Mugabe says indigenisation is ‘generous’

[miningmx.com] – ZIMBABWEAN president, Robert Mugabe, said the value of his country’s mineral patrimony would always outweigh the importance of foreign capital which he said had left “a gaping hole in the landscape” in the past.

Mugabe, currently on a state visit to South Africa, met President Jacob Zuma at the Union Buildings in Pretoria on Wednesday. He was then due to meet deputy president, Cyril Ramaphosa later while he is also scheduled to attend a meeting of South African and Zimbabwean corporate leaders on Thursday.

The Zimbabwean leader – whose country has the world’s second largest platinum reserves, as well as deposits of gold, coal, chrome nickel and diamonds – told journalists that investors in his country’s mining sector were lucky to get the 49% equity reserved for foreigners under the empowerment policy, known as indigenisation.

South Africa has a handful of mining investors in Zimbabwe, among them Anglo Platinum, Impala Platinum, Aquarius Platinum, and Metallon Gold.

“Where it’s our natural resources, we must at least have 51% ownership of the company and the resources, which is quite generous by the way because you take 49% every year of $500m or $1bn. It’s a huge amount,’ he said in response to a question seeking clarification on the policy.

Investors have become hesitant to sink money into Zimbabwe, citing an uncertain legislative framework and a lack of clarity over the indigenisation policy.

Zimbabwe is also pushing through an ambitious policy seeking to enforce mineral beneficiation.

The policy, which has sought to pressure platinum miners into promises of large capital investment, is set to be expanded to include other minerals. Gold miners, for instance, have been directed to sell their bullion through a company controlled by the Reserve Bank of Zimbabwe.

Mugabe said that: “When there is value added’ to a resource, it fetches a higher price on the market. Value addition, captured in the Zimbabwe Agenda for Sustainable Socio-Economic Transformation, has been described by Mugabe’s party, the Zanu PF, as a key feature of Zimbabwe’s economic blueprint.

Mugabe was also unhappy with past indigenisation deals signed between the government and foreign miners.

As a result, he wants them reviewed to allow local groups to get controlling shares in the companies without paying compensation.

Said a mining executive: “For the mining sector, there has been clarity regarding expectations around indigenisation and investors now know what they have to face”.

“It is on the other areas such as the take-over of mineral claims and enforced usage of excess claims held for expansion purposes that have to be addressed,” he said.