Zim ownership law a blow to mining

HARARE – Zimbabwe’s proposed empowerment law will hit production in the nation’s top foreign currency earning sector, which is already grappling with exchange rate and power problems, an industry official said on Friday.

Zimbabwe’s Chamber of Mines, a representative body for an industry still dominated by foreign firms, said the bill was a blow to miners, who contribute about 35 per cent of the country’s foreign currency earnings. “We have all sorts of problems, but these have been made worse by the recent passing of the empowerment bill,” the chamber’s acting chief executive Douglas Verden told Reuters.”We must have a foreign investor-friendly environment because mining is very expensive…if government decides to take over 51 per cent, then foreign investment will cease.No foreign investor will come in knowing they will not take control.”On Wednesday, President Robert Mugabe’s government pushed through parliament a bill allowing the transfer of majority control of all foreign-owned firms – including mines and banks – to black Zimbabweans.The bill is expected to sail through the upper Senate, also dominated by Mugabe’s ZANU PF, before being signed into law.Anglo Platinum and Impala Platinum – the world’s number one and two platinum producers – and Rio Tinto are some of the foreign mining companies with investments in Zimbabwe.Verden said the industry, which had been consulting with the government over the past five years regarding the empowerment law, would wait to see how the law would be applied, particularly to firms with considerable social investments.”The die is cast, now we wait and see,” Verden said.”The bill itself as it stands is an enabling act, allowing the minister to make regulations.We are now waiting to see exactly what transpires.”Indigenisation and Economic Empowerment Minister Paul Mangwana has said government would allow companies to comply to the new rules gradually.Verden said miners were concerned about how they would be paid for shares to be transferred to locals.”It’s still unclear, but we’ve heard of some fanciful options such as financing the purchase through dividends – remember not many mines are making profits at the moment – or in the Zimbabwe dollar, which is worthless.”Mining output, especially in the key gold sector, would decline further due to the added uncertainty surrounding the bill, persistent electricity cuts and the flight of skills.Verden said Zimbabwe was losing ground to other countries on the continent with friendly mining policies.Nampa-Reuters”We have all sorts of problems, but these have been made worse by the recent passing of the empowerment bill,” the chamber’s acting chief executive Douglas Verden told Reuters.”We must have a foreign investor-friendly environment because mining is very expensive…if government decides to take over 51 per cent, then foreign investment will cease.No foreign investor will come in knowing they will not take control.”On Wednesday, President Robert Mugabe’s government pushed through parliament a bill allowing the transfer of majority control of all foreign-owned firms – including mines and banks – to black Zimbabweans.The bill is expected to sail through the upper Senate, also dominated by Mugabe’s ZANU PF, before being signed into law.Anglo Platinum and Impala Platinum – the world’s number one and two platinum producers – and Rio Tinto are some of the foreign mining companies with investments in Zimbabwe.Verden said the industry, which had been consulting with the government over the past five years regarding the empowerment law, would wait to see how the law would be applied, particularly to firms with considerable social investments.”The die is cast, now we wait and see,” Verden said.”The bill itself as it stands is an enabling act, allowing the minister to make regulations.We are now waiting to see exactly what transpires.”Indigenisation and Economic Empowerment Minister Paul Mangwana has said government would allow companies to comply to the new rules gradually.Verden said miners were concerned about how they would be paid for shares to be transferred to locals.”It’s still unclear, but we’ve heard of some fanciful options such as financing the purchase through dividends – remember not many mines are making profits at the moment – or in the Zimbabwe dollar, which is worthless.”Mining output, especially in the key gold sector, would decline further due to the added uncertainty surrounding the bill, persistent electricity cuts and the flight of skills.Verden said Zimbabwe was losing ground to other countries on the continent with friendly mining policies.Nampa-Reuters