Monday, April 02, 2012
Saturday, 31 March 2012 23:43
Deputy News Editor
Government and Implats could be headed for a major showdown following indications that the Johannesburg Stock Exchange-listed mining group will play hard ball over the transfer of a controlling stake in Zimplats to locals.
While everything seemed on course when Youth Development, Indigenisation and Economic Empowerment Minister Cde Saviour Kasukuwere and Implats chief executive Mr David Brown agreed on an indigenisation plan last month, recent developments have seen Zimplats’ parent company constantly shifting goal posts.
Mr Brown recently told an investors’ briefing in South Africa that Implats will only transfer a 31 percent stake in Zimplats to the National Indigenisation, Economic and Empowerment Board after receiving “fair cash compensation”.
The remaining 20 percent of the controlling stake Implats has agreed to hand over to locals will be shared equally among the company’s workers and the Community Share Ownership Trust.
However, Government maintains that it will not pay for resources that rightfully belong to the people of Zimbabwe.
Cde Kasukuwere yesterday said: “The fact of the matter is we are taking our resources and there is no need for us to concentrate on the trivial. What (Mr) Brown said or did not say does not change what we are doing here, which is taking our resources for the benefit of the majority.”
Mr Brown hinted that Implats only agreed to the deal so as to “take the heat off their backs” and was now looking at ways of getting the best of what he termed an “in-principle agreement”.
“We recognise that there is obviously quite a lot of water to flow under this particular bridge and, effectively, what we are trying to do now is to take some of the heat out of the angle that the Government was coming from in terms of our non-compliance with the law and accusations that we were being disrespectful and we were not being good corporate citizens,” he was quoted as saying.
“In essence, the in-principle agreement has taken a lot of that sting out of the relationship and we can now start to look at some of the detail but in a much more convivial atmosphere than previously.
“The impression created that we did not want to comply with Zimbabwe’s laws did put us in a difficult position with regard to our ongoing investment in Zimbabwe.”
Mr Brown was optimistic his company would emerge better from the arrangement.
“I believe that we have found an element of common ground and that we have a workable solution as the Government does understand that the recognition of appropriate value is essential.
“We will look to the discussion and, on execution; we believe that Zimplats will have met all the Government’s indigenisation and empowerment requirements.
“That will leave us in the very positive position of having received value for the sale of stakes, but, at the same time, not prejudicing Zimplats’ medium- and long-term growth aspirations in Zimbabwe,”
At the current market value, the 31 percent stake that Implats is supposed to transfer to the National Indigenisation and Economic Empowerment Board (NIEEB) is worth US$350 million.
However, the mining concern reckons its stock is undervalued and expects Zimbabwean authorities to part with close to US$500 million. Mr Brown also ruled out the possibility of having the NIEEB getting vendor finance to purchase the equity.
Vendor financing is a business transaction whereby a company lends money to a borrower for the purchase of its products or property.
Apart from a “fair value cash payment”, Implats also looks set to demand compensation for the platinum-bearing ground, worth US$153 million.
It claims to have voluntarily returned the ground to Government in 2006 in return for empowerment credits.
The group also claims it did not receive the credits with Mr Brown insisting any negotiations on the 31 percent stake will only commence after they get a US$153 million cash compensation.
“We are prepared to forego credits provided we receive adequate cash compensation in the equation and that the overall package is fair from a value perspective.
“If 31 percent is sold at value and Implats gets US$153 million; that would be an attractive outcome,” the Implats boss told the media and analysts’ conference.
And in a move that is likely to see the company regaining its controlling stake if Government does not stand firm, Implats is adamant that the Zimbabweans who will hold a controlling stake in Zimplats will have to fund the mining concern’s expansion programme.
Failure by the shareholders to follow their rights will see their 51 percent stake being heavily diluted.
Asked on what would happen if the Government maintained its stance of not paying for equity, Mr Brown said Implats would seek protection from the South African government, which has a bilateral trade agreement with Harare.
“We have been having conversations with the South African government on this because, obviously, they have a keen interest in what is happening.
“The treaty covers fair compensation and, obviously, if there was no fair compensation, then we would have alternative processes that we could explore.”