Harare, Zimbabwe — MININGREVIEW.COM — 20 May 2010 – Zimbabwe’s Chamber of Mines has proposed a compromise to the government’s drive to force foreign firms to give a 51% stake to locals, contending that a 15% local shareholding for mines was enough.
Chamber president Victor Gapare said government should recognise that most mining companies built schools and roads in the areas where they operate, benefiting nearby communities.
"From a broad-based empowerment point of view, you have to look at things like schools, hospitals, roads and all the developments which take place around mining communities, and in our minds that’s true empowerment," Gapare told a news conference here.
A Zimbabwean indigenisation law that took effect on March 1 requires foreign firms valued at more than US$500 000 (R3.75 million) to cede at least a 51% stake to locals. Firms were given 45 days to give details of their plans to comply, but the deadline has been extended indefinitely.
The Zimbabwean government has said that mines will be the law’s first target, but Gapare said Harare should consider requiring only a 15% local shareholding.
“The position which we put together says a minimum of 15% equity,” Gapare said. “The rest to make up 51% will be in the form of social responsibility programmes like building schools and hospitals,” he added.
“The mining companies are finding it very hard to attract capital. What we hope is that as the perceived country risk of Zimbabwe comes down, companies will be able to attract capital,” he continued.
In the first month after the law was published, Zimbabwe’s stock market fell about 10%, while mining shares dropped 20%.