HARARE – Zimbabwe’s government is nationalising all alluvial diamond deposits while the state will assume controlling stake in all future mining ventures involving other minerals including gold, platinum and non-alluvial diamonds, economic indigenisation Minister Saviour Kasukuwere said Wednesday.
At present, the government holds 50 percent stakes in each of the companies that are mining alluvial diamonds in the controversial Marange fields to the north of the country.
Addressing journalists in Harare, Kasukuwere said the ruling coalition of President Robert Mugabe and Prime Minister Morgan Tsvangirai had unanimously agreed on the sweeping changes that although targeting new projects are certain to leave investors in established mines wondering about how safe their investments are in Zimbabwe.
Kasukuwere said: “At its weekly sitting…cabinet took far reaching decisions on the issue of implementation of Indigenisation and Empowerment Act in general and the mining sector in particular.
“The shareholding in the mining sector as it relates to the state shall be as follows, 100 percent for alluvial diamonds.”
According to the regulations, government would establish a ‘Sovereign Wealth Fund’ to function as a vehicle through which the state will acquire controlling stake in all new mining ventures that do not involve alluvial diamonds.
Kasukuwere said once the new rules came into force, communities would now get 10 percent of gross profit from the exploitation of their mineral resources. He said the new rules would become effective once gazzeted but did not say when exactly that would be.
“Cabinet resolved that through a Community Share Ownership Scheme…communities shall be entitled to 10 percent of profit before tax,” he said.
The minister said the funds would be channeled towards supporting new health, education and infrastructural projects in communities.
Government would soon be announcing new guidelines on how the controversial Indigenisation Act would be implemented in other sectors of the economy, he said.
Meanwhile, Kasukuwere dismissed claims by Minister of Industry and Commerce Professor Welshman Ncube that government had suspended implementation of the Indigenisation regulations.
“Let me say that the Minister of Youth Development, Indigenisation and
Empowerment remains the sole mouthpiece on issues of indigenisation and empowerment. We have not frozen indigenisation,” he said.
Under the empowerment programme, foreign-owned firms are required to cede significant stake to local blacks by 2015 and those failing to comply risk losing their operating licenses.
Mugabe, whose then sole ruling ZANU PF party passed the Indigenisation and Economic Empowerment Bill in 2007, had initially wanted all foreign-owned firms to cede 51 percent stake to locals.
He backed down after Tsvangirai opposed the requirement to force all foreigners to surrender control of their investments and the coalition government later modified the rules to allow varying percentages of shareholding foreign-owned companies in various sectors of the economy must transfer to local blacks.
The committees appointed to recommend to the government the various shareholding thresholds are yet to report back to Kasukuwere.
Analysts say the empowerment drive is unlikely to succeed as most local business people are unable to raise the required funding to buy shares from foreign-owned companies.
A similar empowerment drive by Mugabe in agriculture destroyed the mainstay sector, leaving once self sufficient Zimbabwe dependent on food aid after the 86-year old leader failed to provide funding, inputs and skills training to black villagers resettled on former white-owned commercial farms to maintain production.
And critics fear that the economic empowerment is a ploy by Mugabe to reward his allies and supporters with thriving businesses in the same way his top backers in his ZANU PF party and the military were rewarded with the best farms grabbed from whites.
Large multinational corporations such as cigarette manufacturer BAT Zimbabwe, which is 80 percent British-owned; UK-controlled financial institutions Barclays Bank and Standard Chartered Bank, food group Nestlé Zimbabwe, mining giants Rio Tinto and Zimplats, and AON Insurance are some of the big foreign-owned firms that will be forced to cede control to locals. – ZimOnline.