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09 Nov 2012 00:00
Zimbabwe's Empowerment Minister Saviour Kasukuwere. (Reuters)
As he signed a deal with Anglo American Platinum (Amplats) to sell a majority of its shares to locals last week, Zimbabwe's empowerment minister, Saviour Kasukuwere, had a smug look on his face and hummed along to a cellphone ringtone.
Now that he has made the world's number one platinum mining company bend to Zimbabwe's tough empowerment rules, it should be easy to whip the rest into line. President Robert Mugabe plans to put the empowerment crusade at the centre of his election campaign next year and the Amplats deal is a timely boost.
Land reform has always shored up his rural support and he hopes that he can strengthen his traditional support base by forcing mines to hand over shares to local communities.
"We are pleased that they have fully complied with the expectations of our laws.
They are way ahead of the others," Kasukuwere said.
A few hours later, he tweeted: "Said we'll change ownership structures and empower our people.
In Kasukuwere's ministry, which has been at the head of Mugabe's empowerment crusade, there is animated talk about the unrest on South Africa's mines.
More such deals
It is believed that the strikes, which have cut production and cast doubt over the future profitability of its neighbour's mines, will help the government to drive an even harder bargain when negotiating with South African mines in Zimbabwe. Mugabe is desperate to seal more such deals, hoping they will help his election campaign next year.
"They [South African mines] are in a tough place; there are very few options left. They may not like it here, but Zimbabwe offers better growth prospects for them," a senior official in the ministry told the Mail & Guardian.
With Amplats having signed, other companies are now facing more pressure to comply. Among the major mines yet to sign are Mzi Khumalo's Metallon Gold and Canada's New Dawn Mining and Duration Gold.
In March, Impala Platinum, the world's second-biggest producer, agreed "in principle" to sell a 51% stake in its mines to black Zimbabweans. Negotiations are still continuing on how the government will pay for the shares, but the structuring of the Amplats deal is now likely to become a model to follow.
To comply with Zimbabwe's empowerment requirements, the mines may have to accept that they will not get market value for the shares they sell, which is what happened to Amplats. Its Zimbabwe operation, Unki, is valued at $592-million, but the total 51% sale price of $142.8-million values the operation at a sharply discounted $280-million.
According to Kasukuwere, the discount is "in recognition of the sovereign ownership of resources by the people of Zimbabwe".
Unki will issue shares to a community trust, workers, local investors and a government fund. A consortium of local investors led by Anglo-Zimbabwe managing director James Maphosa will take up 10% of the stake.
The new shareholders will pay off the shares over 10 years, using dividends due to them.
Zimbabwe remains optimistic about its mining industry, the one sector that can grow the economy. This week, Finance Minister Tendai Biti raised his growth forecasts for mining output from 15% to 16.7%.
Despite all the uncertainty, some analysts believe international investors are being forced to reconsider Zimbabwe.
Cloud over empowerment
"South Africa has vastly more resources, but there are some investors taking another look at Zimbabwe, wondering if it can't be a long-term play once all the controversy is out of the way," said Kennedy Ndebele, a fund manager who invests in mines on Zimbabwe's stock exchange on behalf of foreign investors.
Although some investors are staying away from Zimbabwe, more than 1 000 foreigners, including diamond traders and investors, are to meet in the country next week to discuss prospects in its diamond business.
The empowerment drive is motoring ahead despite opposition from Mugabe's opponents.
Obert Gutu, a senator in Prime Minister Morgan Tsvangirai's party and the deputy justice minister, said those behind the drive were targeting "well-run corporations for their own greedy and corrupt accumulation of personal wealth".
The African Development Bank suggested in a recent report that the cloud over empowerment was beginning to clear, reflecting in higher prices for shares in mines as investors continued to invest.
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