Review mining law: Rio Tinto

The mining giant, which said it produced a record 260 000 carats in 2008, said it was looking to further boosting output at its Murowa Diamond mine once the controversial ownership law had been reviewed to enhance foreign investor participation in the local mining sector.

The operating environment in Zimbabwe has improved since the formation of the government of national unity, Jean Chawapiwa-Pama, Vice President, Communication & External Relations in Africa, told The Zimbabwean on Sunday in Johannesburg.

There are a number of legislative changes that are still urgently needed to improve confidence and expedite the inflow of FDI. These include; uncertainty over ownership laws which require foreign companies to cede 51 percent shareholding to locals. The current legislation is seen as a hindrance by foreign investors, said Chawapiwa-Pama.

Analyst say there is huge potential for Zimbabwes mining sector – which in addition to diamonds also boasts huge deposits of platinum, gold, nickel and coal – to grow further and provide desperately needed revenue for the unity government.

But they say a controversial law limiting foreign ownership of mines to 49 percent enacted by Mugabe several months before agreeing to share power is acting as a huge disincentive to foreign firms with financial resource to develop the countrys mineral resources.