Group demands ZSE lists for Fidelity suitors
BY MTHANDAZO NYONI
INVESTORS wishing to take stakes in central bank Fidelity Printers and Refiners (FPR) should agree to list on at least one of the country’s stock exchanges to improve transparency and accountability, the Zimbabwe Environmental Law Association (Zela ) the week.
FPR, which has been listed for sale, is Zimbabwe’s only gold buying agency.
The country has two operational exchanges – the 95-year-old Zimbabwe Stock Exchange (ZSE) and the Victoria Falls Stock Exchange, which started trading last year.
Zela’s call came as the central bank announced it was selling 60% of its stake in FPR to large-scale gold producers and buying agents.
Small-scale gold miners will also have participation through their associations.
As part of this program, the Reserve Bank of Zimbabwe reviews three-year average gold shipments to FPR to determine the new shareholding profile.
But in a document that assesses the strategy, which was released last week, Zela said willingness to adhere to the principles of transparency and accountability must be key in determining eligible shareholders.
“The government should consider making it compulsory for all shareholders, who are going to take stakes in FPR, to list on the Zimbabwe Stock Exchange or the Victoria Falls Stock Exchange,” Zela noted.
“This will open a window for citizens to hold companies to account on the transparency of mining revenues, as companies will have to publicly disclose their environmental, social and governance information in accordance with international best practices. “
The lobby group said that by allowing private companies to be part of the gold refining process, the country has a good chance of complying with the requirements set by the London Bullion Market Association (LBMA) for responsible sourcing.
The LBMA has established guidelines to address systematic or widespread human rights violations in the gold fields and avoid the risk of mining companies contributing to the conflict.
The guidelines also help governments fight terrorist financing.
Being an LBMA accredited refiner gives markets assurance that the country’s gold mining practices and processes meet the requirements of the Organization for Economic Co-operation and Development (OECD) guidelines on sourcing. responsible in gold.
“Compliance with OECD responsible sourcing and LBMA accreditation requirements will ensure that our gold exports generate the best returns in the international market,” Zela said.
“Unbundling the RPF could free up the resources needed for the government to comply with LBMA’s responsible procurement requirements if adequate legislation is put in place for private companies to comply.
“The privatization of the gold refining process should therefore be linked to mechanisms to strengthen responsible sourcing activities such as gold traceability initiatives. “
Zimbabwe lost its LBMA membership in 2008 after failing to meet the minimum gold production levels set by the organization, i.e. the capacity to produce 10 tonnes of gold per year.
As a result, FPR sells its gold in international markets primarily through South African and Dubai-based refineries.
“Based on FPR’s gold production and deliveries over the past few years, it is now very easy for the country to join the LBMA,” Zela said.
“The government should be persuaded to be readmitted to the LBMA, as this will attract international investment and possibly remove the Pariah state label.
Zela said the unbundling of FPR must be accompanied by full due diligence processes on potential shareholders.
“Using an average delivery of gold to FPR over three years as a key factor to consider in choosing which companies to take stakes in FPR is not sufficient, given that the government is integrating the private sector into the management of gold, ”he added. noted.
“The government could also consider including a condition that shareholders should have a blank tax certificate or proof of a good record of promoting human rights as part of its application to acquire the business. actions in RPF, “Zela noted.
Such due diligence processes, Zela said, would enable the government to attract responsible investment in the gold sector and reduce the chances of the government losing income from investors who may have a bad track record of evasion. tax and involvement in the illicit gold trade.