Dineo Matomela
Zimplats reassured shareholders late last week that its mining licence was not under threat of being cancelled for failing to comply with Zimbabwe’s empowerment laws.
Zimbabwe’s largest platinum producer said it was engaged in ongoing discussions with the Zimbabwean authorities about its plan to sell 51 percent of its assets to locals.
The company, owned by South Africa’s Impala Platinum (Implats), said in a letter to its shareholders last week that the Zimbabwean government had not rejected its entire empowerment plan but there was a “disagreement on the implementation, in its current form, of the Release of Ground Agreement of 2006”. Business Report has a copy of the letter.
“The government acknowledges the existence and validity of the agreement, but wants to renegotiate certain terms of the agreement.”
The letter to shareholders follows news that Zimplats was among 11 companies given ultimatums last month to submit “acceptable” indigenisation plans.
Indigenisation was not the way to promote empowerment or investment for a country, Iraj Abedien, the chief economist at Pan African Investment and Research, said on Friday.
“If operations at Zimplats are shut down, the company can pursue a legal case against the government and between 8 000 and 10 000 workers will be affected. No way can the government operate the mine nor can it replace the mining company without sorting out legal issues. The country’s reputation will suffer,” he said.
Zimbabwe’s indigenisation policy has sent out mixed messages. It is unlike South Africa’s black empowerment policy, which has a charter and legal guidelines.
Catherine Grant, the programme head for economic diplomacy with the SA Institute of International Affairs, said: “Zimplats is a test run for Zimbabwe’s indigenisation policy. It is one of the first companies to have to go through the process, it is going to be difficult. Zimplats has put forward ideas to the government, but they have not been successful.”
Ajay Lalu, the managing director of Black Lite Consulting, said: “The problem with Zimplats is that platinum is a resource that is underground and you can’t move it like a factory. The company does not have a choice. They have made a huge investment and to discard it would be detrimental to shareholders.”
He said there were lessons to be learnt from South Africa’s empowerment process, which was based on a willing buyer, willing seller rule.
“In Zimbabwe’s indigenisation policy companies have to give away their shares for no value. I think it is not right, people have spent their time and money investing in these operations.”
Southern African countries including Tanzania, Namibia and Botswana, have introduced empowerment policies similar to those that were introduced in South Africa.
Lalu explained that empowerment was not about ownership, and there were highly skilled Zimbabweans who could manage these assets.
The Minister of Indigenisation, Saviour Kasukuwere, told reporters last week that 45 mining companies had either had their empowerment plans approved or had agreed on an implementation plan with the government. A total of 51 companies had not responded to the directive.
Foreign mining companies with significant operations in Zimbabwe include Anglo Platinum, Aquarius Platinum and Rio Tinto.
The government rejected the proposed indigenisation plan of Aquarius’s Zimbabwean subsidiary, Mimosa Holdings, which is a 50/50 joint venture with Implats.
Implats shares closed 0.3 percent lower at R169.50 on Friday.