The Sunday News
Prosper Ndlovu in Victoria Falls
THE Government expects the newly established Victoria Falls Stock Exchange (VFEX) to stimulate more mining investments and accelerate attainment of above US$12 billion annual earnings from the sector beyond 2023.
Mines and Mining Development Minister, Winston Chitando, is convinced that with adequate support and synergistic relations with VFEX, the mining sector could outperform set targets. The Victoria Falls Stock Exchange was launched in the resort town on Friday.
Treasury has also projected that the mining sector will grow by a margin of about seven percent in 2021, recovering from the Covid-19 dent this year, as implementation of several mining deals recently sealed by the new dispensation take shape.
The minister told delegates who attended the official launch of the foreign currency denominated trading platform (VFEX) on Friday that the ministry, working closely with the Chamber of Mines in Zimbabwe, would seek to capitalise on VFEX and urged non-listed extractive entities to grab the opportunity.
Already Australian mining company, Arcadia Resources, Invictus Energy, Blanket Mine parent firm, Caledonia, Seed Co International Limited, and a total of about 80 companies have signalled 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 tomorrow, under the guidance of the Zimbabwe Stock Exchange (ZSE). The new stock exchange is also expected to help reduce foreign currency and settlement risks previously associated with the economy.
“We would want to see the Victoria Falls Stock Exchange funding exploration. There is so much potential in this country to develop beyond the US$12 billion if we realign our thinking. The US$12 billion milestone is just for 2023 but the industry could go beyond that by 2030 and this is a platform for doing that. What we would like to see through the Chamber of Mines and VFEX is to try and see what the listing requirements are, that’s a way to have clarity and flexibility. It’s very important that the listing requirements are aligned to the needs of the mining companies to participate there.”
Minister Chitando bemoaned what he termed as “lack of appreciation” of mining sector operations mainly by the financial services sector. He said this gap has resulted in limited financing of key exploration activities that could unlock immense economic value do the economy.
“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. 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. There is need to realign the language, and the thinking.
Sometimes the rhetoric that companies are doing exploration and financial services fear risks to invest claiming the company will be doing exploration. That should change as it is basically mining and not exploration.”
The minister said given the launch of VFEX, capital market should going forward, be able to fund mining companies and business to expand their businesses.
“The stock market should be able to say to a mining company ‘if you find something I will fund you for another 10 metres’. In that way there is very minimum risk but the unfortunate reality is the financial services sector, the capital market are not aligned to that,” he said.
Such a development has an effect of constraining economic growth, said the minister. He challenged the capital and financial market in the country and the mining industry to close ranks and realise the available opportunities.
“A lot of the opportunities, which the financial markets and the capital markets are shying away from, is compromising not only the profits or benefits, which should accrue from the pension but also compromising development of the country. To the board and management of the Victoria Falls Stock Exchange, in particular, and the capital market in the country in general, let’s together with the mining industry, get closer and realign. You will make money, the country will develop.”