Zimbabwe reviewing indigenisation bill in attempt to boost mining investment

Zimbabwe mines minister makes vague promises of a review of its foreign ownership bill which has led to the drying up of foreign investment in its mining sector.

Author: By James Macharia
Posted: Thursday , 06 Aug 2009

JOHANNESBURG (Reuters) - -

Zimbabwe's mines minister said on Wednesday his country was reviewing a bill forcing foreign companies to sell stakes in their businesses to make it less harsh and attract badly needed foreign investment.

Under proposed indigenisation laws, foreign companies cannot hold more than 49 percent of a business and must sell any stake above that to Zimbabweans.

"We are going to come up with user friendly legislation. The bill will be finalised soon and presented to parliament in the current session," Mines and Mining Development Minister Obert Mpofu told an investment conference in Johannesburg.

"I can't comment on whether we will remove the 51 percent requirement or not, there is a consultation process on this by all the key stakeholders."

He declined to say when the bill would be brought to parliament for debate, before being passed into law.

The laws have led to the withholding of investment badly needed to raise production as Zimbabwe tries to recover from economic collapse under a unity government between President Robert Mugabe and old rival Morgan Tsvangirai.

Mpofu told an investment conference in Johannesburg the review of the bill would seek to strike a balance between attracting investors and indigenisation.

"Whatever we do should not discourage investment and not compromise indigenisation," he said.

Mining has become Zimbabwe's leading source of foreign exchange, with gold accounting for a third of exports, but political turmoil, lack of energy and unfavourable regulation has forced some mines to close.

Some of the key players in Zimbabwe include Impala Platinum Holdings (Implats), the world's second largest producer of the metal, which has the biggest mining investments in Zimbabwe. Its bigger rival Anglo Platinum and Rio Tinto also have mining interests in the country.

Zimbabwe has the world's second-biggest platinum reserves and large deposits of diamonds, coal and nickel.

BLACK EMPOWERMENT

Mpofu said the review would also include views from others in the region such as South Africa, which has adopted the black economic empowerment (BEE) to include blacks in the mainstream economy after years of exclusion under apartheid.

South Africa, the biggest producer of precious metals, adopted BEE legislation four years ago compelling mining companies to sell 15 percent of their assets to black investors by 2009 and 26 percent by 2014.

Mpofu reiterated Zimbabwe has launched a review of all mining contracts, saying it will introduce a "use it or lose it" policy, to allow investors to take advantage of unused mineral resources.

"We are contemplating introducing that kind of measure, which is aimed at those who have been sitting on mineral deposits for a long time without exploiting them," Mpofu said.

Zimbabwe's Chamber of Mines said with proper incentives, gold output would rise to 50 tonnes per year by 2015 from 3.5 tonnes last year, while platinum output could reach 1 million ounces a year after 15 years from 170,000 ounces a year now.

(Reporting by James Macharia)

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