Maravi

(NEWZIMBABWE) Empowerment stymies US$10bln investment: Implats

COMMENT - Implats doesn't want to share profits or pay taxes. So what's new? Why would any country in the world want 'investment' that it doesn't benefit from?

Empowerment stymies US$10bln investment: Implats
26/08/2011 00:00:00
by

IMPALA Platinum Holdings Ltd., the world's second-largest producer of the metal, may invest as much as $10 billion in Zimbabwe to expand production if the government backs down on a demand that its business there be controlled by black citizens of the country.

The country, which has the world's largest platinum reserves after South Africa, passed a law earlier this year to force foreign companies to cede at least 51 percent of their local assets to black Zimbabweans.

Anglo American Platinum, the world's largest platinum producer, and Aquarius Platinum Ltd., also mine the metal in the southern African country.

"It would run into the billions of dollars, probably between $5 and $10 billion," Chief Executive Officer David Brown said in an interview in Johannesburg yesterday, where the company is based. "Fifty-one percent equity just does not work."

Impala first invested in Zimbabwe in 2001 when it bought 30 percent of Zimbabwe Platinum Mines Ltd. for the equivalent of $47 million and later took control of the company.

It is now the biggest investor in Zimbabwean mining, with the country in the third year of recovery from a decade-long recession sparked by the seizure of white-owned commercial farms for redistribution to black subsistence farmers.

The unit, now known as Zimplats Holdings, produced 182,100 ounces of platinum in the year to June 30 and is in the midst of a $460 million expansion of its Ngezi mine, southwest of the capital Harare to boost output to 270,000 ounces in 2014, according to a company statement.

"We could begin to look at phase three and beyond but this requires stability," Brown told investors at a presentation. The company has until Aug. 31 to revise its May proposal to satisfy ownership rules after it was rejected last week.
Impala also owns the Mimosa mine in the country in a venture with Aquarius.

Impala, which produces about 25 percent of the world's platinum, used to cut car emissions and make jewellery, is spending $4.5 billion over the next five years to expand production as rising demand drives up prices.

While most of its deposits are in South Africa, 11.3 million ounces, or almost a third of its total platinum reserves, are in Zimbabwe. That's worth about $21 billion at the current platinum price.

"It's a huge disappointment that we find ourselves in this position - we've been a model investor in this country," Brown said in the interview. Impala believes "an appropriate level of ownership will be the final result" of talks with the government, Brown told investors. The ownership rule could "retard" investment in mining and other industries at a time when it's needed, he said.

Economic expansion has been "largely confined to the mining and agriculture sectors," the London-based Economist Intelligence Unit said in a report earlier this month.

Power shortages, uncertainty over the likely election timetable "and continued confusion about legislation requiring 51 percent local ownership of all enterprises, are likely to prevent more rapid gross domestic product expansion," it said.

Zimplats signed an agreement with the government in 2006 to release of a portion of its mining claims in exchange for a combination of black empowerment credits and cash. Impala said in a June statement that year the area contains 99 million ounces of platinum, palladium, rhodium and gold.

The area could support open-pit mining and "could be turned into quite a profitable concern," Brown told investors. "They gave that ground to people who weren't necessarily interested in mining it."
The country also has the world's second-biggest chrome reserves as well as deposits of coal, gold and iron ore.

Labels: IMPALA PLATINUM, INDIGENIZATION AND EMPOWERMENT ACT (ZIMBABWE), ZIMPLATS

posted by MrK @ 4:49 PM