The government has notified mining companies that it intended to indigenise the country’s mines by forcing them by law to cede portions of their mines to government and locals.
Rio Tinto, which owns 56 percent of Rio Tinto Zimbabwe, said: “It seems there would be no change in the pricing regime in the foreseeable future and further decisions about the mine’s future may have to be made in light of the proposed empowerment laws.”
It also said the fixed exchange rate regime made plans to dig a new diamond mine unviable.
As many as seven gold mining companies are already up for sale in Zimbabwe.
Jack Murehwa, president of the Zimbabwe Chamber of Mines, said the fixed rate made illegal gold trading attractive with mines receiving up to Z$2 million
to the US dollar on the black market against an official exchange rate of 30,000 to the greenback.
While the extent of illegal gold trading is unknown, Zimbabwe is believed to have lost US$59 million through illegal exports of gold in the first six months of this year.
Proposed indigenization of the mining industry could add to the industry’s woes.
Under the Mines and Minerals Amendment Bill, the Government plans to take over 51per cent of companies mining strategic fuels and minerals, taking 25 percent without paying.
The balance of 26 percent it needs for a majority shareholding would be paid for. However, the bill asserts that payment will come from dividends earned from the state’s shares in the companies it takes without having to pay.
It gives the state seven years in which to do it. The bill justifies its seizure “in virtue of its original ownership of all useful minerals in its subsoil”. Companies mining other minerals will be taken over by indigenous Zimbabweans. The bill does not specify the payment method.
Much of Zimbabwe’s mining industry has been wrecked by government interference but the ripe plum remaining is the fast-growing multi-billion-dollar platinum industry.
However, gold production, a major currency earner that constitutes nearly 52 percent of Zimbabwe’s total mineral production value, has successively declined for a second year to just 18.05 tons last year.
The Associated Mineworkers Union acknowledged that the mining industry was ailing.
“There are mass retrenchments and mines, mostly foreign ones, are closing their doors,” said Tinago Ruzive, of the AMU.
Zimbabwe ‘s mining sector has shed 40,000 jobs since 2000 as companies face high inflation, a reduction in foreign currency earnings and increasing political risk.
Post published in: News