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companies brave Zimbabwe nationalisation
Nelson Banya, Reuters
March 11, 2008
foreign mining companies said on Monday they would press ahead with
operations in Zimbabwe despite a nationalization
law that analysts warned could deepen an economic crisis ravaging
The world's largest platinum
miner, Anglo Platinum and Rio Tinto have said they will continue
mining after President Robert Mugabe signed into law on Sunday a
bill giving locals the right to take majority control of foreign
companies, including mines and banks.
"We will continue
to engage Zimbabwe's government," Trevor Raymond, Angloplat's
head of investor relations told Reuters.
Nationalisation has not
discourged Rio Tinto, which has diamond interests in Zimbabwe.
"Rio Tinto is supportive
of the move towards indigenisation provided that it is done at the
right pace and in a way that does not discourage much needed overseas
investment in the Zimbabwe mining industry," it said in a statement.
already suffering from foreign investor flight, the world's highest
inflation rate of over 100,000
percent and severe food, fuel and foreign currency shortages.
Mugabe is digging in
for March 29 elections, facing one of the biggest political challenges
in his 28 years in power after former finance minister Simba Makoni
broke ranks with him.
Makoni's chances of victory
in the polls were boosted when Dumiso Dabengwa, a senior member
of Mugabe's ruling ZANU-PF, endorsed him. Makoni is running as an
Mugabe also faces long-time
rival Morgan Tsvangirai, leader of the biggest faction of the opposition
Movement for Democratic Change (MDC), in the polls.
Mugabe may be dangling
shares in foreign-held companies to those who may seek to back his
opponents, analysts say.
There is constant talk
of more defections by senior ZANU-PF officials although most of
them have rallied behind Mugabe.
Analysts warned the nationalisation
drive could hit the mining sector, now the major pillar of the economy,
which makes up more than a third of Zimbabwe's foreign currency
"He (Mugabe) appears
to have signed the law to improve his prospects in the election,"
John Robertson, an independent Harare economic consultant, told
"But that's a short-sighted
move, one that will backfire and the broader economy will suffer
badly as long as this law remains on the statute."
The world's second biggest
platinum producer, Impala Platinum Holdings, is the foreign mining
firm with the most operations in Zimbabwe,
Its shares fell more
than 5 percent on Monday on worries about the nationalisation law
as well as a fall in the platinum price. Larger rival Anglo Platinum
lost 1.3 percent.
The Confederation of
Zimbabwe Industries (CZI) said the new law could also hurt manufacturing,
which operates at less than a third of its capacity.
"We are not opposed
to indigenisation, but we would want it to be implemented as smoothly
and practically as possible, taking note that we are part of a global
marketplace," said CZI president Callisto Jokonya.
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