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(NEWZIMBABWE) Rio Tinto hands over 52 percent of Murowa Diamonds

Rio Tinto hands over 52 percent of Murowa Diamonds
08/10/2011 00:00:00
by AFP

MINING multinational RioTinto's Zimbabwean subsidiary Murowa Diamonds has ceded 51 percent of its equity to comply with a new law giving local blacks majority shares in foreign companies, a news report said on Saturday.

"Murowa Diamonds wrote to us yesterday saying they have given up 51 percent shares and these would be given to our people," the state-owned Herald newspaper quoted Indigenisation Minister Saviour Kasukuwere as saying.

The mine, located in the Midlands town of Zvishavane, was commissioned in 2004 with Rio Tinto owning 78 percent while the balance was controlled by Rio Zim, a local entiry listed on the Zimbabwe Stock Exchange.

Zimbabwe gave foreign companies including banks and mines up to September 25 to submit plans to sell 51 percent of their shares to the black community by 2015.

An official in the indigenisation ministry said around 700 companies had missed the deadline, warning them to follow the law or risk de-registration.

But Zimbabwe has also proved willing to strike individual deals with companies, giving platinum-mining giant Zimplats more time to submit its proposal and allowing British insurer Old Mutual to conduct a "first phase" of compliance by handing over 25 percent of its shares.

Still resistance to the empowerment regulations remains in pockets of the country’s lucrative mining sector, Kasukuwere said.

"The general trend of submitted plans shows a level of resistance in moving away from the proposal by the Chamber of Mines of Zimbabwe. The mining businesses are offering to dispose 26-30 percent as equity on commercial value,” he said.

“The balance is to be claimed as empowerment credits for corporate social responsibility programmes. It appears this approach has been agreed to and co-coordinated under the Chamber of Mines of Zimbabwe.

Kasukuwere said some companies were proposing to dispose of equity to individual Zimbabweans or to indigenous consortia rather than to designated entities as prescribed by the law.

"My overall assessment is that over 90 percent of the submitted proposals do not meet the minimum requirements and there seems to be an element of resistance. However, I am meeting the various mining houses to achieve agreement on compliance with the law," he said.

President Robert Mugabe says the indigenisation law aims to fight poverty and put control of the economy in local hands, but the scheme has raised tensions within the shaky unity government with Prime Minister Morgan Tsvangirai.

Tsvangirai's party, which holds most economic portfolios in government, fears the law will scare off investors.

Labels: DIAMONDS, MUROWA DIAMOND MINE, RIO TINTO, SAVIOUR KASUKUWERE

posted by MrK @ 10:43 PM