GOVERNMENT’S decision to expropriate a 51% stake in foreign-owned mining firms has raised an outcry in South Africa where sources say President Thabo Mbeki’s government is becoming increasingly concerned by Zimbabwe’s habit of arbitrary p
The move by government came as a shock to Pretoria which had reportedly received assurances from President Robert Mugabe’s government that there would be no forced take-overs of mines in the country, sources indicated.
The news was received with consternation by South Africa’s opposition, which called on their government to fast track agreements protecting South Africa’s property rights in Zimbabwe “given the serious threat to SA’s commercial interests”.
Sources indicated that South Africa, now a major investor in Zimbabwe’s mining sector, had hammered out an agreement last year under which it pledged financial and technical support for a black economic empowerment (BEE) programme after assurances from Mines minister Amos Midzi that the process would be undertaken in a transparent and non-disruptive manner.
The South African government undertook to finance small and medium-scale mining operations to enable
them to eventually take up stakes in the bigger, foreign-owned firms in the absence of crucial financial backing from local financial institutions.
A Zimbabwean team visited South Africa last August and was clearly informed about how South Africa had approached the issue of resource distribution and mineral production, and the remittance of foreign currency earnings from mineral exports.
As a result, the two countries had initiated a BEE exchange programme under which South Africa was to share its expertise on the creation of a viable mining charter for indigenisation.
The planned mine seizures, announced by Mines and Energy Development minister Midzi last Friday, are also understood to be at the core of the International Monetary Fund (IMF)’s decision to maintain sanctions against the country despite efforts made to clear outstanding arrears to the Bretton Woods institution.
The IMF has repeatedly told Zimbabwe that it should put in place measures to restore confidence in the fragile economy by respecting property rights.
In an address to the Chamber of Mines on the Mines and Minerals Amendment Bill, Midzi said: “Government has made two giant steps: to be an active participant in the mining business (and) to indigenise 51% in some instances of all foreign-owned companies.”
Midzi said government would hold a 51% shareholding in platinum and diamond mines as well as in gold and emerald mines.
“In gold, government shall only participate in big mines,” he said.
In firms mining other minerals like platinum, previously disadvantaged people (blacks) would take up to a 50% shareholding to be achieved over seven years.
Midzi last year reassured the international community that the country would undertake indigenisation of the sector after comprehensive consultations with key stakeholders.
A number of South African firms have invested heavily in Zimbabwe’s mining sector.
The world’s biggest platinum miner, South Africa’s Anglo Platinum (AngloPlats) which is developing the Unki platinum project in the country, said it had noted “with concern” Zimbabwe’s proposal.
South Africa’s Impala Platinum, which has an 86,7% stake in Zimplats and a 50% stake in Mimosa mine, warned that the new measures would hurt investment in the sector.
Both Implats and AngloPlats said they would engage the government on the proposal. A meeting between government and miners has been called on Monday to discuss the issue.
“We are not going to give up and are unlikely to do so while there is still room for discussion,” Zimplats CEO Greg Sebborn was quoted by an online news agency yesterday as saying.
Sebborn also said in the report his company’s investments, backed by South African-based Implats, were covered by two specific agreements. The first was drawn up in the mid-1990s when Zimplats invested in the Hartley Platinum Project, and the second came in 2000 when Implats invested in the Zimbabwean operations. Both agreements had government signatures and the latter held the signature of the South African Reserve Bank, he said.