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Rio surrenders 51% stake in Murowa Diamonds

Reuters | Mon, 10 Oct 2011 09:24

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[] -- RIO Tinto has told Zimbabwe's government it will give up a 51% stake in its local diamond unit Murowa, state media reported on Saturday, making it the first foreign-owned firm to voluntarily comply with the country's local ownership law.

"Murowa Diamonds wrote to us (on Thursday) saying they have given up 51% of shares and these would be given to our people," Kasukuwere told the official Herald newspaper.

Murowa officials were not available for comment.

The heavily criticised law is aimed mainly at mining firms and banks operating in the resource-rich country, which has become an economic basket case because of what analysts say are years of mismanagement by President Robert Mugabe's government.

Last month, Indigenisation and Empowerment Minister Saviour Kasukuwere said mining firms had mostly met a September deadline by which they were required to submit plans to transfer a 51% stake in their operations to locals.

The world's number one and two platinum producers, Anglo American Platinum and Impala Platinum are also major foreign mining firms with assets in Zimbabwe.

Critics have said a major reason for the law is to allow Mugabe's ZANU-PF party to build up a war chest ahead of national elections that could come as early as next year.

They say Zimbabwe, emerging from a decade-long slump, can not raise the funds needed to take over the mining assets and the cash generated by the firms would go to top officials, not ordinary people, who rank among the poorest in the world.

Regulations supporting the empowerment law require miners to choose local partners from a government approved list, which Prime Minister Morgan Tsvangirai's Movement for Democratic Change (MDC) party says is meant to benefit Mugabe's allies.

Mugabe was forced to share power with Tsvangirai two years ago after disputed elections in 2008. The two have sharp differences over the ownership policy.

"My overall assessment is that over 90 percent of the submitted proposals do not meet the minimum requirements (of choosing partners from a government list) and there seems to be an element of resistance," Kasukuwere was quoted as saying.

Kasukuwere also said plans submitted by foreign mines generally show the companies want to sell a maximum of 30 percent of shares while the remaining 21 percent would be made up of empowerment credits awarded for social investments made in infrastructure, health and education facilities.

Implats unit Zimplats , which is the largest platinum producer in Zimbabwe was given up to next month to fully comply with the empowerment law.

Zimbabwe has the world's second-largest known platinum reserves after neighbouring South Africa and market watchers and investors are therefore keen to see how the situation unfolds against the backdrop of red-hot commodity prices.

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