Zimbabwe: Foreign-Owned Mining Firms Up for Grabs by Locals

By Staff Writer

HARARE---Zimbabwean Government under new regulations released on Monday has compelled all foreign-owned mining companies in its country to sell majority stakes to locals in the next coming six months.

The new rules, in a gazette notice published without warning on Monday, marked the latest attempt by long-ruling President Robert Mugabe to squeeze cash out of the mining industry, after last month’s hiking of exploration fees by 2,000 per cent to $1million. The rules also expand the law to include all mining companies valued at more than $1million.

 “A controlling interest, or the 51 per cent of the shares or interest which in terms of the Act is required to be held by indigenous Zimbabweans in non-indigenous mining business,” the new law said in the government gazette.

All foreign firms valued at more than $500 000 last year were required to sell 51 per cent stakes to locals in the country’s controversial Indigenisation and Economic Empowerment Act.

According to the Gazette, Companies have up to May 9 to close shops and finalise transactions by September 25.

 Mixed reactions have clouded the atmosphere based on the move. Economist John Robertson told AFP that “It’s very messy and it is a harsher approach to the mining sector. It is politically inspired. The disposal of 51 per cent of the shares in mining companies to indigenous Zimbabweans will apply to all companies with a net asset value of more than one US dollar.’’

President Robert Mugabe is in the frontline supporting the new law and has created tensions within the unity government, with Prime Minister Morgan Tsvangirai charging that it will discourage investment.