HARARE/JOHANNESBURG (Reuters) - Impala Platinum, the world’s second-biggest platinum producer, has bowed to Zimbabwe’s pressure to surrender a 51 percent stake in its Zimplats unit to local black investors, the company announced on Tuesday.
The cave-in followed months of wrangling over the ownership requirement, which has further jolted investor confidence in the southern African state. The demand that foreign-owned companies, particularly miners, transfer a 51 percent stake in local operations to black investors was widely seen as a populist tactic by President Robert Mugabe’s ZANU-PF party in the run-up to elections expected later this year.
In a dramatic turnaround on Tuesday, Implats’ chief executive David Brown, who last year insisted that “51 percent equity just does not work,” told a news conference in Harare his company had accepted the requirement.
“Essentially we have found each other and that augurs well for the mining industry in Zimbabwe,” Brown said.
It remained unclear how the cash-strapped Zimbabwean government would pay for the stake, worth hundreds of millions of dollars.
The Implats decision is seen as putting pressure on other foreign mining companies in Zimbabwe to follow suit. These include Mimosa, a 50-50 joint venture between Implats and Aquarius Platinum, and Murowa diamond mine, which is 78 percent controlled by Rio Tinto.
“It’s a remarkable U-turn by Mr. Brown because only last week he was saying there was no agreement and had previously said the 51 percent model could not work,” said Tony Hawkins, a professor at the University of Zimbabwe’s Graduate School of Business.
“With Zimplats having capitulated the other companies are going to be under pressure too. But the next question obviously is where are they (the government) going to get the money to pay for the value of the shares?” he said.
A joint statement from the government and Implats said the 51 percent would be broken down as follows: 10 percent to the community, another 10 percent to Zimplats employees and 31 percent to the state’s National Indigenisation and Economic Empowerment Fund.
Empowerment Minister Saviour Kasukuwere, who is leading the government drive on the ownership issue, told Reuters after the press conference: “There’s no deadline on when the finer details of the transaction will be worked out.”
“The details are about the value. How do they value the shares? All that is to be worked out,” he said.
For Implats the stakes were high as its Zimplats’ unit accounts for 10 percent of its output and it has just resolved a crippling illegal strike at its South African Rustenburg operation which cost it 120,000 ounces in lost output and 2.4 billion rand in revenue.
The spot price of platinum pushed above that of gold for the first time in six months on Tuesday.
Zimbabwe, with the second-largest known platinum deposits in the world after South Africa, is seen as a growth area for the sector. But analysts saw the 51 percent local ownership requirement hurting the country’s investment image.
“This will have a very negative impact on investor confidence and ultimately it has to hurt them,” said Gary van Staden, a political analyst with NKC Independent Economists.
“If you can twist the arm of Implats then you can twist anyone’s arm. This is what awaits anyone who does not willingly submit to Harare’s asset seizure,” he said.
Zimbabwe has said the policy is needed to redress the racial inequities of past colonial rule, but the government’s seizure of white-owned farmland over the last decade has decimated commercial agriculture in what was once described as the region’s bread basket.
Zimbabwe became independent from Britain in 1980.