Dismay as Zim indigenisation talks stall

[miningmx.com] – NEW proclamations by Zimbabwe president, Robert Mugabe, that South African miners receive no financial compensation for shares ceded under indigenisation rules stalled term sheets signed by Impala Platinum, Aquarius Platinum and Anglo Platinum who declined this new provision.

The three companies’ units in Zimbabwe – Zimplats, Mimosa and Unki respectively – signed indigenisation term sheets in 2013 after agreeing to cede majority shares into the hands of black Zimbabwean groups.

Wilson Gwatiringa, CEO of the National Indigenisation and Economic Empowerment Board (NIEEB), said today that the fund created to finance the acquisition of shares in foreign companies by locals “was never capitalised” because it “never had funds to support share acquisition by indigenous investors”.

He told Zimbabwean parliamentarians that in February 2013 – after the signing of the Implats term sheet in January of that year – some “stakeholders reviewed the transaction (indigenisation deals) and insisted that the 51% indigenous equity should be acquired without payment but in exchange for the mineral deposit”.

Mugabe has made several statements in the past two years insisting that the minerals foreign companies are mining in Zimbabwe constituted payment for the shares the foreign mining groups were supposed to cede.

The government was even advised against this position by Brainworks Capital, a company offering advisory services to the indigenisation transactions.

During a state visit to South Africa in April this year, Mugabe said: “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 and you get 49% of that. It’s a huge amount’.

Implats CEO, Terence Goodlace, wrote to the government in a letter dated June 28 2013 that the company was not in a position to cede shares for no compensation.
South Africa’s platinum miners in Zimbabwe have subsequently said that negotiations with the government were ongoing.

“As you are aware, we are prepared to fully finance the transaction on behalf of the agreed indigenous parties, on terms which would enable such parties to pay for the shareholding out of future dividends,’ said Goodlace in a letter addressed to Mugabe’s office dated June 28 2013.

Amplats and Mimosa adopted similar positions. Johan Theron, spokesperson for Implats, said his company was committed to complying with the country’s indigenisation and beneficiation requirements.

“This is the stalemate that derailed the Zimplats, Mimosa and Unki mines transaction. The term sheets expired in 2013. Unfortunately, no alternative idea to enforce the proposed model was proffered by other stakeholders,” said Gwatiringa.

Investors are reluctant to sink money into Zimbabwe, citing a placid legislative framework and lack of clarity over the indigenisation policy. The mineral rich southern African country is also pushing through an ambitious policy seeking to enforce mineral beneficiation inside the country.