Saturday, March 12, 2011

(NEWZIMBABWE) Mines offer 26 percent equity

COMMENT - These people will set their own level of taxation next. They know what the law is, there is no reason to negotiate.

Mines offer 26 percent equity
by Alfonce Mbizwo I Reuters
11/03/2011 00:00:00

MINING companies would be comfortable with selling stakes of 26 percent to local owners under a government plan that aims to eventually transfer majority control, the head of the mining chamber said on Friday.

A minister from President Robert Mugabe's Zanu PF party said on Wednesday that Zimbabwe would set up a sovereign fund to own 51 percent of mines, but Prime Minister Morgan Tsvangirai said a day later cabinet had not adopted that decision.

The government has established committees to come up with ownership levels for different sectors.

"The sector committee on indigenisation in mining recommended a threshold of 26 percent, which is what the chamber is comfortable with," Victor Gapare, the Chamber of Mines president, told Reuters on Friday.

Analysts said impoverished Zimbabwe does not have the money to buy controlling stakes through the sovereign wealth fund but is likely to use the threat to force global mining giants to the table so the country with the world's second-largest platinum reserves can receive more money from its mineral riches.

Youth and Indigenisation Minister Saviour Kasukuwere said this week guidelines on local mine ownership would be published on Friday and take effect within a week.

The move is likely to discourage foreign investment and could hit foreign miners including Anglo Platinum and Impala Platinum, the world's largest and second-largest platinum producers, and Rio Tinto, which runs a diamond mine in the country.

The empowerment drive has split the unity government formed by Mugabe and Tsvangirai in 2009, as Mugabe's ZANU-PF vigorously pursues a take-over foreign companies while Tsvangirai's MDC is urging restrain, fearing this could cause economic chaos.

"Government must stop flip-flopping on this issue and come clean once and for all," Gapare said.

Gapare also said increased funding for gold mining companies would help increase production to 14 tonnes this year, up from 9.6 tonnes in 2010. He said the mining industry would need $7 billion in investment to fully recover in the next three years.

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