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Mining Firms Re-Engage Zimbabwe Government on Indigenization Equity Quotas

  • Gibbs Dube

Reports said foreign investors recently backed out of a US$40 million deal to fund RioZim, pointing to risks perceived in the indigenization program some critics call a thinly veiled nationalization of the mining sector

The Zimbabwe Chamber of Mines said Tuesday that it is re-engaging the government on disputed indigenization quotas for blacks under an economic empowerment program, hoping to convince Harare to settle for less than a controlling 51 percent stake.

The Chamber said some mining firms are now unable to attract foreign investors given the mounting uncertainty as to equity ownership.

Reports said foreign investors recently backed out of a US$40 million deal to fund RioZim, pointing to risks perceived in the indigenization program which some critics say is a thinly veiled nationalization of Zimbabwe's key mining sector.

Mining executives said sharp differences remain between the government and the industry as to the sized of the equity stake to be made over to indigenous investors. The state has demanded a controlling 51 percent stake; mines have proposed 26 percent.

The mining executives said that in re-engaging the government, companies are offering to expand local community development programs in the areas of health, education and infrastructure, and to procure some of their operational inputs locally.

Stockbroker Batanai Matsika of Imara Securities said re-engaging the government to negotiate acceptable equity transfers could bolster investor confidence.

But economic commentator Bekithemba Mhlanga said talks between mining companies and government will prove to be a waste of time.

"ZANU-PF is determined to grab mining companies from foreign owners and I see them pushing hard to achieve this goal within the shortest possible time," Mhlanga said.

Elsewhere, Parliament on Tuesday approved a US$98-million loan from the Chinese Export-Import Bank to fund construction of a new national defense college, as VOA Studio 7 correspondent Irwin Chifera reported from Harare.

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