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Mugabe hints at way out of law
01/06/2006 17:14 - (SA)
Ngezi - Zimbabwe's President Robert Mugabe on Thursday hinted that mining companies might buy their way out of a new draft law giving the government 51% ownership, a proposal that has shaken the mining sector.
Mugabe was speaking on a tour of the Ngezi platinum mine owned by the local Zimplats unit of Impala Platinum, which on Thursday announced a plan to invest $2.5bn over 10 years to expand production in Zimbabwe.
"It is government's policy that Zimbabweans should derive greater benefit from their resources...hence the principle we enunciated of 50/50, or 49/51% shareholding in favour of the state of Zimbabweans," Mugabe said.
Could be satisfying intent
"This is what has frightened some of you and I don't see why you should be frightened," Mugabe said, adding that companies that "plough back" some of their earnings to Zimbabwe could already be satisfying the intent of the new law.
"The applicability of that (ownership) principle will certainly take into account all that you have done and all that you will be doing in the future," he told a group of managers from Implats and Zimplats at the mine.
The draft law unveiled in March detailed plans to give the government a 51% stakes in mining firms, including 25% without payment.
Few bright spots
Analysts said the proposals looked certain to batter the sector, which has become a top foreign exchange earner after the collapse of agriculture and is one of the few bright spots in an economy mired in recession.
Mining accounts for about 4% of gross domestic product, but contributes over 40% of all foreign currency inflows in Zimbabwe.
Zimplats chief executive Greg Sebborn said in a presentation to Mugabe the company wanted to increase platinum production to 1 million ounces per year within 10 years and planned to pump $2.5bn into its expansion programme.
Deal with government
Zimplats had already announced that it had reached a deal with the government to release some mining rights in exchange for a combination of cash and credit - a move likely to take it out of the firing line if the new ownership law is applied.
Mugabe, who in earlier speeches on the mining issue has sounded uncompromising on ownership, on Thursday said his government only sought to maximise Zimbabweans' own benefit from the country's rich natural resources.
"So don't dread us. We are not there to frighten away investors, we are not there to take away that which is not
ours. If you have carried out any indigenisation programme that is acceptable to us you do not need to fear anything," he said.
Foreign mining companies with interests in Zimbabwe include Anglo Platinum (Angloplat), the world's biggest platinum producer, number two Impala Platinum (Implats), Aquarius Platinum and mining giant Rio Tinto Plc.
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