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17 Sep 2009 09:48
Zimbabwe is ready to consider easing proposed rules that would force foreign mining companies to give local businesses majority stakes in their firms, a Cabinet minister told Agence France-Presse.
Three years ago, President Robert Mugabe’s government proposed requiring mining firms to give—for free—51% stakes to black Zimbabweans.
The move alarmed foreign mining firms, with the draft law drawing immediate comparisons to Zimbabwe’s violence-plagued land reforms, which saw the government seize white-owned farms with little or no compensation.
Mining firms warned that any expropriations would further cripple the already hobbled mining industry, which accounts for 50% of Zimbabwe’s export earnings.
Now that Mugabe has been forced into a unity government with his erstwhile rival, Prime Minister Morgan Tsvangirai, the country is desperately trying to lure foreign investors to rebuild an economy crushed by years of hyperinflation.
Saviour Kasukuwere, the Minister for Indigenisation, told Agence France-Presse that the government was ready to consider easing the proposed regulations and that any local business partners should have cash to invest.
“The 51% stake is not a pre-requisite for investment. We are saying bring your money and we will not illegally take it,” Kasukuwere told Agence France-Presse.
“We are ready to discuss with businesses.
We are prepared to listen.
Some companies had feared the new rules would result in government imposing partners on foreign firms, but Kasukuwere denied that was the intention.
“We will not impose a partner on anybody,” he said. “For anybody to get equity in any firm, they must bring cash upfront.”
“When we talk of empowerment, we are not talking of nationalising or expropriation,” he added.
Foreign companies that stood to be affected by the bill included Rio Tinto diamond mines, Anglo Platinum and Zimbabwe Platinum Company (Zimplats), which is the subsidiary of the world’s second biggest platinum producer, Impala Platinum.
Mineral-rich Zimbabwe was once a prime source of gold, platinum, chrome and dozens of other metals, but most mines now run only maintenance operations because of the high cost of doing business here.
Gold panning and scavenging for diamonds had mushroomed during Zimbabwe’s economic freefall, leading to claims of human rights abuses in the eastern Marange diamond fields after the military seized control and forced out informal miners.
Zimbabwe’s Mining Ministry says it has shortlisted two foreign firms to take over the Marange fields in a bid to prevent a ban on the nation’s diamond sales by the Kimberley Process, which regulates global trade in the gems to prevent rights abuses.
The two-day mining conference, which wraps up on Thursday, aims to lure foreign companies back into the country, with about 850 delegates from South Africa, India, Georgia, Russia and Australia.
Mining currently accounts for 3,8% of Zimbabwe’s economy and 4,5% of formal employment—though that figure represents a very small number of workers in a country with 94% unemployment.
Kasukuwere insisted that the final version of the mining empowerment law would protect foreign investments rather than discourage them, though he gave no indication of when the law would actually be passed, leaving a cloud of uncertainty over the industry.
“We have to encourage and guarantee investments when we have such laws as an empowerment act,” he said. “This law will bring about investment security in the country.”—AFP
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