Little Chance Banks Will Finance Mining in Zim, Says RMB DirectorJuly 16, 14
(IDEX Online News) – A leading South African bank says it is difficult to fund diamond mining ventures in Zimbabwe because of the high political risk and uncertainty in the country.
Rand Merchant Bank (RMB) Business Development Director Henk De Hoop said other banks likely had the same thinking on the issue.
He said that recent developments in Zimbabwe, where the license of a diamond company had been rescinded and the threat of a non-renewal of other firms was possible, served to confirm a policy of non-involvement.
“These policies leave mining firms unable to complete the work they borrowed money to carry out and hence they are unable to pay their financiers back for said funds,” De Hoop told The Daily News.
“In such a case, banks have no way of recouping their loans. You as a bank have nothing [you can do] if a company decides to stop paying you back because they have lost a mining license,” he said. “It needs to have that comfort, it’s one of the base rules and those base rules have been thrown out of the window essentially and the [Zimbabwean] government has not been consistent in that message either.”
There are seven companies licensed to mine diamonds in Marange fields, accounting for more than 80 percent of Zimbabwe’s diamond output.
Several of the companies have said that alluvial deposits are running out and that they do not have the technology or finance available to carry out underground mining and have been firing workers, raising the ire of the Zimbabwe government.
Mining ministry officials have suggested that they will not consider giving mining firms new concessions until the existing ones are exhausted.