Empowerment law affects US$445m mining project
by Caroline Mvundura Thursday 06 May 2010
HARARE – Zimbabwe’s largest platinum producer Zimplats Holdings has said commencement of a US$445 million project to ramp up production to nearly 300 000 ounces annually was dependent on finalisation of “compliance issues” regarding the country’s controversial black economic empowerment laws.
Zimplats, majority owned by South Africa’s Impala Platinum – the world’s second largest platinum producer – said it had won board approval for its Ngezi phase II expansion project that will see platinum output rising to 270 000 ounces from 180 000 ounces per annum.
The project will among other things include development of an underground mine, construction of a 35 000 megalitre dam, 1 125 employee houses and creation of 1 000 new jobs in a country battling to emerge from a 10-year recession that saw unemployment skyrocketing to about 90 percent according to some estimates.
But Zimplats said in a quarterly statement released earlier this week that: “Project commencement is dependant on finalisation of compliance issues regarding the Indigenisation and Economic Empowerment Act and the
accompanying regulations that were recently gazetted.”
Zimplats said it was awaiting response from the government on its proposals on how it plans to sell stake to local blacks in line with the empowerment law.
However Indigenisation Minister Saviour Kasukuwere, who has given foreign-controlled companies a May 15 deadline to submit plans of how they intend to sell 51 percent stake to indigenous Zimbabweans, last month
publicly criticised Zimplats’ empowerment plan which he described as inadequate.
The Harare coalition government has said it is reviewing the empowerment laws.
But analysts have warned that any plan to force foreign-controlled businesses to sell shares to locals – especially in the absence of a scheme to assist impoverished indigenous Zimbabweans to buy stake from foreigners – will only help scare away potential foreign investors whose money the country badly needs to rebuild its shattered economy.
Zimplats, which last September completed the first phase of its expansion programme at a cost of US$350 million, said commencement of the second phase also depended on the firm and the government reaching a “mutually acceptable arrangement” regarding US$34 million that it is owed by the Reserve Bank of
Zimbabwe and a review of taxes.
Meanwhile Zimplats said operating profit rose 14 percent to $57 million in the March quarter compared with the December quarter.
The company said metal prices continued an upward trend in the quarter in line with the global economic recovery and also increased investor interest in platinum group metals.
Revenue for the first quarter was nine percent higher than the previous quarter, reflecting the higher sales volumes and improved metal prices.
Operating costs increased by four percent in line with the higher sales volume, the company said. – ZimOnline.