November 19, 2007 / 7:17 AM / 12 years ago

Zimbabwe seeks 25 percent stakes in mining firms

HARARE (Reuters) - President Robert Mugabe’s government published a draft bill on Monday forcing mining firms to transfer majority shareholdings to local owners, including giving the Zimbabwe government a free 25 percent stake.

The mines and minerals amendment bill is expected to be presented to parliament and to be approved before the end of the year, and follows the passing in September of a general bill giving 51 percent stakes in foreign-owned firms to locals.

That bill did not include a provision for a 25 percent government shareholding.

Analysts say the latest drive by Mugabe’s government is likely to worsen an economic crisis that has left the southern African state with the highest inflation rate in the world at nearly 8,000 percent, and discourage foreign investment.

The world’s second biggest platinum producer, Impala Platinum (Implats), is the foreign mining firm with the most operations in Zimbabwe, while Rio Tinto has diamond interests and the world’s top platinum producer Anglo Platinum (Angloplat)

is developing a mine in the country.

South Africa’s Implats has said it already had agreements in place that it expected would meet the requirements of the general bill that seeks to grant majority ownership to locals, and that, in principle, it supported the aims of localization.

“We have not seen the latest documentation and will not be in a position to comment further until we see it,” Implats’ Chief Executive Officer David Brown told Reuters.

Angloplat’s spokesman was not available for comment.

RISK

Zimbabwe Chamber of Mines Chief Executive Officer Douglas Verden also said he had not yet seen the new bill: “This is not an issue I can comment on now, I’m yet to study the bill.”

But the chamber’s chief economist David Matyanga last month said the proposed localization of mine ownership would scare away much-needed foreign investment and hit production in a sector that is now the country’s leading foreign currency earner.

Matyanga said Zimbabwe already had significant local involvement in the mining industry and risked losing further ground to other countries on the continent with friendlier investment policies.

“Of the 22 mining companies in the country, 10 are foreign owned, three are run by government, two are wholly indigenous owned, four listed on the Zimbabwe Stock Exchange and another two owned by local, third or fourth generation white Zimbabweans,” Matyanga said.

He said one of the 22 firms had an ownership dispute.

Zimbabwe is grappling with a severe economic crisis blamed on Mugabe’s controversial policies, such as the seizure of white-owned farms to resettle landless blacks.

The veteran ruler, in power since independence from Britain in 1980, denies mismanaging the economy and says it has been sabotaged by foreign firms and western nations plotting to undermine his rule.

Additional Reporting by James Macharia in Johannesburg; Editing by Chris Johnson

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