New minister may thwart Zimplats indigenisation deal
Impala Platinum will this year increasingly focus on its Zimbabwean unit, Zimplats – which, according to chief executive Alex Mhembere, has made “tangible progress” with its bid to finalise its compliance with Zimbabwe’s contentious indigenisation laws.
The worst appears to be over for the company, especially with the government appearing to take into consideration empowerment credits as part of the indigenisation plan, informed sources told the Mail & Guardian this week.
The nearly $1-billion indigenisation compliance term sheet that Implats signed with former empowerment minister Saviour Kasukuwere is no longer binding. It is being reviewed to rule out monetary compensation for shares ceded to the government by Zimplats, the company has said.
“We have made tangible progress on the ground, in terms of some aspects of the 51% [shareholding] we believe we will be able to put to rest soon,” Mhembere said.
But in what may spell bad news for Implats, Zimbabwe now has a new indigenisation minister, Christopher Mushohwe, after Francis Nhema was removed from the helm of the ministry. Nhema took over the reins from Kasukuwere after President Robert Mugabe’s Zanu-PF won the July elections.
Mushohwe was not immediately available for comment. He did say, however, in December that foreign investors would be “lucky” to secure a 49% share in local companies: “So it’s not cast in concrete that it’s 49%; it can be 1 % because [49%] is the maximum [foreign shareholding], and 51% can be 99% because it’s the minimum [local shareholding].”
Sources say Nhema, who had adopted a softer approach towards enforcing the indigenisation policy, was considering empowerment credits for the Zimplats plan. The initial deal gave Zimplats concessions that included a state obligation to repay $153?million worth (about 51-million ounces) of unmined platinum reserves that the company gave to the government for empowerment credits in 2000.
There had been earlier indications that the government would renege on this agreement, however, when Mugabe said the state would not pay for shares ceded by foreign mining companies.
Executives at the company said the issue of empowerment credits had been “tabled and discussed with the previous minister of indigenisation”, adding that the company now has to “engage with the new minister and find out if there is going to be any change in terms of his views with regard to empowerment credits”.
“There are some aspects that still have to be looked at again and again. The emergence of a new minister after the Zanu-PF conference in December means that the tone of discussions will obviously change,” one of the sources said.
Mhembere would not say when he expects the issue to be finalised, although he maintained that engagement with the government had been premised on a common understanding of the need for both parties to extract value from Zimbabwe’s mineral endowments.
“The issue in terms of indigenisation for the entire country has not been put to rest. We have not really been racing against years; we have been racing against doing the right things. We have been saying let’s work and find a solution that works best,” he said.
Zimplats produces around 270 000 ounces of the precious metal a year and is now in the process of reviving a refinery facility previously owned by BHP Billiton. Platinum miners in Zimbabwe are under pressure to build beneficiation facilities, but the deadline has been extended to the end of next year.
“We had already indicated to them before that the December [deadline] wasn’t practical. We are happy with the extension that the minister has granted,” said one platinum miner.
Sources indicate that Zimplats is progressing well with the first phase of its beneficiation facility that will cater for its own feed. Zimplats has already placed orders and paid deposits for “long-lead items such as the oxygen plant”, which it expects to take delivery of by November and start running early next year.
But fellow mining companies Anglo Platinum and Aquarius Platinum are potentially on a collision course with the Zimbabwean government, as they have said they are not going to build refineries of their own.
Zanu-PF resolved during its December elective congress that the government should enforce measures to compel all mining companies in Zimbabwe to refine the minerals they mine in the country. Other mining companies are now exploring options to upgrade and use facilities owned by two Zimbabwe-listed mining companies, RioZim and Bindura Nickel Corporation (BNC). BNC owns a smelter facility in Bindura and RioZim, which jointly owns the Murowa diamond mine with Rio Tinto, operates the Empress Nickel Refinery in Kadoma.
Project teams have already been commissioned to carry out studies into how the facilities can be upgraded and used.