Zimbabwe Mining Firms Given Deadline to Comply With Indigenization Law
Harare economist John Robertson warned that the mining sector will collapse if the new regulations are implemented
Entities that will receive and hold share stakes include the Indigenization and Economic Empowerment Fund, the Zimbabwe Mining Development Corporation, a sovereign fund, or employee share scheme Companies with mining operations in Zimbabwe have been given six months to comply with indigenization regulations providing for the transfer of majority control to sovereign wealth funds or other state-controlled entities in the name of black empowerment. A new Indigenization Ministry notice published in the official gazette sets the minimum holding by indigenous investors as a controlling 51 percent stake. There had been some discussion of a lower indigenous stakeholding benchmark for the mining sector. Companies have 45 days to present indigenization plans, six months to make transfers. Entities that will receive and hold share stakes include the Indigenization and Economic Empowerment Fund, the Zimbabwe Mining Development Corporation - or companies that it forms for this purpose - a sovereign fund, or employee share scheme. The notice says the value of the shares or other interests will be calculated on a basis agreed by the Ministry of Indigenization and the mining firms concerned. Share prices of targeted companies like Aquarius Platinum, owner of Mimosa Mines, plunged on the Australian stock exchange on the news. Aquarius spokesman Gavin Mackay told VOA Studio 7 reporter Gibbs Dube that his company is consulting stakeholders on the new regulations. Former Affirmative Action Group President Matson Hlalo said the indigenization of mining concerns is being pursued at the wrong time. Harare economist John Robertson warns that the mining sector will collapse if the new regulations are implemented, adding that "some foreign firms will no longer want to invest in country that does not respect property rights." The African Union and the Economic Commission for Africa meanwhile advised caution on indigenization initiatives. AU and ECA officials participating in a conference of economy ministers noted the negative effects of other such African initiatives. The officials encouraged governments to look for other ways to create economic growth, such as promoting small and medium-scale enterprises. Economist Prosper Chitambara said there is no evidence supporting nationalization as a strategy for economic growth, telling VOA Studio 7 reporter Tatenda Gumbo that indigenization should be reworked to boost Zimbabwe's informal sector.