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'Bill detrimental to mining sector'
Jeffrey Gogo, The Herald (Zimbabwe)
March 08, 2006

http://www.herald.co.zw/inside.aspx?sectid=566&cat=8&livedate=3/8/2006

GOVERNMENT’S plans to slash foreign-owned companies’ shares by half are detrimental to the mining sector, say local platinum mining groups.

Mines Minister Mr Amos Midzi last week said Government had approved the Mines and Minerals Bill, which seeks to give 25 percent of foreign-owned mines to Government for free once the Bill becomes law while at least 26 percent would be paid for over a period of seven years.

Zimbabwe’s largest platinum producer, Impala Platinum Holdings (Implats), yesterday said the intended reforms would harm their operations.

Implats, which runs Zimplats and Mimosa platinum mines here, says it plans to lobby Government to repeal the new laws because of their negative impact on the industry.

"Implats confirms that the group is in receipt of a Cabinet-approved draft proposal relating to ownership of the Zimbabwean platinum industry," said company spokesperson, Mr David Brown, speaking from South Africa, where he is based.

"Implats believes the proposal is not in the best interests of developing the platinum industry in Zimbabwe and is inconsistent with previous discussions with the Zimbabwean Government.

"The company will actively engage with and seek further clarity from the Zimbabwean Government on the proposal and remains hopeful that a solution will be found in the best interests of Zimbabwe and the companies invested there."

Impala has targeted most of its future growth in Zimbabwe and plans to boost output by around 2,3 million ounces by 2010, although the project has been put on hold owing to some technical and regulatory impediments.

Capital expenditure for the projects has been put at US$700 million (Z$69,4 trillion).

Zimplats also issued a statement on Monday saying it had engaged Government to seek clarification on the latest developments, particularly given that they had already signed an agreement before commencing operations.

Until Mr Midzi’s statement last week, locals were restricted to a maximum of 15 percent equity of foreign-owned companies.

However, the 15 percent Zimplats stake allocated to indigenous players more than two years ago, has been lying idle after the winning bidder, Nkululeko Rusununguko Mining Company failed to raise the initial US$31 million.

Although no figures were available, the price is believed to have shot up since then.

According to analysts lack of financial muscle will continue to frustrate future black economic empowerment initiatives.

"This is an ill-fated policy, which could scare away investors," remarked one economic commentator who refused to be named.

"For a country seeking to attract foreign direct investment to earn foreign currency, this is one major blow to any such hopes, and certainly frustrates the foreign investor."

Platinum is fast becoming Zimbabwe’s top foreign currency earner — buoyed by firm international demand and rising prices — and is poised to overtake traditional hard currency cash cows such as gold and tobacco.

However, platinum explorations and mining operations need deep pockets, which are mostly found among offshore investors.

At present, Anglo Platinum is developing the Unki Platinum Mine in the Midlands at a cost of US$90 million, and is due to commence operations next year.

Zimbabwe possesses the second largest undeveloped platinum reserves in the world after South Africa, and stands to overtake Russia as the second largest producer of the white metal.

The metal that glitters — gold — is also in line for an ownership overhaul. But Anglo Zimbabwe managing director Mr James Maphosa yesterday remained tight-lipped preferring only to say: "That (new mining law) is an issue under discussion and our submissions would be through the Chamber of Mines.

Currently, we cannot make a public statement on the matter."

No comment could be obtained from Metallon Gold Zimbabwe spokesperson Ms Rachel Mutape, who did not respond to questions sent to her earlier this week.

Metallon, wholly owned by South African business mogul Mzi Khumalo, runs at least five gold mines in Zimbabwe.

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