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Caledonia’s VFEX Listing Boost For Mining Sector

MUTARE- The listing of Caledonia Mining Corporation on the Victoria Falls Stock Exchange has been described as a major boost to corporate accountability in the increasingly murky extractive sector.

Caledonia, also listed on the London Stock Exchange (LSE) owns Blanket Mine in Gwanda, officially listed on the subsidiary of the Zimbabwe Stock Exchange (ZSE), set as a foreign denominated stock market established to create an offshore financial service center.

Zimbabwe Environmental Law Association (ZELA) a leading civic society player in natural resource governance, said this listing will improve Foreign Direct Investment (FDI) inflows into the mining sector and provide opportunity for communities to demand accountability.

Financial disclosure will also improve transparency and buttress the country’s ambitious US$12 Billion Mining Industry, as well as enhancing private led corporate accountability in the sector through environmental, social and governance reporting said ZELA.

“The listing of Caledonia Mining Corporation is commendable as it provides an opportunity not only to improve Foreign Direct Investment (FDI) inflows into the mining sector and buttress the country’s US$12 Billion Mining Industry but also enhances private led corporate accountability in the sector through environmental, social and governance reporting,” said ZELA in a Press Statement.

Zimbabwe’s mineral resources management has largely remained veiled in secrecy, with little information regarding taxes, royalties, other duties and charges to government at subnational and national levels, said ZELA.

Caledonia has already published its Environmental, Social and Governance (ESG) Report focused on Blanket Mine in Statutory Instrument 134 of 2019 on Securities and Exchange (Zimbabwe Stock Exchange listing requirements) Rules.

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The listing requirements make it mandatory for all listed companies to disclose Environmental, Social and Governance (ESG) information as part of their sustainability reporting.

“What is central to the sustainability listing requirement is the provision of a balanced and objective view on the company’s performance by including both positive and negative impacts on the environment and society, how it relates to its stakeholders and contribute to sustainable development.

“Sustainability reports provide scope for CSOs and communities that host mining activities to have a fair understanding of the leakages between mining and social economic development.

“Communities that host mining activities are keen to know the profile of mining companies in public investments infrastructure and services, the proportion of mining companies’ spending on local procurement, payments that mining companies make to government, the impact of mining activities on human rights such as access to water, mining companies’ compliance with environmental laws and regulations and the resources that mining companies’ channel to Corporate Social Responsibility (CSR).”

ZELA said “through analyzing ESG reports, communities and CSOs can engage the companies directly on any gaps, participate and validate stakeholder engagement activities, inform regulators on any misinformation…”

Government was cautioned on harmful tax incentives as conduits for Illicit Financial Flows (IFFs) which could place an added cost to efforts of raising maximum revenue from the mining sector.

ZELA also acknowledged the importance of putting in place policy measures targeted at increasing the listing of companies on the VFEX and creating an enabling environment for the country to attract more investment in the mining sector.

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VFEX falls under Special Economic Zones (SEZs) with incentives including, 100% rebate on customs duty on imported equipment, exemption from Non- Residents withholding tax on royalties, dividends and fees on services that are not locally available.

“Already, Zimbabwe is vulnerable to risks of Illicit Financial Flows (IFFs) associated with investments that are being channeled via tax havens such as New Jersey and Guernsey.

“To move a step further on transparency, the Government must carry out a transparency cost benefit analysis on the tax incentives and eliminate risks of redundancy of tax incentives,” read part of the statement.

This development also comes at a time when the Zimbabwe Consolidated Diamond Company (ZCDC) is considering adopting the Initiative for Responsible Mining Assurance (IRMA) after several awareness meetings undertaken by ZELA on the benefits of adopting IRMA standards.

IRMA is a voluntary system established to independently verify compliance with environmental, human rights and social standards for mining operations. If adopted, the IRMA presents an opportunity for ZCDC to improve on responsible investments and increase its chances of attracting Foreign Direct Investment (FDI).

Under the ZSE listing requirements, mining companies are expected to rely on GRI standards or any standards of their choice for their sustainability reporting since there is no specific international reporting framework or standards that the country has adopted for the extractive sector.

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