Caution urged in plan to grab mining assets

Mining company Implats says the Zimbabwe government's plan to take a 51 percent controlling interest in mining operations in the country "is not in the best interests of developing the platinum industry in Zimbabwe". Newspapers in South Africa and Zimbabwe have devoted many column inches to the news that the government planned to become the majority shareholder in the country's estimated US $20 billion mining sector. According to South Africa's Business Day, Zimbabwean Minister of Mines Amos Midzi told the Zimbabwe Chamber of Mines last week that the cabinet had approved draft proposals requiring mining companies to surrender 51 percent of their assets to the government and/or indigenous groups, depending on the commodity. The government would pay only for 26 percent and the remainder would be a "free carry". Midzi reportedly warned that alternative foreign investors had been identified to take over equity in mines if the current external shareholders did not co-operate. South African mining house Implats, which has significant interests in Zimbabwe's platinum mining sector, told IRIN that the company was aware of the plan but a company spokesman would not expand on a statement issued on Sunday that Implats was "in receipt of a cabinet-approved draft proposal relating to ownership of the Zimbabwean platinum industry" and that Implats believed the proposal was "not in the best interests" of the platinum industry. The government's scheme was also "inconsistent with previous discussions [the company has had] with the Zimbabwean government", Implats added. "The company will actively engage with and seek further clarity from the Zimbabwean government on the proposal, and remains hopeful that a solution will be found in the best interests of Zimbabwe and the companies invested there," Implats noted. Zimbabwean economist Dennis Nikisi said the government's strategy was in line with similar developments in countries such as Namibia, Botswana and South Africa, where the authorities have moved to ensure their countries reap greater rewards from the extraction of natural resources. But, he cautioned, the difference between enhancing equity and sabotaging an already weakened economy lay in how the proposed plan was executed. The rationale behind the government's proposal was "basically that all the mineral resources in the country belong to Zimbabwe and Zimbabweans". "Many of the corporations that are extracting these mineral resources in Zimbabwe have been doing so independently, without any shares owned by the government or indigenous individuals. As such, it is improper that the local people - either through themselves or the government - should not directly benefit from the extraction of these minerals," Nikisi explained. The proposal was thus intended to ensure that Zimbabwe "benefits from its own resources". The "free carry" part of the scheme was based on the belief that the government would warehouse those shares for eventual purchase by indigenous groups. But, he cautioned, "we must be very careful - already Zimbabwe is perceived as a lawless country, and as people who do not respect international agreements." Taking a fast-track land restitution approach to reforming the ownership structure of the mining sector could mirror the effects of farm invasions on agriculture. "This [mining sector reform] must be executed in a manner that is beneficial to mining companies as well as government, particularly at this delicate stage where we want to be perceived as willing to be part and parcel of the global community," Nikisi said.