Jan Raath in Harare – Times Online November 21, 2007
President Mugabe unleashed a devastating new blow to Zimbabwe’s mortally wounded economy yesterday, announcing a new law giving the state a controlling stake in mines operating in the country.
Under the Mines and Minerals Amendment Bill, the Government can take over 51 per cent of companies mining strategic fuels and minerals, taking 25 per cent without paying.
The balance of 26 per cent it needs for a majority shareholding will be paid for, it said. However, the Bill brazenly asserts that payment will come from dividends earned from the state’s shares in the companies it takes without having to pay. It gives the state seven years in which to do it.
The Bill justifies its seizure “in virtue (sic) of its original ownership of all useful minerals in its subsoil”. Companies mining other minerals will be taken over by indigenous Zimbabweans. The method of payment is not specified.
Much of Zimbabwe’s mining industry has been wrecked by Government interference but the ripe plum remaining is the fast-growing multibillion-dollar platinum industry. The largest company with such interests is Zimplats, the local subsidiary of South Africa’s Impala Platinum, which is the world’s second-biggest producer of the precious metal.
Already producing $10 billion (£5 billion) of platinum a year, Zimplats is carrying out a billion-dollar expansion programme to double its output and make the mine one of the world’s biggest. It is by far the biggest foreign investment in Zimbabwe since the country’s independence in 1980. Also in the Government’s sights is the London-based Rio Tinto’s Murowa diamond mine, which has cost $78 million to set up and is on the verge of starting a $270 million expansion.
No comment was available from either of the two companies. The Zimbabwe Chamber of Mines said that it was studying the Bill. Doug Ver-den, a spokesman, said: “It doesn’t look good.”
The proposals are regarded by economists as the logical extension of the lawless invasions of white-owned farms that began in 2000 and set off the decline of one of the most prosperous countries in Africa.
“The Government is invading the property rights of the mining companies,” John Robertson, an economic commentator, said. “It's political patronage. The dividends will go to the select few as a reward for service to the ruling party. It is shallow and damaging in the extreme.”
The Bill specifies that any company showing “wilful noncompliance” in surrendering its shares will have its mining licence cancelled. Any future mining investments will be required to give the controlling share to the Government or black Zimbabweans. “It is going to put a stop to all new mining development,” said Mr Robertson.
Last month the Zimbabwe parliament passed a Bill to force foreign-owned companies to sell 51 per cent of their shares to black Zimbabweans. Mr Mugabe has yet to sign the Bill into law. Before the platinum company committed itself to its investment the Government signed an agreement guaranteeing that the venture would not be nationalised.
Last updated 22/11/2007