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07 Feb 2008 13:56
Zimbabwe’s draft mining Bill will not force firms to give a stake to the government for free as previously feared, and will be debated by Parliament after elections next month, a senior official said on Thursday.
The government of President Robert Mugabe, who is running for another five-year term, published the Bill last November.
It was said to contain a requirement that mining firms transfer a majority stake to locals, including giving the Zimbabwe government a free 25% stake.
The Bill spooked mining firms and analysts warned it could backfire and hurt the mining sector, now the country’s leading foreign-currency earner, worsening an economic crisis that has devastated the Southern African state’s economy, leaving it with the highest inflation rate in the world.
They fear the Mines and Minerals Amendment Bill could hurt foreign investment in a nation that has the world’s second-biggest platinum reserves.
Zimbabwe is grappling with a severe economic crisis blamed on Mugabe’s controversial policies, such as the seizure of white-owned farms to resettle landless black Zimbabweans.
“The Bill will be tabled in Parliament after the elections, after the new Parliament sits,” said a top official in Zimbabwe’s Mines Ministry, who declined to be identified.
“The government is not going to grab the shareholding as people have been saying, the government will pay fair value,” the official, who said he had seen the Bill, told Reuters.
“For companies that are listed, the government will pay a market value and for those that are privately owned, the government will hire consultants to verify the value.”
About half of Zimbabwe’s mining firms are foreign owned.
The world’s second biggest platinum producer, Impala Platinum (Implats), is the foreign mining firm with the most operations in Zimbabwe. Rio Tinto has diamond interests and the world’s top platinum producer, Anglo Platinum, is developing a mine in the country.
The proposed mines Bill follows the passing in September of a general Bill giving 51% stakes in foreign-owned firms to Zimbabweans.
That Bill did not include a provision for a 25% government shareholding.
The official said it was likely the government would “buy a 20% and not a 25% stake in the mining firms”.
He said the Bill would take into account credits towards the 51% local-ownership requirement for any mining firms that gave up some unused mining claims and committed to social spending such as building roads, power and other infrastructure.
Implats has already said it has agreements in place that it expects will meet the requirements of the general Bill that seeks to grant majority ownership to locals, and that, in principle, it supports the aims of localisation.
The Zimbabwean official said the government would also only take a stake on investments in excess of $100-million.
But under the law, Zimbabwe’s government could take control of strategic uranium, coal and methane projects, he said.
“Zimbabwe is open for business,” the official said when asked if the new mines law could hurt investment in the same way the land-seizure law undermined the country’s economy.
“There are many companies that are prospecting and operating mines there. Many others still want to come in.”
Mugabe, the veteran ruler, in power since independence from Britain in 1980, denies mismanaging the economy, blaming sabotage by Western nations plotting to undermine his rule.—Reuters
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