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Mugabe won’t budge on mining compliance

Harare – Implementation of Zimbabwe’s indigenisation policy is open to negotiation for regional partnerships, joint ventures with friendly countries and investments in other economic sectors excluding mining, where the government will not accept any variation on the 51/49 percentage threshold, said President Robert Mugabe.

The indigenisation policy and other operating constraints have unnerved international investors who have largely kept their hands in their pockets, at least as far as sinking money into Zimbabwean projects is concerned. The International Monetary Fund has also advised Zimbabwe’s government to clarify the policy.

Mugabe, who is on his second state visit to South Africa in 20 years, has explained that the government will negotiate on compliance thresholds for other sectors apart from mining. The indigenisation policy, first promulgated in 2007, requires that all foreign companies in Zimbabwe cede 51% majority shares in local operations to black Zimbabwean groups.

“If the resources are brought from outside (or) you want to manufacture gadgets which we didn’t have before, well that’s not covered under the 51/49 (threshold). That can be negotiated,” Mugabe told journalists after a meeting with President Jacob Zuma on Tuesday afternoon.

He said implementation of the policy is also open to flexibility with friendly countries. South Africa is a trade partner of Zimbabwe and several local companies operate in that country, including SABMiller, Old Mutual, Standard Bank, Nedbank, Impala Platinum, Aquarius Platinum and Anglo American Platinum.

According to Mugabe, “with our friends on a joint basis, provided it’s on a reciprocal basis, we can negotiate for a 50/50” partnership.

He also said joint venture partnerships with friendly companies are possible, although he added that at present no South African companies have partnered with Zimbabwean mining companies to exploit mineral resources in the country. Zimbabwe has several joint venture partnerships with Chinese companies in diamond mining and cement manufacturing.

“We can have an arrangement on companies that operate on both sides. That principle applies on a regional basis to each other,” he said.

SA mining groups in Zimbabwe have largely signed empowerment deals. However, these are being reviewed to ensure that the community and employee share ownership schemes and the National Indigenisation and Economic Empowerment Board that will get the shares ceded by foreign companies, do not pay for the shares.

“The gold that I have is much more beneficial and important to my country. What we say, therefore, is that we who are owners of natural resources, must have at least 51% of the earnings of that company and we allow the company 49%,” said Mugabe.

Source – Fin24