Delay in ratifying Bippa costs Mwana Africa – (BIPPA)
2010 07 02 –
http://www.chronicle.co.zw/inside.aspx?sectid=9873&cat=8
Byo Chronicle
Friday, July 02, 2010
Business Reporter
Delays by South Africa to ratify the Bilateral Investment Promotion and Protection Agreement (Bippa) with Zimbabwe is stalling disbursement of a US$ 10 million loan facility advanced by the Industrial Development Corporation of South Africa to refurbish Mwana Africa’s Freda Rebecca gold mine.
Mwana Africa agreed to a finance facility with the IDC last November and in March, the corporation’s board approved the final terms of the facility to fund the second phase of the mine’s refurbishment exercise.
However, Mwana Africa said it had not been able to drawdown on the loan because South Africa had not ratified the Bippa between the two countries.
The Bippa was signed on 27 November last year and ratified by the Zimbabwe Government in May.
“Drawdown of the facility remains subject to certain conditions, most notably the provision by the Export Credit Insurance Corporation of South Africa of political risk insurance for the facility, which is itself subject to ratification of the Bilateral Investment Promotion and Protection Agreement between Zimbabwe and South Africa.
“The agreement is aimed at providing security of tenure to South African investments in Zimbabwe, and Zimbabwean investments in South Africa. The agreement was signed by the respective governments on 27 November 2009, and was ratified by the government of Zimbabwe on 11 May 2010.
“In South Africa, the agreement has been adopted by the Portfolio Committee on Trade and Industry in the National Assembly and by the Select Committee on Trade and International Relations in the National Council of Provinces. Mwana expects that, in the coming weeks, the instrument will be put forward for adoption by the South African parliament, after which notice of the agreement’s ratification will complete the process,” Mwana Africa said in a statement accompanying its results for the year ending 31 March.
It said the company was also waiting for the Reserve Bank of Zimbabwe’s External Loans Co-ordinating Committee to approve the mortgage charge over the land on which Freda Rebecca plant is built and the operation of offshore accounts.
“Mwana Africa is working with the ELCC and IDC to agree amendments to the security package, compliant with the current exchange control regulations in Zimbabwe,” said the company.
It said it would also undertake a programme to assess the mine’s lifespan as access to the second tranche of the loan required reserves that last at least 10 years.
Gold production at Freda Rebecca is expected to rise from 30 000 ounces a year to 50 000 ounces once the second phase of the refurbishment is completed.
The mine reopened in October last year after years under care and maintenance.
Since its re-opening, almost 12 000 ounces of gold have been mined.
Meanwhile, Bindura Nickel Corporation has prepared plans for the resumption of operations at its Trojan mine and concentrator, Mwana Africa chief executive Mr Kalaa Mpinga has said.
In a statement accompanying the results, he said preparatory work had started in areas critical to the resumption of operations which require limited expenditure.
“Further plans have been drawn up to restart and enhance the efficiency of BNC’s other mines, smelter and refining assets. In addition, the company continues to assess the potential to develop the Hunters Road project,” he said.
BNC was placed under care and maintenance in 2008.