IN 2003, Anglo American Platinum (Amplats), the world's largest platinum miner, triumphed over the Zimbabwe government's demands that it cede 15-20% equity in Unki Mine, then an undeveloped project 60km from Gweru.
Amplats later invested US$300 million towards developing the mine, whose platinum deposits it had discovered decades earlier.
Struggling to operate in the aftermath of Zimbabwe's fast-track land reform programme and in an unpredictable economic and political climate which appeared increasingly hostile towards foreign ownership of the economy, many of Zimbabwe's foreign mining houses divested from the country.
Amplats' parent company, Anglo American Corporation of South Africa, which had vast interests in virtually all mineral activites, agriculture and manufacturing, had just rid itself of most of its interests in Zimbabwe, but kept Unki Mine because it saw it as a valuable asset in line with the company's redefined core business of gold and platinum mining.
However, two weeks ago, Zimbabwe's indigenisation and empowerment laws finally compelled Amplats to transfer not 15% or 20%, but 51% of Unki Mine to black Zimbabweans. Anglo American now joins the ranks of Impala Platinum (Implats), former majority shareholders in Zimbabwe Platinum (ZimPlats), and Mauritius registered, but formerly Australian-controlled Mimosa Platinum Mine, among major mining companies that have conceded to the Zimbabwe government's indigenisation demands.
Outside mining, major companies that have also complied with indigenisation laws include Johannesburg, London, Hong Kong and Zimbabwe stock exchanges-listed Old Mutual plc, and the local Meikles Group.
As the Youth Development, Indigenisation and Empowerment Minister, Saviour Kasukuwere, ploughs through the government's indigenisation "to-do" list, South African sugar producer, Tongaat Hullet, British-owned Standard Chartered Bank, and formerly British-owned but now South African-controlled, Barclays Bank Zimbabwe, may soon face the same fate.
As a country shunned by the international community and starved of foreign direct investment (FDI) mainly because of its controversial land reform and economic policies during the hyperinflation era, the Zimbabwe government's new empowerment drive raises questions on how attractive an investment destination it is to the foreign investor.
According to the World Economic Forum's Global Competitiveness Index 2012-2013 released in June, Zimbabwe is ranked 132nd out of 144 countries worldwide, while South Africa and Mauritius rank 52 and 54 respectively.
Since 2005, the World Economic Forum has measured the micro-economic and macro-economic factors influencing a country's competitiveness through its Global Competitiveness Index (GCI). The GCI assesses a state's institutions, infrastructure, macro-economic environment, financial markets development and other social indicators such as education and health, to determine a country's level of productivity, which in GCI terms translates to global competitiveness.
The GCI report on Zimbabwe states that although the country retained the same position as in 2011, ongoing efforts to regain macro-economic stability were inadequate. Government corruption, poor infrastructure and weak social indicators are the reasons for the country's low ranking.
In addition, lack of protection of property rights is seen as a huge deterrent for potential investors.
While the government of national unity (GNU) has made some strides towards restoring economic stability and FDI has improved considerably since 2003, the year Amplats invested in Unki Mine, total investment inflows had been at an all-time low of US$3,8 million. However, since dollarisation and the GNU's inception, foreign direct investment (FDI) has steadily increased from US$52 million in 2008, to US$165,9 million in 2010 and US$387 million in 2011, according to the Zimbabwe Investment Authority. Although this is a marked improvement, FDI levels are still low and regionally, Zimbabwe has had the lowest FDI inflows among Sadc countries for the past 11 years.
The African Development Bank notes government's indigenisation and land reform laws are major deterrents for foreign investors in its Zimbabwe Country Brief Outlook 2011-2013.
Commenting on Unki Mine's indigenisation, London-based analyst, Lance Mambondiani, recognised the importance of economic empowerment for blacks, but was highly critical of the government's heavy-handedness on the issue. This, he said, was one of the reasons for poor investor confidence and low FDI levels.
"The country's economic transformation requires restructuring and democratising of ownership and control of the economy by empowering the historically oppressed to play a leading role in the mainstream economy," said Mambondiani.
According to details of the Unki deal, as from June 30 2013, Unki's full-time employees, the Tongogara Community Trust and an unnamed pool of indigenous investors will receive 10% of shares each, while the government will acquire 21% through the National Indigenisation and Economic Empowerment Board through decade-long loans.
Further to waiting up to a decade before profits can be enjoyed, Unki Mine's new indigenous shareholders also have a US$142 million debt to settle with Anglo Platinum. The owed sum dates back to March 2008 for the cession of two mining claims the government took from Amplats.
"It is still viable to invest in Zimbabwe despite these seemingly prohibitive laws. A well-established company like Anglo-American can still mine in Zimbabwe profitably. Effectively government has given them a 10-year moratorium to cede the stake in the business," said Paul Chakaduka, a Johannesburg-based equities trader.
Although Zimbabwe's relatively cheap sale of claims, natural resources and state-owned assets, such as the sale of Ziscosteel to Indian steel giant, Essar, are intended to woo back international investors and the provision of tax concessions for mining, manufacturing and tourism investments could be attractive to international investors.