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Zimbabwe to review company ownership laws

Obert Mpofu,
Zimbabwe mines and
mining development
Harare, Zimbabwe — MININGREVIEW.COM — 13 July 2009 – The government of Zimbabwe has decided to review laws forcing foreign companies to sell stakes in their businesses, in a bid to prevent the discouragement of investment needed for mines and other industries.
Reuters reports that in terms of existing indigenisation laws, foreign companies cannot hold more than 49% of a business, and they must sell any stake above that to Zimbabweans. The government is also able to seize 25% of shares in some mines without paying.

These laws have led to the withholding of investment badly needed to raise mining production as Zimbabwe tries to recover from economic collapse under the new unity government of President Robert Mugabe and old rival Morgan Tsvangirai.

Now mines and mining development minister Obert Mpofu has revealed that the review would lead to legislation more focused on investment.

“Careful consideration will be taken to ensure that the process of indigenisation is not at the expense of much needed direct foreign investment,” he said. “We are back to the drawing board at stakeholder consultation stage where submissions of all the views of interested parties are being sought again in order to address all the concerns,” he added.

Mining has become Zimbabwe’s leading source of foreign exchange, with gold accounting for a third of exports, but political turmoil, lack of energy and unfavourable regulation had forced some mines to close.

Now Zimbabwe has launched a review of all mining contracts, saying it would introduce a ‘use it or lose it’ policy.

“In doing so we want to ensure that all those that are performing will not be prejudiced,” he emphasised. “We are doing it in a manner that will not frighten people away.”