(NEWZIMBABWE) Mining sector anxious over indigenisation

Mining sector anxious over indigenisation
by Gilbert Nyambabvu
13/02/2010 00:00:00

THE country’s key mining industry is experiencing some nervy moments after the recent gazetting of indigenisation regulations with some companies saying the issue could adversely affect plans to expand operations in the country.

Publication of regulations relating to implementation of the country’s Indigenisation and Economic Empowerment Act also exposed deep divisions within the coalition administration with Prime Minister Morgan Tsvangirai’s party saying the move was null and void while empowerment minister, Saviour Kasukuwere of Zanu PF maintained that the regulations would be effected.

However, the mining sector which is a key target of the legislation has been quick to express concern over the legislation which requires that companies operating in the country make arrangements to cede 51 percent of their shareholding to indigenous Zimbabweans.

“We believe that as all stakeholders in the country are currently working towards the economic recovery of Zimbabwe, and that the mining industry will be one of the leaders in the economic recovery of Zimbabwe, the indigenization legislation in respect of mining should reflect this perspective.

“Once the level and form of indigenization, as it relates to the mining industry, under the umbrella of these new regulations, is determined, this clarity and certainty will allow New Dawn to move forward and continue to develop and expand its business operations in Zimbabwe," said Ian Saunders chief executive of New Dawn Mining which runs Turk gold mine.

Global resources group, Rio Tinto, a majority shareholder in the country’s Murowa diamond mine, said the legislation was a “threat” and urged the authorities to seek dialogue with mining companies.

"We are staying on course (at) Murowa in Zimbabwe; the only threat to our operations is the indigenisation programmes," Rio chief executive Harry Kenyon-Slaney told a recent mining conference in Cape Town.

Other companies such as Caledonia Mining which owns Blanket Mine and Aquarius Platinum which has a 50 percent interest in Mimosa platinum mine as well as Mwana Africa said they would wait for the outcome of the Chamber of Mines’ consultations with government before deciding how to react to the legislation.

Meanwhile the regulations, which take effect from the beginning of next month, set a statutory limit of 49 percent foreign shareholding in local firms with companies expected to comply by the end of a five-year period.

Additionally existing businesses with a market capitalisation of US$500 000 should within 45 days from March 1 2010 declare their shareholding status to the responsible minister while new business would be required to follow suit within 60 days.

Companies unable to meet the 49 per cent limit would be required to submit a plan on how they will meet the threshold within 45 days from March 1 while those with acceptable reasons will be given a 30-day extension.

However, it remains unclear whether the regulations will be enforced with the coalition administration giving conflicting signals over the issue.

Elton Mangoma the MDC-T economic planning and investment minister told parliament that publication of the regulations had not been done properly adding that the measures risked undermining investment in the country

But minister Kasukuwere insisted to parliament that the regulations would be enforced.

“It is in the interest of the people of Zimbabwe to become shareholders. I have put in place those regulations and those regulations stand.

“Every minister administers laws under his ambit and does not necessarily have to consult,” he said.