Zim steps up pressure to hand shares over to locals
Foreign firms are learning that token deals will not appease Mugabe: Zimbabwe wants them to sell majority interests to locals before elections.
Zimbabwe wants foreign companies to conclude the sale of majority interests to locals before elections, frustrating investors who had hoped their public shows of share donations to communities would buy them time.
Empowerment Minister Saviour Kasukuwere announced last weekend that he would force Impala Platinum (Implats), which owns 87% of the country’s largest platinum mine, Zimplats, to sell off its share of Mimosa Mine, the number two platinum producer it jointly owns with Aquarius Platinum.
Over the past year the sight of executives of foreign-owned companies standing next to President Robert Mugabe and raising large cheques to cameras and cheering crowds has become the most common image of Mugabe’s empowerment crusade.
The cheques, made out to local community groups, are part of companies’ efforts to comply with empowerment laws that force foreign companies to sell 51% of their shares to Zimbabweans.
Mugabe has officiated at the launch of empowerment programmes by mines owned by Zimplats and Mimosa. But many are now finding out that even having Mugabe launch your programme is not appeasement enough.
Implats being greedy?
Kasukuwere has suggested that Implats was being greedy in holding stakes in the country’s two largest platinum mines. “Implats cannot be allowed to maintain a 24.5% portfolio investment in Mimosa while they have their hands full with the massive capital expenditure that will be required at Zimplats,” Kasukuwere was quoted as saying last weekend. “They cannot have their cake and eat it too.”
This week he told the Mail & Guardian that a single foreign shareholder in Mimosa would make empowerment negotiations easier. He revealed that he had also written to Anglo Platinum, the world’s number one platinum producer, to speed up the sale of a majority stake in the Unki mine in central Zimbabwe. He wants the companies to conclude their empowerment deals before elections, which Mugabe insists on holding this year.
“We have negotiated enough and we have said we want to see this done before we go into national elections,” Kasukuwere said.
Implats said it was “concerned” about Kasukuwere’s remarks. Aquarius Platinum said it had not received any communication and did not comment further.
Mugabe increasing the rhetoric ahead of the elections
As Mugabe presses for elections, he is stepping up his rhetoric about empowerment, an issue on which he will base his re-election.
In an interview with state media to mark his 88th birthday on Tuesday, Mugabe was asked what he would offer voters in the next election. “What do we offer the electorate?” he said. “Goodness me. Independence gave us political freedom and we say political freedom cannot be complete unless we have sovereignty over our natural resources.”
Now that land had been taken over, “the minerals must also come”.
Mining has driven Zimbabwe’s economic recovery, accounting for 50% of the country’s exports last year.
Finance Minister Tendai Biti’s $4-billion budget for this year is anchored by an expected $600-million in diamond earnings. Mining grew 26% last year and is forecast to see further growth of 16% in 2012.
But recent government policy threatens that recovery. In addition to the pressure on empowerment, a recent 8 000% hike in exploration fees could cost mines as much as $1-billion, according to the Zimbabwe Chamber of Mines.
Zimplats employs 4 000 workers and the number could rise to 10 000 in five years as the company grows operations under its $1-billion expansion plan.
SA investors want protection for their assests
South African investors in Zimbabwe have long struggled to find the right formula to protect their assets. Some have sewed up partnerships with local businessmen who they believe are close enough to power to protect their assets.
DRDGold, which is conducting an exploration exercise in Zimbabwe, has partnered with a company called Chizim Investments, a tourism business owned by Lovemore Chihota, a war veteran and former central bank official.
Beyond mining, South African companies have been stepping up their interest in Zimbabwe, attracted by the economic recovery.
Pick n Pay recently increased its shareholding in TM Supermarkets, one of the country’s three biggest grocers, from 25% to 49%—the maximum it can hold under the law.
Cement maker PPC, in its last financial results, reported that sales in Zimbabwe had grown by 50%. The company’s chief executive, Paul Stuiver, said Zimbabwe had been the only client country to register growth.