Gwanda Community Share Ownership Trust gets US$360K as dividend payment from Blanket Mine

By Almot Maqolo

HARARE – International and regional organizations have developed economic frameworks recently to support community gain from nearby mineral resources. This comes as communities in mining sites have expressed outrage around the world because they endure the burden of mining-related problems such environmental deterioration, air and water pollution, exposure to hazardous chemicals and the deaths of people and livestock due to exposed mine pits. Since its formation, Zimbabwe’s Community Share Ownership Trusts (CSOTs) have functioned with varied degrees of success, with mining communities being the main beneficiaries.

In 2012, Caledonia facilitated Indigenous Zimbabweans’ ownership of 51% of Blanket in accordance with the law in effect at the time. This included local residents acquiring a 10% ownership stake through Gwanda Community Share Ownership Trust (GCSOT). Following legislative changes in 2020, Caledonia expanded its ownership in Blanket to 64% while GCSOT kept its 10% stake. To ensure that GCSOT has the resources to launch its activities, Blanket paid advance dividend payments to GCSOT totaling $4 million in 2012 and 2013. By giving up some of its future dividend rights, GCSOT was able to pay back the advance dividends. At first, GCSOT gave up 100% of its dividend rights; this was later reduced to 80%. The advance dividend account had a $0.2 million outstanding amount as of June 30, 2021 (the most recent reporting date).

The advance dividend account was fully reimbursed after Blanket paid a dividend on September 29, GCSOT, one of the indigenous shareholders, will now get the full 10% of dividends that are due to it from Blanket. In July 2022, Caledonia Mining Corporation, which owns 64% stake in Blanket Mine in Gwanda, announced GCSOT has received a dividend payment of US$360 000 from Blanket Mine. Commenting on the announcement, Mark Learmonth, Caledonia’s Chief Executive Officer, said: “In October 2021, Blanket Mine announced that the advance dividend loan had been repaid and going forward GCSOT would receive its full entitlement of 10 per cent of dividends paid by Blanket Mine.” “With investment in our local communities and employees being at the heart of our business, I am delighted that this dividend has now been paid.”

It is not only morally right to ensure that communities directly benefit from natural resources, but it also promotes social cohesion and sustainable development. The business sector and several international players, who saw themselves as losers in the economic empowerment model, opposed this principle, though. The survival and welfare of Community Share Ownership Trusts, however, have shown to be seriously threatened by recent legislative and policy revisions in Zimbabwe (CSOTs). The Finance Act (2018), which reversed several of the 2010 provisions that the government had enacted through the Indigenisation and Economic Empowerment Act [Chapter 14:33], presented particular difficulties.

Gold production at Caledonia Mining Corporation had an annual average growth rate in output of 4% since 2017. Whilst the firm has decided not to exercise the option to the Glen Hume Mine, analysts say open cast mines Connemara North and Maligreen Goldfields remain on the cards with annual historic output of 20 000 ounces each. Caledonia’s strategy to maximise shareholder value includes a quarterly dividend policy which the Board adopted in 2014. The Board will consider future increases in the dividend as appropriate in line with its prudent approach to risk management. Zimbabwe has launched a roadmap with a target of achieving US$12 billion in the mining sector by The sector contributes about 18% to GDP and provides essential raw materials for manufacturing and agriculture sectors.

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