IMPALA Platinum Limited is expected to sign the terms of the sale of a majority shareholding in its local unit, Zimbabwe Platinum Mines, today, a Cabinet minister has announced.
Youth Development, Indigenisation and Empowerment Minister Saviour Kasukuwere said Implats, the world's second largest platinum company, owns about 87 percent in Zimplats.
But under the indigenisation and empowerment laws it is compelled by the law to reduce its shareholding to 49 percent or less.
"We have concluded the mining and platinum sectors," the minister said yesterday.
"We are looking at this as the completion for the platinum and mining industry.
"There is compliance in the sector and this heralds a new era for the transfer of resources to our people."
Reliable sources said yesterday the deal would give 10 percent shareholding to a Community Share Ownership Trust while another 10 percent would be given to the Zimplats Employees Share Ownership Trust.
The company will also give up 31 percent of its shareholding to the National Indigenisation and Economic Empowerment Fund.
Another platinum company that has completed the empowerment deal is Mimosa Mining Company under which the shareholders, Aquarius Platinum and Implats, agreed to allow indigenous entities to buy 51 percent of the company.
This transaction, worth US$550 million, will see the JSE and UK-listed firm complying with indigenisation laws.
Anglo American also agreed to sell its majority stake in Unki Platinum to black Zimbabweans in a deal worth US$142 million.
The Zimplats deal could be above US$1 billion, given that the company is twice bigger than Mimosa.
Implats spokesperson Mr Bob Gilmour told Bloomberg yesterday that the sale of the stake was "a work in progress"
The empowerment policy has seen community share ownership schemes being established in Manicaland, Mashonaland Central, Midlands and Matabeleland North and South provinces with several communities already benefiting.
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So the deal says that Zimplat will vendor finance $961M of this deal. Let's think this through folks 1- Is the Indigenisation fund operating yet? 2- Zimplat will charge 10% interest/year (which in Zimbabwe's current situation is very good. No one can borrow from a bank in Zim, or in most African countries at this rate, we are more used to 15-18% rates) 3- The funds will be reimbursed from 85% of declared dividends. This is where I have a serious issue with this deal. To date, Zimplat has paid very little in dividends and rightly so because they are reinvesting most of the profits from the mine into its expansion. With a Life of Mine for Mimosa of 40 years, starting 2008, and average dividend payouts in the industry below 7%, I don't see how the communities, or the Indigenisation Fund will actually take home any meaningful amount, which was the all point of this exercise. I still believe that well structured royalties split between communities and the state are a much better answer than equity stakes in project which aren't truly of interest to the protagonists. - One last caviat, when comes cash calls, everyone either pays or get diluted, I wonder how that will work if the dilution brings the Zimbabwean shares below 51%! Africans wake up let's not be fooled by smoke screens...