No easy answers for Zim

[] — READING between the lines, it would appear that recent draft proposal by the Zimbabwean government’s mining department on amendments to its Minerals and Mines Act was not policy.

Zimbabwe’s mines minister, Amos Midzi, presented a draft proposal to the country’s chamber of mines earlier this year asking for foreign miners to hand over control of their assets to government and local business.

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One of the concerns of the draft proposal was that 25% of the asset handover would be to government, at no cost. A further 26% was to be sold to local businesses, presumably ones nominated by government as attempts by foreign miners to identify their own partners have fallen on deaf ears.

The amendments to the minerals and mines bill represent a resuscitation of demands by Zimbabwe’s government in 2004. It back-tacked soon after the proposals were leaked to the press, saying it would negotiate them just as the South African government had done with its empowerment plans in 2002/3.

Now, following a recent meeting between Impala Platinum CEO, Keith Rumble, and President Robert Mugabe, that would seem to be the position again.

After Midzi’s aggression, the tone of comments from Zimbabwe’s government has switched again. Last week, Gideon Gono, Zimbabwe Central Bank governor, made conciliatory comments about the manner of transformation in Zimbabwe’s mining industry, saying property rights should be respected and asset exchanges should be completed on commercial terms.

Quoted by Zimbabwe’s Sunday Mail, a state-owned newspaper, Gono said: “For the … sustainable integration of Zimbabwe into the competitive global space for investment attraction, this process has to be done in accordance with strict observance and respect for private property rights, as well as through market-friendly principles of fair value exchanges.’

Importantly, Gono was speaking shortly after visiting the International Monetary Fund where Zimbabwe is seeking more donations. Gono’s comments represent economic reality for Zimbabwe, a country that cannot afford the negative publicity, nor to worsen its economic standing by leading one of its last remaining economically feasible industries to ruin.

Midzi’s imprudent posturing, and Gono’s comments aside, Impala’s board can’t allow the situation to stand. It was obviously concerned enough about the proposed amendments to warrant a personal meeting with Mugabe.

A possible compromise between Zimbabwe and foreign miners such as Impala Platinum remains to be seen. In the meantime, one can only imagine, as one potential scenario, that Impala has undertaken to accelerate its development plans for Zimbabwe’s platinum industry in return for more reasonable empowerment legislation. (Impala had put the brakes on further significant investment in Zimbabwe).

The stakes are high. Impala Platinum, has some 141 million ounces of unmined platinum in Zimbabwe, and the country represents a major slice of its future. So far, it hasn’t been too heavily penalised by the market for its fortunes in Zimbabwe.

Nonetheless, an impasse in Zimbabwe leaves Impala having to seek other avenues of growth.

Like Lonmin, Impala doesn’t have the mineral reserves of Anglo Platinum. An effort to grow its refining business – Impala Refining Services (IRS) – through a joint venture with a mining firm in Madagascar, since abandoned, and a more recent announcement to expand capacity at IRS to accommodate future capacity from junior mining firms, reflect the company stretching for growth. Eventually, Impala will need Zimbabwe.