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Press Statement: Caledonia’s Listing on Victoria Falls Stock Exchange Advances Environmental, Social and Governance Reporting in the Mining sector

Date: 7 December 2021

On the 2nd of December 2021, Caledonia Mining Corporation, which owns Blanket Mine in Gwanda, was officially listed on the Victoria Falls Stock Exchange (VFEX)[1], a wholly subsidiary of the Zimbabwe Stock Exchange (ZSE). The Victoria Falls Stock Exchange (VFEX) is a foreign denominated stock market established by the Government of Zimbabwe to create an offshore financial service centre and a gateway for Zimbabwe companies to attract capital. Caledonia is also listed on the London Stock Exchange (LSE). 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.

In the recent past, courtesy of the Canada’s Extractive Sector Transparency Measures Act (ESTMA)[2] which it used to comply with, Caledonia Mining Cooperation’s Blanket Mines has been very consistent on disclosure of their financial reports that are critical in bridging the transparency void in the mining sector in Zimbabwe. Of particular importance to Zimbabwe Environmental Law Association (ZELA) and other Civil Society Organisations (CSOs) working on tracking transparency and accountability in the management of Zimbabwe’s mineral resources management has been information regarding taxes, royalties, other duties and charges that it has been paying to the Zimbabwean government  at national and local authority level ( Gwanda Rural District) The mining company voluntarily delisted on Canada’s Toronto Stock Exchange ( TSX) hence it is no longer compelled to report in terms of the Extractive Sector Transparency Measures Act as before. The company started to report in terms of The Reports on Payments to Government Regulations 2014 of the United Kingdom with effect from 1, January, 2021.

For the first time in 2021, the company published its Environmental, Social and Governance (ESG) Report focused on Blanket Mine in Zimbabwe[3]. The ESG report covered the mining company’s position on health and safety, labour force and community relations implications of the Blanket Mine’s operations. The release of its first ESG report in July 2021 marked the beginning of the company’s journey towards complying with sustainability reporting framework which is provided for by the Statutory Instrument 134 of 2019 on Securities and Exchange (Zimbabwe Stock Exchange listing requirements) Rules. 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. The listing requirements on sustainability looks at disclosure on various aspects including Environmental, Social and Governance (ESG) information in line with the Global Reporting Initiative (GRI). 

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). This is part of the information that mining companies are expected to disclose as part of the sustainability reporting requirements. The recent official listing of the company means the company will continue to issue ESG reports in compliance with the ZSE listing requirements. 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. This means Caledonia is already in compliance with the ZSE listing requirements.

The release of Caledonia’s 2020 ESG report and the subsequent move to officially list on the VFEX should be a window to amply the Publish What You Pay (PWYP) Zimbabwe coalition and mining communities’ work on mineral revenue transparency since at national level the country has not yet adopted any mineral revenue transparency or responsible sourcing framework. In July, the PWYP Zimbabwe coalition applauded Caledonia’s move to list on the VFEX and encouraged more mining companies to follow suit[4]. ZELA and other PWYP members should start scrutinising the company’s first ESG report and generate information for advocacy. Through analysing ESG reports, communities and CSOs can engage the companies directly on any gaps, participate and validate  stakeholder engagement activities, inform regulators on any misinformation, provide feedback to the standards issuers (GRI), engage the Executive and Board of Directors  on matters of concerns from the sustainability reports, analysing corporate social responsibility budgets and local procurement projects  and verify the impacts of the projects and provide feedback to the companies.

ZELA acknowledges the importance of putting in place policy measures targeted at increasing listing of companies on the Victoria Falls Stock Exchange and creating an enabling environment for the country to attract more investment in the mining sector. In the case of the Victoria Falls Stock Exchange (VFEX), the Government designated Victoria Falls as a Special Economic Zone (SEZ). This means that beyond benefiting from minimal currency risks, free mobility of capital and dividends, companies listed on VFEX enjoy several tax incentives. Some of the tax incentives awarded under the Special Economic Zones (SEZs) include, 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. Under RBZ’s incremental Export Incentive Scheme (IEIS) announced in June[5], gold companies licensed under the Special Economic Zones (SEZs) or listed on VFEX also enjoy 100% foreign currency retention. However, the Government must not be blind to the fact that tax incentives can facilitate Illicit Financial Flows (IFFs) and cost efforts to raise maximum revenue in the mining sector if they are not managed in a transparent and accountable manner. Already, Zimbabwe is vulnerable to risks of Illicit Financial Flows (IFFs) associated with investments that are being channelled via tax havens such as New Jersey and Guernsey.  ZELA calls for Government through the national budget and Zimbabwe Revenue Authority (ZIMRA)’s reports to disclose the tax revenue forgone because of tax incentives awarded under the Special Economic Zones. 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.

The organisation also calls for non-listed mining companies to voluntarily adopt international best standards on mineral revenue transparency and responsible sourcing. The development 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).


 Zimbabwe Environmental Law Association

“Celebrating two decades of promoting environmental justice through sustainable and equitable utilisation of natural resources and environmental protection.” 

For Further Information, Please Contact:

Zimbabwe Environmental Law Association

26 B Seke Road, Hatfield, Harare, Zimbabwe

Website : www.zela.org  |Twitter: @ZELA_Infor | Facebook: Zimbabwe Environmental Law Association

[1] https://www.vfex.exchange/wp-content/uploads/2021/12/VFEX-Press-Release-Official-Opening-of-VFEX-and-Listing-of-Caledonia-December-2021.pdf

[2] https://www.caledoniamining.com/wp-content/uploads/2019/02/ESTMA-2017.pdf

[3] https://www.chronicle.co.zw/latest-caledonia-releases-inaugural-blanket-mine-esg-report/

[4] http://www.zela.org/publish-what-you-pay-zimbabwe-commends-caledonia-mining-corporations-move-to-be-listed-on-the-victoria-falls-stock-exchange/

[5] https://www.rbz.co.zw/documents/publications/circulars/2021/Exchange-Control-Circular-Number-4—Incentives-for-Exports-and-Growth.pdf

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