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UPDATE 2-Zimbabwe push to control foreign miners hits confusion
April 5, 2012 / 9:09 AM / 5 years ago

UPDATE 2-Zimbabwe push to control foreign miners hits confusion

* Tsvangirai says Minister has no powers to nationalise

* Finmin, CBank warn of instability over seizures

* Not clear where hammer will fall

By Nelson Banya

HARARE, April 5 (Reuters) - Zimbabwe’s bid to win majority control of foreign-owned mines was locked in confusion on Thursday, as the prime minister contradicted a fellow minister’s declaration that the state owned 51 percent of firms that had not complied with local ownership laws.

“All mining companies that have not complied ... should note that 51 percent of their shareholding is now deemed to be owned by the state,” empowerment minister Saviour Kasukuwere said in a statement.

Kasukuwere’s declaration drew a sharp rebuke from Prime Minister Morgan Tsvangirai, who is sharing power with President Robert Mugabe in a fragile coalition formed three years ago.

He said Kasukuwere had no power to do this and it was not government policy, adding to the confusion over a drive that has often been carried out in an ad-hoc manner.

It was not immediately clear which firms were being targeted, or whether Mugabe’s cash-strapped government planned to pay for the shares. Kasukuwere, a key Mugabe ally, did not respond to requests for clarification.

Tsvangirai said in a statement: “the ... act does not empower the minister to unilaterally nationalise private entities and there is no reason to create panic among investors by projecting the image of a voracious government keen to grab compulsorily people’s companies without compensation,”

“It is not the policy of this government to nationalise the mining businesses or any other business. The Prime Minister takes a serious view of the Minister’s attempts to incite the public to act unlawfully against mining businesses.”

ELECTION PLOY

The demand for foreign companies, particularly miners, to transfer a 51 percent stake in local operations to black investors is widely seen as a tactic by Mugabe’s ZANU-PF party to raise cash for elections that may come this year.

Johannesburg-listed Impala Platinum, the world’s second-biggest platinum producer, bowed to pressure last month to surrender half its Zimplats unit, although details of the transfer have not yet been worked out.

Analysts said the latest broadside from Kasukuwere might be more bluster than fact.

“I would treat this with quite a degree of skepticism,” said Nic Borain, an independent political analyst based in Cape Town.

“I would want to wait to see the specifics of how those shares would be transferred, how the assets would come to be in government hands, how government would exercise any control over those assets.”

Kasukuwere’s statement added that any profits accruing to the 51 percent stakes “should be regarded as property of the state”, and that other companies transacting with mining firms should remember that they are dealing with the government.

“Any attempt to defraud the state will result in prosecution,” it said.

Kasukuwere has previously said most major firms have complied or are in the process of complying, but he has not publicly endorsed plans relating to leading gold producer Metallon Gold, an unlisted South African miner, and Mwana Africa’s Bindura Nickel corporation.

Harare says its “indigenisation” policy is needed to redress the racial inequities of past colonial rule, but similar drives in other sectors have been disasters, most notably the government’s seizure of white-owned farmland that decimated commercial agriculture and led to widespread food shortages.

On Thursday, Finance Minister Tendai Biti, who is from Tsvangirai’s party, and central bank governor Gideon Gono, another Mugabe ally, both warned that the empowerment drive would destabilise the economy if extended to the banking sector.

“If you tamper with the banking sector, you can’t have capital. Capital is fungible and fluid and it will move (away),” Biti said.

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