Zimplats succumbs to indigenisation laws

2012-03-17 09:10

Zimplats has been given a Tuesday deadline by Indigenisation Minister Saviour Kasukuwere to formulate proposals on how it will hand over the majority stake to the state.

Zimplats, a subsidiary of South Africa’s Implats, has agreed to cede 51% of its platinum operartion in compliance with the country’s indigenisation law.

The decision has unleashed a wave of uncertainty in the country’s mining industry.

The extended deadline followed a two-week ultimatum given by the minister on February 22 as he turned up the heat on the platinum giant, which he had accused of “delaying tactics” over the implementation of the indigenisation law.

Last week, he threatened ­Zimplats with unspecified “mechanisms” to force compliance.

Observers warned this week that news of Zimplats agreeing to meet the indigenisation threshold would deal a heavy blow to other foreign-owned mining companies keenly following the Kasukuwere-Zimplats face-off – denting their hopes that the latter would resist the overture to indigenise.

Trevor Maisiri, a senior analyst at International Crisis Group, said: “I now foresee a situation where most mining companies will go back to the drawing board to try to streamline their proposals along the Zimplats model.”

In a strong signal that foreign-owned mining companies – Anglo Platinum, Aquarius Platinum, Rio Tinto and Caledonia – had ­coalesced around a Zimplats approach towards indigenisation, they each last year gave away a 10% stake and $10?million (R77?million) ­under the community share ownership trust schemes.

Maisiri also pointed out that the deal with Zimplats would give ­impetus to Kasukuwere’s rising political star and President Robert Mugabe’s Zanu-PF would “forever be indebted to him for breaking the ice on indigenisation”.

Meanwhile, the details of the implementation of the deal remained sketchy, with Zimplats chief executive Alex Mhembere quoted by the local media as saying: “It would take months (to implement the deal).” A position also seemingly ­accepted by David Brown, Implats chief executive, and Kasukuwere, who said: “There’s no deadline on when the finer details of the deal will be worked out.

“The details are about the value. How do they value the shares? All that has to be worked out.”

The 51% indigenisation stake is set to be handed over in three categories – an additional 20% stake to the community share ownership trust scheme, 20% to employees and the remaining 11% to the National Indigenisation and Economic Board.

It could not be immediately ­established from board chairperson David Chapfika if Zimplats would be compensated for giving away the indigenisation stake.

In the past, Kasukuwere (41) has said there would be no compensation as the government did not have the funds to do so.

Tony Hawkins, an economics professor at the University of ­Zimbabwe, told City Press this week: “There is no agreement on the valuation of shares, but the figure that’s popping up now is US$500?million. So any agreement will certainly be contingent on ­Implats getting compensation.

“But the big question?.?.?.?is where will the government get $500?million from? Given that indigenisation is the central plank of Zanu-PF’s election campaign, will they be prepared to compensate every other foreign-owned mine, such as Rio Tinto and Anglo Platinum?”
 
Eric Bloch, a senior economist at the Bulawayo-based H&E Bloch consultancy, said: “It sends a very strong message to foreign investors that Zimbabwe is an unsafe ­investment destination. Zimplats was bullied to the last breath and this has set a bad ­precedent on what is likely to ­follow in the mining sector in the coming months.”

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