THE only respite foreign mining companies in Zimbabwe can receive is an extension of the period within which they would be expected to cede 51% shares, according to the government.
This is likely to stoke fears of regulatory uncertainty in Zimbabwe among investors.
Mines and Mining Development minister Walter Chidakwa insisted that the sector would not be exempt from the 49%-51% compliance threshold.
However, mining sector sources said this would create fresh waves of uncertainty as some foreign mining companies have made significant progress regarding compliance with the contentious legislation during the tenure of ousted Indigenisation minister Francis Nhema.
“Apparently we are going back to the drawing board with regards compliance with the empowerment law,” said a mining executive from one of Zimbabwe’s big foreign-owned mining houses.
“We had good progress with the government and our company (made) significant concessions to the deal which we were now finalising.”
Zimbabwe promulgated the indigenisation policy in 2007, leading to an outcry from a capital intensive industry, with economists saying investors had put new projects and expansion plans on hold owing to the ambiguity that has dogged the policy.
The law requires foreigh companies to cede 51% of their shares to employee and community share schemes as well as to the National Indigenisation and Economic Empowerment Board.
President Robert Mugabe and his government have said the government will not pay for shares ceded by foreign miners such as Impala Platinum and Anglo American Platinum in the past two years.
Mining executives in Zimbabwe say they are still engaging with the government over revision of empowerment deals their companies signed with the government, which compelled them to provide vendor financing for State bodies to fund the takeover of the shares.
The money was supposed to be paid back through dividends. Mugabe is now arguing that the resources foreign miners are extracting in Zimbabwe constitute the compensation for the shares they have to cede.
Foreign mining companies in Zimbabwe include resource giants Rio Tinto, Implats, Amplats, Aquarius Platinum, Metallon Gold, DRDGold and junior miners such as Mwana Africa, Caledonia Mining Corporation and New Dawn Mining, among others.
“. . . what’s clear is that we will take a simple approach,” Chidakwa was quoted as saying by State media on Monday.
“The 51-49% threshold is a requirement enacted by Zimbabwean legislators; as such it will stick. It’s not negotiable,” he said.
“We can only be flexible on the period that companies will be able to achieve this.”
In its current format, the empowerment policy requires foreign companies to be fully compliant within five years.
Revisions to the law early this year now compel foreign companies to submit their empowerment compliance plans to the minister responsible for the sector they operate in.
Zimbabwe has vast mineral resources spanning gold, coal, chrome, platinum and nickel, among others.
This has attracted investors from as far as Europe, Russia, China and other regions and markets.
Despite its vast mineral endowment, the country is struggling to revive its economy. Fund managers have complained of regulatory uncertainty, high taxes and exorbitant fees.