Indigenization Minister Saviour Kasukuwere told an investment conference in Harare that the government will take control of the mining sector through a so-called sovereign wealth fund that will hold public stakes
Controversial mine ownership rules requiring foreign companies to cede 51 percent of shares to indigenous or black Zimbabweans will be published on Friday, Indigenization Minister Saviour Kasukuwere revealed Wednesday.
Addressing delegates at a two-day Euromoney investment conference in Harare, the minister accused foreign mining companies of fleecing the country of resource revenue, charging that citizens have not benefited from vast mineral wealth.
“The country has been getting a raw deal from the mining sector all along with companies taking money out of the country,” Kasukuwere said. He added that the unity government Cabinet had come to agreement on the question.
“We have to address this issue," Kasukuwere told investors. "We have been very careful in implementing this law and adhering to the rules of the country.”
Kasukuwere told the conference that the government will in effect nationalize the mining sector by setting up a sovereign wealth fund to hold 51 percent indigenous stakes. The fund will then help individual Zimbabweans acquire a stake in the mines.
Kasukuwere told VOA that he is not moved by assertions that such a step, amounting to expropriation, will discourage investment by foreign players.
He said foreign investors understood and agreed on the need to empower indigenous Zimbabweans. Kasukuwere said those who don’t like it can stay away.
The regulations in the Indigenisation Act seek to transfer ownership of any foreign-owned businesses with a value of US$500,000 or more to indigenous Zimbabweans.
“We have a mandate to empower our people, we want to be fair," Kasukuwere said. "Government has never been against foreign investment,” he told delegates, blaming poor performance by many state-controlled enterprises on Western sanctions.
Companies targeted include Angloplat and Impala Platinum - two leading players in the market for that semi-precious metal, and Rio Tinto, which operates a diamond mine.
Economist Eric Bloch dismissed Kasukuwere’s assertions as cheap politicking from ZANU-PF ahead of possible elections this year. He said the government does not have enough money to acquire the shares needed to establish a sovereign fund.
Affirmative Action Group President Supa Mandiwanzira said the government is right to take a 51 percent stake in mining firms for the benefit of black Zimbabweans.
But Tsvangirai's spokesman Luke Tamborinyoka denied the Cabinet had come to an agreement on the move to acquire 51 percent stakeholdings in mines.
Kasukuwere said that in putting the Indigenization Act into effect, the Cabinet had agreed and his role as a minister is to publish regulations for the process of cession.
As the Euromoney investment conference ended Wednesday, the ZANU-PF politburo was holding an extraordinary session to endorse an anti-sanctions campaign seeking the seizure of firms whose parent companies are in states imposing sanctions.
Investment Minister Tapiwa Mashakada said ministers put up a spirited performance at the conference to allay fears of foreign investors about nationalization.
Mashakada said nearly 2,000 delegates including investors and World Bank and African Development Bank representatives see Zimbabwe as a good destination for capital.
He said Zimbabwe should begin seeing significant foreign direct investment following the conference. “We expect some of the investors that attended the conference to come back to set up businesses in Zimbabwe,” Mashakada said.
Economic commentator Masimba Kuchera said President Mugabe’s failure to show up for the opening of the conference left investors unsure of the business climate.
He said it is particularly distressing that ZANU-PF held an extraordinary politburo meeting about seizing foreign companies even as the investment conference was under way.
PRESIDENT Robert Mugabe is about to seize control of Zimbabwe's foreign-owned multi-billion-dollar mining industry.
ReplyDeleteSaviour Kasukuwere, the Indigenisation Minister, said that a sovereign wealth fund would be created that would own 51 per cent of the mines, which account for a third of the country's GDP.
The regulations are to take effect at the end of next week.
"In the mining sector specifically, we have been getting a raw deal all this time, with companies taking money out of the country," Mr Kasukuwere said.
His comments echoed statements by Mr Mugabe last week in which he threatened to seize businesses based in countries - chiefly Britain - that imposed sanctions against him and his associates.
A year ago Mr Kasukuwere stunned Zimbabwe's business community when he introduced "indigenisation" regulations to force white and foreign-owned businesses worth more than $US500,000 to "cede" 51 per cent of their shares to black Zimbabweans.
The biggest mining investor in Zimbabwe is Impala Platinum, of South Africa, which has embarked on a $US450 million expansion of its Zimplats project.
It was specifically named by Mr Mugabe as a target.
Anglo American's Anglo Platinum, the world's biggest platinum producer, commissioned a $US300m start-up investment in a $US3.4bn platinum project at its Unki mine last year.
Rio Tinto has put on hold a $US300m expansion for its Murowa kimberlite diamond mine because of uncertainty over Mr Mugabe's nationalisation plans.
None of the companies was immediately available for comment.
Business leaders believe that Mr Kasukuwere's move will halt new investment, set off swift disinvestment and produce huge job losses.
The economy has experienced its first growth in a decade, after the formation of a coalition Government in 2009, with the former pro-democracy opposition leader Morgan Tsvangirai now Prime Minister.
Mr Tsvangirai and his colleagues in the coalition have been struggling to lure investment in the face of the continuing threats of nationalisation by Mr Mugabe and his ministers.