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Zimbabwe nationalizes all extractive industry

29 March 2011 09:16 (UTC +04:00)

Baku - APA-Economics. Zimbabwe yesterday made public radical regulations forcing foreign mining companies to sell majority stakes to blacks by September this year, sending shares in miners with local operations tumbling amid jitters their businesses could be nationalized, Zim Online reported.

A government gazette, dated Friday but which was made public yesterday gave mining companies 45 days to submit details of their indigenisation plans to the Minister of Youth and Indigenisation Saviour Kasukuwere, failure of which they could be prosecuted.
Aquarius Platinum Ltd that jointly owns Mimosa platinum mine with Impala Platinum (Implats) mines, took the biggest knock in yesterdayâ€™s trade, shedding seven percent of its value due to fears over Harareâ€™s indigenisation policy.

The empowerment plans are opposed by Mugabeâ€™s coalition partner Prime Minister Morgan Tsvangirai, who favours a gradual approach, fearing that wholesale indigenisation could wreck a fragile economy.

Implats, which operates the largest platinum mine in Zimbabwe fell five percent yesterday. Its Zimbabwe unit has fallen 20 percent this year in Australia on fears of nationalisation.

Government sources say Implats has over the last two months come under a lot of pressure to sell shares to Mugabeâ€™s political allies but the firm has resisted, arguing the government should honour an agreement that protects it from the empowerment drive.

Zimplats wants to sell 15 percent of its shares to locals.

Analysts say Zimbabwe maybe putting pressure on foreign mines to pay more in taxes.

Miners may come under pressure, torn between pulling out and risk losing rights to the massive platinum reserves and other minerals to Mugabe’s preferred investors from China or negotiate revised deals that will see the government getting more from the countryâ€™s resources.

Zimplats has already ceded 33 percent of its platinum concessions on the great dyke to the government, which sold these to Russian and Chinese investors.

The resource rich southern African nation boasts the worldâ€™s second largest reserves of platinum, has discovered alluvial diamonds which experts say could generate $2 billion a year and has large gold, chrome and coal deposits.

The new regulations now target foreign mining companies with a value above $1, effectively forcing all mines to be in local hands. Previously, only companies with a net asset value of $500,000 were targeted for indigenisation.