Zimbabwe’s government would nationalise half of the country’s key resources sector by setting up a sovereign wealth fund to own 51 percent stakes of mining companies, a minister said yesterday.

Saviour Kasukuwere, the Minister of Youth Empowerment and Indigenisation, said the government would publish guidelines on the mine ownership regulations tomorrow and the rules would take effect within a week.

The move is likely to discourage foreign investment and will hit foreign mining houses including Anglo Platinum and Impala Platinum (Implats), the world’s top two platinum producers, and Rio Tinto, which runs a diamond mine in the country.

“In the mining sector specifically, we have been getting a raw deal all this time with companies taking money out of the country,”Kasukuwere said .

He said earnings from mineral exports reached $1.7 billion (R12bn) last year, about 30 percent of the country’s estimated gross domestic product, but that mining companies had only paid $4 million in taxes to the government.

President Robert Mugabe’s government has rattled investors with plans to force foreign-owned firms to sell majority stakes to black Zimbabweans.

Analysts said that years of mismanagement by Mugabe’s Zanu-PF had only made things worse for an economy that was crushed by hyperinflation a few years ago.

Mugabe signed the Indigenisation and Economic Empowerment Act in 2008 and the government has issued regulations providing details of how foreign-owned firms should achieve at least 51 percent black ownership within five years.

Officials from the rival Movement for Democratic Change (MDC) have been campaigning for foreign investment to add strength to a nascent economic recovery.

MDC officials have also tried to allay concerns about the law that the government said was aimed at addressing the unresolved economic imbalances left by decades of white minority rule, and would ultimately create a stable economy and fair society.

But foreign companies cite the law as their main concern about investing in the country.

Shares in Zimplats, a unit of Implats, are down nearly 20 percent this month and the company said the fall could be attributed to news around the new ownership rules.

“Obviously (this is) more bad news, but we will get the clear picture of what the intentions are after the elections,” said Stephen Roelofse at Metropolitan Asset Managers.

Mugabe has called for elections this year, ahead of plans drawn up in the power-sharing deal with the MDC. – Reuters