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detrimental to mining sector'
Gogo, The Herald (Zimbabwe)
March 08, 2006
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
Capital expenditure for the projects has been put at US$700 million
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
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
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
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
Metallon, wholly owned by South African business mogul Mzi Khumalo,
runs at least five gold mines in Zimbabwe.
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