Economists slam Indigenisation rules as platinum stocks tumble

JOHANNESBURG - Economic analysts this week lashed out at President Robert Mugabes controversial indigenisation laws, saying they would discourage foreign investment in the mining sector.

Peter Major, an analyst with specialist financial services group Cadiz Investments, said the Indigenisation Act would inhibit economic recovery prospects and devalue the countrys assets. The analyst said Mugabe was taking political risks for election purposes that would destroy the country.

Mugabe tells his people what they want to hear, as he wants to win the election by a landslide, said Major. However, it does not do his country any good because it promotes mining shallow assets and illegal mining, while demoting further foreign investment.

Several companies have already reported a slide in their share prices linked to Mugabes indigenisation push. Aquarius Platinum, the worlds fourth-largest platinum-miner, which also owns 50 per cent interest in Mimosa Mine in a joint venture with Implats, was the hardest hit, with its shares dropping by 8,54 per cent on Monday, to close at R37,43 a share.

The company said its Zimbabwean operating subsidiary, Mimosa, was engaged in discussions with the relevant authorities to establish a position that would be compliant with the Indigenisation Act and beneficial to stakeholders. Impala Platinum (IMPJ.J), the world’s second-largest producer of the precious metal which has Zimbabwe operations, fell over 5 percent at one

point to a 10-day low and was trading 3.55 percent lower at R190.56 rand on Monday.

Anglo Platinum (AMSJ.J), the world’s top producer, was down 1.90 percent at 666.44 rand, while Platinum XPT was down 0.77 percent, highlighting how jittery investors are about the risks of doing business in the region. Platinum producers were down far more than the wider counters.

A government gazette published on Monday gave all foreign-owned mining businesses 45 days to set out the manner in which they planned to achieve the indigenisation quota. Such a plan, once approved by the Minister, had to be implemented within six months of the date of the notice.

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