21 April 2006

Zimbabwe: Mines Grab Scare

Harare — PRESIDENT Robert Mugabe on Tuesday once again rattled foreign mining houses by reiterating that his government was not backing off on an intended plan to seize more than half the shares of foreign-owned mines.

Digressing from his prepared speech, the veteran politician told thousands of his ruling ZANU PF supporters who gathered for the Independence Day celebrations at the National Sports Stadium in Harare that minerals were non-renewable resources and that his government needed to maximise on the existing deposits, which were being exploited by foreigners.

"Takati tinoda kuita (We said we wanted) 50 or 51 percent in favour of Zimbabweans or the state and 49 percent in favour of investors," President Mugabe said.

Tuesday's seizure threats immediately unnerved players in the sector, mining industry sources said.

President Mugabe's pronouncements had once again sparked fresh panic in a sector which had recently discounted the seizure threats after the 82-year-old had told a ZANU PF meeting that miners had nothing to fear from the proposed law.

At that time, President Mugabe said amendments to the Mining Act were still under discussion contrary to an earlier statement by his Mines Minister Amos Midzi that the Cabinet, which the President chairs, had okayed the amendments.

In another meeting with foreign miners, President Mugabe also reportedly assured them to press ahead with expansion plans, which they had put on ice.

Miners said this week plans to nationalise foreign owned mines would once again scuttle ongoing negotiations between the government and the Chamber of Mines, the representative body for the miners.

"That statement overrides the negotiations we are engaged in," said one miner who requested anonymity.

In March, Zimbabwe's mines ministry approved draft amendments to the mining law aimed at extending government control over foreign-owned mining interests. It said up to 25 percent shares would be grabbed without compensation.

Miners warn that financial support from banks and direct investors will cease if the law is passed, while output and jobs will fall. Already, worried foreign miners have responded to the threats by freezing plans to increase capacity.

Mining is the only industry experiencing real growth amid the collapse of most key sectors of Zimbabwe's economy.

But perceived risk arising from the proposed amendments is stalling expansion programmes.

Uncertainty over the new mining laws has seen the country's largest platinum producer, Zimplats, deferring a US$2 billion expansion plan.

The white metal miner says it stands ready to sink US$100 million into the Great Dyke each year over the next two decades.

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