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Impala questions Zim draft proposal Posted: Thu, 30 Aug 2007 [miningmx.com] -- DAVID Brown, CEO of Impala Platinum, said elements of the Zimbabwe government’s draft empowerment legislation – termed the indigenisation bill – might be unworkable in its current form. “There’s the question of whether it can be implemented,” he said on the sidelines of Impala’s year-end results presentation. “Does the state have any money to fund platinum expansions? Where do they get the management?” The indigenisation bill wants companies operating in Zimbabwe to sell 51% of their equity to the Zimbabwean government, or local entities nominated by it. The bill was currently “floating around parliament,” according to Brown. Impala is seeking to invest about R3bn expanding the facilities of its 86.9% owned Zimbabwe Platinum Mines (Zimplats). Half of this investment would have to be carried by the Zimbabwe government were it to own the company as laid out in the draft legislation. Brown’s comments follow those of Zimplats chairman Mike Houston who told a Miningmx correspondent the indigenisation bill did not appear to take cognisance of an agreement the Zimbabwean government had struck with the company in 2006. In that arrangement, Zimplats agreed to sell mineral rights to the Zimbabwean government equal to an estimated 30% of the company, or a $50m cash credit. Said Zimplats’ Houston: “The government has recently issued a draft empowerment bill which seeks to enforce a 51% shareholding by indigenous Zimbabweans in all foreign owned companies.” “At this juncture, although it's early days in terms of the negotiations, there appears to be no provision for empowerment credits for social and infrastructure spending in the draft bill and this is of serious concern to Zimplats in view of our agreement with the government," he said. Brown said Impala was discussing the matter with the Zimbabwe government. “We’re in conversation with the ministry of mines. It’s only a draft bill and we’ve had our agreement for over a year,” he said. “It’s electioneering,” an analyst said. Zimbabwe goes to a political and parliamentary elections next year with 83-year old president Robert Mugabe’s ZANU-PF under more pressure than ever in his 27-year rule to retain power. This is amid the highest inflation rate in the world and a plan to freeze prices that backfired. The indigenisation plan is one of two pieces of legislation Mugabe is trying to force through parliament in an effort to retain control. The other is that he be allowed to name his successor. “There’s enough flexibility in the agreement with the Zimbabwean government to negotiate our terms,” Brown said. Impala’s Zimbabwean operations, Zimplats and Mimosa, were star performers for the company in the 2007 financial year with Mimosa producing the best operating margin of 69% while Zimplats had record production of 95,000 oz of platinum in matte. In addition, Impala is pumping investment into Zimbabwe. The phase 1 expansion at Zimplats is “well underway” with combined full production of 160,000 oz.year expected by 2010 at a cost of about R3bn. Click Here to subscribe to our daily newsletter
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