Zimbabwe mines threatened with forced takeover

By Jan Raath May 9, 2011, 17:04 GMT

Harare - The six-week deadline passed Monday for white and foreign-owned mining companies in Zimbabwe to show the government of President Robert Mugabe how they plan to meet demands to ensure black Zimbabweans take control of their businesses.

The regulations would force many mining companies to sell 51 per cent of their shares to indigenous Zimbabweans were issued in late March.

This provoked fears that the most lucrative sector of the country's economy would be wrecked in the same way the country's agriculture was when Mugabe grabbed white-owned farms in 2000, bringing chaos and impoverishment.

The mines have to submit details of their current shareholdings, and how they intend to sell the majority stakes to blacks, and to name the beneficiaries.

The mining industry, which accounts for 47 per cent of Zimbabwe's gross domestic product, is struggling to emerge from a decade of economic ruin that ended in the collapse of the currency, astronomical inflation, famine and the closure of schools and hospitals, all of which economists blame on Mugabe's policies.

Zimbabwe has the second largest reserves of platinum in the world, and the biggest reserves of high-grade chrome ore, as well as sizable gold deposits.

Mineral output doubled last year to 1.38 billion US dollars, but 90 per cent of it is provided by the top dozen big companies, led by Zimplats, owned by South African-based Impala Platinum which has invested 4.5 billion US dollars in its Zimbabwe operations, and Anglo American Corporations Angloplats, with a 3.5-billion-US-dollar complex commissioned last year.

Angloplats spokesperson Thabsile Phumo, from the company headquarters in South Africa, Monday would only say the company was in ongoing engagement with the government of Zimbabwe on the regulations. Pro-democracy Prime Minister Morgan Tsvangirai, in coalition with Mugabe since 2009, has described the laws as meant to allow looting and plunder by a greedy elite among Mugabe's cronies.

The industry has been in negotiations for months with Indigenization Minister Saviour Kasukuwere, a wealthy oil company owner who insists that the laws are meant to give poor Zimbabweans a stake in the economy.

But last month Alex Mhembere, Zimplats chief executive, said there was a big appetite for a stake in Zimplats by people in business and political office.

'How do you ensure the local people will benefit in a way that the industry and the economy benefits?' asked Gapare. 'You need a balance.'

Both the big platinum companies secured a written agreement with Mugabe when they started Zimbabwean operations shortly after 2000, to allow them to receive credit for major investments in the welfare of the communities around them instead. They have invested millions of dollars in housing, schools, hospitals, roads and sports facilities, but Mugabe insists they have done nothing.

Legal sources say that there is ample scope, theoretically, to take the government to court and have the laws annulled. They discriminate racially against whites (although Chinese, viewed as political comrades, are exempted from the laws), they violate constitutional property rights and many other statutes and contradict themselves.

'But if we could get some sort of agreement without challenging them in court, so much the better,' said a Chamber of Mines official requesting anonymity. 'If we take them to court, their reaction will be to make the laws even worse.'

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