in order to attract investors. Some of the paper work needed are Government mineral mining certificate, siting works, environmental related report, mine valuation or analysis report projection report and in some cases banking reports. The above necessary paper work is very important as they fall into the first phase of a mine owner showing transparency and administrative competence, and would give a prospective investor the opportunity of clearly seeing a picture of the mine to be invested in.
Mining benefits and problems
The mining industry is one of the most important sectors of the economy, particularly when we focus on its ability to impact on other sectors. The sector has the ability to create profound levels of employment, a key enabler to the growth of any economy.
Its growth over the years has also stimulated the growth of other economic sectors especially in areas surrounding the mining environments.
In most areas, mining has led to the growth of companies such as supermarkets and companies that manufacture and distribute mining tools. However, the mining sector, if not managed properly by both miners and the Government can also do harm in various ways. The damage, in some areas may be irreversible and costly. Let’s take a look at some issues of great concern around mining.
When one goes around mining areas particularly where small to medium-scale mining is more pronounced, various malpractices are evident. Sometimes you would wonder how people do such harm and expect other generations to also benefit from the same resource. Some small-scale miners leave huge pits that are a trap to both wild and domestic animals.
On another hand, wanton digging in search of minerals has resulted in destruction of forests and some of the chemicals such as mercury, cyanide are washed into rivers and can cause harm to aquatic life and even human beings and livestock.
Riverbed mining is seen to be one of the most profitable mining activities, mainly because of the fact that heavy equipment is not necessary and refining methods are carried out at the mining site. However, it is also one of the most destructive ways of mining as it easily causes siltation of rivers and dams.
With such a scenario it is prudent for the Government and the miner to work closely to come up with a win-win situation. The Government wants its people to be employed and mining is one of the biggest employers but at the same there is also need to ensure that this mining is not done at the detriment of the environment.
Government also needs to ensure that it controls the illegal marketing of minerals because at the end there will be no benefits if mining is allowed to be a center of illegal smuggling of minerals outside the country.
One way of controlling illegal mining is for the Government to identify alternative mining sites, like those that have been lying idle so that they allow small-scale miners to operate under supervision. Such a set-up has a number of advantages among them:
(i) The livelihood of the panners would be maintained, as they will remain in their special trade and have an income, that which is sustainable, dependable and safe for them and the environment respectively.
(ii) This would enable Government to provide the much-needed skills training to the miners and to advise on issues related to mining hazards to the participants and the environment and how they can be avoided.
(iii) A programme of this nature would greatly reduce illegal mining and dealings in minerals, meaning the submissions of minerals will be made to Government permitted markets.
In addition, the Government should also consider the fact that most prospective miners do not have the financial resources particularly the youths. As such there must be consideration to waver certain requirements so that miners can be able to carry out their work. This can be done by issuing affordable temporary mining permits, with a given time frame before expiry, based on a practical time frame in order for the miners under such a programme to work in a controlled manner and raise enough capital for formal registration.
With a co-ordinated mining sector, Zimbabwe can easily meet its target espoused in its economic blueprint Zim Asset especially on issues revolving around employment creation, increased mineral output and development of mining communities.