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Herald Reporter

GOVERNMENT has moved to remove a clause in the Finance (No 2) Act, 2020 that has been construed by investors and stakeholders in the mining sector as a re-introduction of the 51/49 percent shareholding structure in favour of indigenous entities.

In 2018, Government scrapped the indigenisation laws allowing foreigners to own up to 100 percent in mining entities.

The Finance Act was passed as part of the 2021 Budget.

However, an amendment to the Indigenisation and Economic Empowerment Act (Chapter 14:33) (IEE Act) contained in the Finance (No 2) Act, 2020 (section 36) raised concern in the mining sector that Government was reversing the equity thresholds.

“The provision in Section 36 of the Finance (No 2) Act, 2020, to the effect that the Minister responsible for the IEE Act, may, in consultation with the Ministers responsible for Mines and Finance prescribe a mineral, the extraction of which would be subject to 51 percent shareholding by a designated entity, has been interpreted by some to represent a departure from Government’s stated position to open the mining sector to investment without the requirement for 51 percent of the shareholding being held by a designated entity.

“To enhance certainty in relation to investments in the mining sector, and consistent with Government policy, this insertion will be deleted,” Government said in a statement. Government reiterated that it was committed to opening up the country to foreign investors.

“Government announced the policy position to remove the requirement for 51 percent of the shareholding of businesses involved in the extraction of platinum and diamonds to be owned through a designated entity. That requirement has been removed through the amendment to the IEE Act, in section 3(1).

“There are no minerals the extraction of which require a business extracting same to have 51 percent of its shareholding being owned by a designated entity.

“This is consistent with Government’s position that there is no mineral, the extraction of which, Government considers requires mandatory shareholding participation through a designated entity,” the statement further reads.