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Zimbabwe Chamber of Mines says new law will drive away investors
ZimOnline
March 21, 2006

http://www.zimonline.co.za/headdetail.asp?ID=11809

HARARE - The Zimbabwe Chamber of Mines says President Robert Mugabe's plans to seize a majority stake in mines will drive away foreign investors and force most mines to shut down.

In a letter delivered to the government on Thursday, the chamber warned that the move to seize a huge stake in mines without paying for it will be disastrous for the mining sector.

"Investors will be forced to withhold capital expenditures for ordinary maintenance as well as development work, partly because financial institutions will no longer offer the investors foreign exchange loan facilities as the investors will no longer have controlling interest.

"With only 49% of the shares paid for and without access to loan funds, most mining companies will have insufficient capital to sustain operations," said the chamber.

The Zimbabwean government earlier this month said Mugabe had already approved a draft law that would allow the government free access to 25 percent of foreign mining firms and pay for another 26 percent over five years to achieve controlling stake.

But the draft law has sent tremours in the business sector with Reserve Bank of Zimbabwe governor Gideon Gono warning that the proposed new law, which strikes at the very core of property rights, would undo all his efforts to bring Zimbabwe back into the international community.

Gono also warned that there was a great risk that Zimbabwe's "investment landscape will forever be damaged, much to the detriment of the country's economic turnaround programme and its ideals" if the government forged ahead with the controversial mining law. - ZimOnline

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