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Zimbabwe ultimatum for Caledonia

Memory Mataranyika | Wed, 14 Dec 2011 14:25

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[miningmx.com] -- FRESH details about a threat of closure that Caledonia Mining Corporation's Blanket gold mine in Zimbabwe faces – and which it played down on Tuesday – have emerged and points to a possible tug of war between the government and the Canadian mining firm.

The Zimbabwe government, apparently irked by statements attributed to Caledonia’s CEO Stefan Hyden rubbishing the indigenisation drive, has moved in to tighten the screws around the Toronto and Aim-listed miner in a bid to force it to comply with the controversial law.

It has now emerged, however, that the government, through the ministry of mines, which is controlled by Zanu-PF MP Obert Mpofu, has given Caledonia up to 14 days, beginning December 8, to either have its license cancelled or to have an indigenisation partner brought in to take majority shareholding in the company.

“As the relevant government licensing authority we wish to give notice to Blanket Mine 1993 Private Limited that unless this breach (non-compliance with the indigenisation law) is rectified within 14 days from the date of this letter, the Ministry of Mines and Mining Development shall consider either withdrawing the operating licence for Blanket Mine 1993 Private Limited or bring in an indigenisation partner to work with Blanket Mine 1993 Private Limited” reads part of a Ministry of Mines letter to Caledonia and dated December 8.

According to recent reports, Youth, Indigenisation and Empowerment Minister Saviour Kasukuwere does not have the power to revoke any mining licenses while Mpofu has previously said he will not cancel any mining license.

Information from informed sources shows that the government has evaluated the value of the Blanket gold mine at $20m. Kasukuwere said the government could compensate Caledonia and take over the mine, arguing that the "value of the property" far outweighs the "investments that Caledonia have made" into it.

Spooked by the latest developments, Caledonia this week said it was willing to comply with the controversial indigenisation law forcing companies to surrender majority shareholding stakes to locals.

Informed sources within government say Caledonia could be used "as an example" to companies "still unwilling to commit to the legislation".

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