HARARE (Reuters) - Zimbabwe will effectively nationalise half of the country’s key resources sector by setting up a sovereign wealth fund to own 51 percent stakes of mining companies, a government minister said on Wednesday.
Saviour Kasukuwere, minister of youth empowerment and indigenisation, said the government in the resource-rich country would publish guidelines on local mine ownership regulations on Friday and the rules would take effect within a week.
Analysts said impoverished Zimbabwe does not have the money to buy controlling stakes but is likely using the threat to force global mining giants to the bargaining table so the country with the world’s second-largest platinum reserves can receive more money from its mineral riches.
The move is likely to discourage foreign investment and will hit foreign miners in the state including AngloPlat and Impala Platinum, the world’s largest and second largest platinum producers, and Rio Tinto, which runs a diamond mine in the country.
“In the mining sector specifically, we have been getting a raw deal all this time with companies taking money out of the country,” Kasukuwere said, without offering details of the plan.
Kasukuwere said earnings from mineral exports reached $1.7 billion in 2010, about 30 percent of the country’s estimated yearly GDP, but that mining companies had only paid $4 million in taxes to the government.
“The signal that they are sending is that ‘we can change anything in this country and it can impact on investment at any time’,” said Claude Kabemba, director of Southern Africa Resource Watch.
“Their push will be incremental. If they are serious about the 51 percent, they must start somewhere,” he said. “They might negotiate a very low price to start and on top of that negotiate a repayment strategy.”
President Robert Mugabe signed the Indigenisation and Economic Empowerment Act in 2008 and the government has issued regulations of how foreign-owned companies should achieve at least 51 percent black ownership within five years.
Mining firms may decide to pull out of the country but they risk losing rights to the massive platinum reserves and other minerals as mining companies from Mugabe’s biggest backer China wait in the wings, perhaps looking to take over the claims.
Mugabe, shunned by Western governments who suspect him of using violence and rigged elections to stay in power, has seen overseas aid dry up and investment deterred as his destitute country has faced greater global isolation.
Kasukuwere said not all sectors would be required to sell 51 percent shares, citing the manufacturing industry which he said was still fragile and needed more time to recover.
Analysts said years of mismanagement by Mugaba’e ZANU-PF has only made things worse for an economy that was crushed by hyperinflation a few years ago.
Mugabe is pushing for elections this year and could be looking for cash as he fights political rival and unity government partner, the Movement for Democratic Change (MDC).
The MDC forced into a power-sharing government with Mugabe after disputed 2008 elections, have been campaigning for foreign investment to add strength to a nascent economic recovery that came after the unity government was formed.
MDC officials have also tried to ally concerns about the law that the government said was aimed at addressing the unresolved economic imbalances left by decades of white minority rule, and would ultimately create a stable economy and fair society.
But foreign companies regularly cite the law as their main concern about investing in the southern African country.
Shares in Zimplats Holdings, a unit of Implats, is down nearly 20 percent since the start of this month and the company said in a statement to the Australian Stock Exchange the fall could be attributed to news around the new ownership rules.