HARARE —
The world’s largest producer of platinum has bowed to pressure to cede 51 percent of its mining operations in Zimbabwe to local black concerns - under President’s Mugabe’s controversial indigenization policy.
The Anglo American Platinum announcement comes as the company struggles with wildcat strikes in South Africa. Zimbabwe, meanwhile, is stalled in getting financial support from the International Monetary Fund (IMF), due in part to concerns that the indigenization policy chases away much-needed foreign investment.
Indigenization law
Anglo American became the second mining giant to comply with the indigenization law requiring all foreign-owned companies to transfer a majority stake of their Zimbabwe operations to local blacks. The law is aimed at what the government says is addressing racial inequalities lingering from white colonial rule.
Anglo American Platinum executive in Zimbabwe, July Ndlovu, says he hopes surrendering the company's majority stake will benefit Zimbabweans.
"It has not been easy. We have argued a lot, but we engaged in this process with only one single purpose in mind: which was to find a transaction which is value credited and beneficial to all parties and can ensure a sustainable mining investment in this country," said Ndlovu.
The deal calls for a 51 percent transfer of Anglo’s Unki mine - worth more than $140 million - to a state fund, mine employees, a community trust and unnamed local investors.
Earlier this year, Impala Platinum became the first mining concern to transfer 51 percent of its Zimbabwe operation Zimplats to local black interests under the same law.
Disincentive to investors
Zimbabwe has some of the world's largest known platinum deposits and the transfers are seen by President Robert Mugabe’s ZANU-PF party as a financial windfall in the cash strapped country.
But coalition partner Prime Minister Morgan Tsvangirai, his MDC party and many economists disagree - saying the indigenization policy is a disincentive for continued and new foreign investment.
It also appears to be a major obstacle in getting IMF and World Bank loans. The IMF did relax restrictions on technical assistance to Zimbabwe earlier this week - but that does not translate into funding, says analyst John Robertson from Robertson Economic Information Services.
"The government has been crying for money and this is not money. This is advice. If we follow the advice we may qualify for financial assistance," he said.
But Zimbabwe's Empowerment and Indigenization Minister Saviour Kasukuwere argues indigenization is actually creating a sustainable mining investment in Zimbabwe - and those that see it any other way need not invest in the African country.
“This policy has been extensively debated. If major, those major, investors can accept that this policy gives them a fair return, to then say [it] scares away investors - if there are investors who do not want - must stay in their own countries," said Kasukuwere.
It remains to be seen if Anglo American will reap a fair return in Zimbabwe after giving up its majority stake and it is not clear if the move is related to its recent troubles in South Africa.
The platinum giant has been facing illegal strikes since mid-September in spiraling labor actions across much of the mining sector. Some 12,000 platinum miners have yet to return to work at mines outside of Johannesburg. The company says production is down by 3,694 ounces of platinum - or $5.7 million - per day. So far losses have amounted to nearly a quarter of a billion dollars in about six weeks.
The Anglo American Platinum announcement comes as the company struggles with wildcat strikes in South Africa. Zimbabwe, meanwhile, is stalled in getting financial support from the International Monetary Fund (IMF), due in part to concerns that the indigenization policy chases away much-needed foreign investment.
Indigenization law
Anglo American became the second mining giant to comply with the indigenization law requiring all foreign-owned companies to transfer a majority stake of their Zimbabwe operations to local blacks. The law is aimed at what the government says is addressing racial inequalities lingering from white colonial rule.
Anglo American Platinum executive in Zimbabwe, July Ndlovu, says he hopes surrendering the company's majority stake will benefit Zimbabweans.
"It has not been easy. We have argued a lot, but we engaged in this process with only one single purpose in mind: which was to find a transaction which is value credited and beneficial to all parties and can ensure a sustainable mining investment in this country," said Ndlovu.
The deal calls for a 51 percent transfer of Anglo’s Unki mine - worth more than $140 million - to a state fund, mine employees, a community trust and unnamed local investors.
Earlier this year, Impala Platinum became the first mining concern to transfer 51 percent of its Zimbabwe operation Zimplats to local black interests under the same law.
Disincentive to investors
Zimbabwe has some of the world's largest known platinum deposits and the transfers are seen by President Robert Mugabe’s ZANU-PF party as a financial windfall in the cash strapped country.
But coalition partner Prime Minister Morgan Tsvangirai, his MDC party and many economists disagree - saying the indigenization policy is a disincentive for continued and new foreign investment.
It also appears to be a major obstacle in getting IMF and World Bank loans. The IMF did relax restrictions on technical assistance to Zimbabwe earlier this week - but that does not translate into funding, says analyst John Robertson from Robertson Economic Information Services.
"The government has been crying for money and this is not money. This is advice. If we follow the advice we may qualify for financial assistance," he said.
But Zimbabwe's Empowerment and Indigenization Minister Saviour Kasukuwere argues indigenization is actually creating a sustainable mining investment in Zimbabwe - and those that see it any other way need not invest in the African country.
“This policy has been extensively debated. If major, those major, investors can accept that this policy gives them a fair return, to then say [it] scares away investors - if there are investors who do not want - must stay in their own countries," said Kasukuwere.
It remains to be seen if Anglo American will reap a fair return in Zimbabwe after giving up its majority stake and it is not clear if the move is related to its recent troubles in South Africa.
The platinum giant has been facing illegal strikes since mid-September in spiraling labor actions across much of the mining sector. Some 12,000 platinum miners have yet to return to work at mines outside of Johannesburg. The company says production is down by 3,694 ounces of platinum - or $5.7 million - per day. So far losses have amounted to nearly a quarter of a billion dollars in about six weeks.
