Zimplats Raided

Staff Writer
1 June, 2006

The publication Platinum Today has said that one of the world’s largest platinum producers has had it’s Harare offices raided. Impala Platinum, known as Implats, also said that government agents had a warrant to raid the home of the chief executive.

Remarkably they said these difficulties would not stifle a deal between it and the Zimbabwean government, which is expected to emerge over the next few weeks. "These things are bothersome and mildly irritating, but it is not serious," said David Brown, the financial director of Implats.

Implats has a large stake in Zimbabwe's largest platinum producer Zimplats, which has been engaged in negotiations to lessen government demands. "We are working like madmen to get the finishing touches of an agreement," added Mr Brown. "If we were dealing with another corporate body I would say it would take two weeks to conclude the deal - government can take a bit longer." Zimplats aims to expand its production to 145,000 oz from 85,000 oz a year.

Reaching a deal with the authorities is regarded as important for Implats as the Zimbabwe government originally announced plans to take a majority interest in foreign-owned mines in the country without full payment.

Business must unite against Mugabe's tyranny

Business Report
NEWS

May 28, 2006

By Basildon Peta

Johannesburg - The dismal failure of Zimbabwe's
business sector to forge a united front against
President Robert Mugabe's "commercial hooliganism" was
the biggest nemesis of South African investors trying
to ward off a controversial plan to nationalise the
country's mining assets, said analysts.

As it emerged this week that there were deep divisions
within the Zimbabwean government over the plan to
force foreign mining companies to relinquish majority
equity to the state, analysts lamented the fragmented
approach by the South African-led Zimbabwean business
community in dealing with the Mugabe establishment.
They said the approach was detrimental to the cause of
business.

"The business sector has the power . to influence
change, but not when it is as fragmented as it is
here," said a Zimbabwean consultant economist, John
Robertson, who also advises big corporations.

All the South African investors who have flooded
Zimbabwe to take over mainly mining corporations are
interested in doing their own thing and protecting
their own turf at the expense of working towards an
integrated approach that may benefit everyone in the
end.

Business Report is authoritatively informed that deep
divisions within the Zimbabwean government have pitted
greedy politicians - who fear that their unfettered
honeymoon under the authoritarian Mugabe might be over
soon and hence want to accumulate as much wealth as
possible - against the more realistic technocrats who
are sympathetic to foreign investors and who believe
that forcing multinationals to relinquish majority
stakes to the state is as unsustainable as the white
land seizures that have destroyed Zimbabwe' farm-based
economy.

After amassing several large-scale commercial farms
for themselves, their children and relatives, the top
politicians want majority equities in mining houses to
be ceded to the state as demanded by Mugabe to pass on
to their consortiums at a later stage.

Some of the ministers have already abused their
positions to acquire exclusive prospecting zones in
several mining areas and some have interests in
smaller-scale mining operations but want leeway to get
to the big stage.

Their poor consortiums cannot afford outright buyouts
of empowerment stakes in foreign mining houses,
officials said.

Authoritative sources said the technocrats at the
ministry of mines wanted a phased empowerment approach
in the mining sector similar to the South African
model. This would be a phased relinquishing of
"realistic levels of equity" either to the state or to
Zimbabwe's private sector over a 10- to 15-year
period.

"Many of Zimbabwe's mineral resources, especially
platinum, are unexploited and still need huge
investments. We, therefore, need to build the
confidence of foreign conglomerates to invest in
extraction and in any other value-adding
technologies," said a well-placed official in the
mines ministry. "Forcing the companies to give
majority equity to government or even establishing
50-50 partnerships will bring us back to square one .
The government simply has no money or expertise to
invest in these capital-intensive projects."

Officials said it would be better if Mugabe's
government avoided being an equity partner in mining
ventures and restricted itself to playing a
facilitative role for black players who could raise
money to be equity partners with the South Africans.

Some black-owned conglomerates such as the Zimbabwe
Stock Exchange-listed TA Holdings have expressed an
interest in venturing into mining and would probably
have the credibility to raise the cash offshore
required to partner with foreign mining companies and
fulfil Mugabe's preferred indigenisation sentiments.

Officials said another proposal by the technocrats was
to exempt specific mining projects needing huge
foreign cash injections from being asked to cede
equity to the state as originally announced by mines
minister Amos Midzi. This was the compromise proposal
that giants such as Impala Platinum (Implats) were
pushing for.

The draft changes originally announced by Midzi would
require foreign mining conglomerates to immediately
cede 25 percent equity to the government of Zimbabwe
without payment. The remaining 26 percent would be
acquired over a five-year period and paid for from
dividends.

Although they don't acknowledge it publicly, South
African mining companies have withheld development
projects worth billions of rands at their mines in
Zimbabwe pending clarity of the government's
nationalisation plans. Mugabe reiterated his stance to
party supporters last week that Zimbabwe's mining
resources should be majority controlled by the state
for the benefit of Zimbabweans.

At the time of going to press, it was not clear
whether Mugabe would be persuaded by the
recommendations of the technocrats from his mines
ministry or those from the Zimbabwe Chamber of Mines.

But officials agreed with Robertson and other analysts
that the failure by the business sector in general and
the mining sector in particular to forge a united
front was detrimental to their interests.

"They [mining companies] come here one by one like
children queueing up for lunch," said another mines
ministry official.

Zimbabwean-born South African businessman Mutumwa
Maware, whose asbestos and gold mines were
nationalised under a decree issued by Mugabe, urged
investors to learn from his experiences and to forge a
"united front against Mugabe's commercial tyranny and
hooliganism".

Implats chief executive Keith Rumble met with Mugabe
more than a month ago to safeguard his company's
interests in Zimbabwe. Since that meeting, Mugabe has
repeated his resolve to seize mines on several
occasions. Anglo Platinum (Angloplat) spokesperson
Simon Tebele said that his company was still in talks
with the Zimbabwe government.

Tebele refused to comment on suggestions that the
failure to forge unity within business was hugely
counterproductive.

He also declined to confirm or deny information that
Angloplat had scaled down investments at its flagship
Unki Platinum Mine in central Zimbabwe. Implats head
of corporate affairs Bob Gilmore had not returned
several calls left for him at the time of going to
press.

Implats controls most of Zimbabwe's platinum reserves
around the Chegutu/Ngezi area. It benefited greatly
when Australia's BHP Billiton abandoned its Chegutu
Platinum Mine several years ago. Impala has previously
said it was involved in negotiations with the Zimbabwe
government. It is understood that the company was
withholding R6 billion worth of investment into its
Zimbabwe mines pending the final outcome of Mugabe's
nationalisation plans.

But Mawere warned firms to tread cautiously. "I am a
victim of 100 percent nationalisation under a decree
issued by the same government that is negotiating with
other asset owners in Zimbabwe.

"Why would Implats have confidence that they will be
secure when even blacks like me, in whose names Mugabe
want to control the same resources, are not secure and
can get victimised?"

If business played a role in helping defeat apartheid
through sanctions, then business could certainly forge
a united front against "commercial tyranny" in
Zimbabwe and help in creating an acceptable business
environment.

A South African court dismissed criminal charges
raised by Mugabe against Mawere, whose minerals were
marketed via South Africa. But that did not stop
Mugabe from proceeding with the seizures. It seems
Mawere had incensed Mugabe by refusing a top post in
Zanu-PF. He has also won a case against the Zimbabwe
government in the British courts, but all his efforts
have been to no avail as Zimbabwe's government would
not let go of his confiscated assets.

Sources say Mzi Khumalo, who operates five large gold
mines in Zimbabwe, and produces 51 percent of
Zimbabwe's total gold output, has long struck a good
working relationship with Reserve Bank of Zimbabwe
governor Gideon Gono and has managed to get a deal to
repatriate part of his profits back to South Africa
despite a foreign currency crunch in Zimbabwe.

"He perhaps has no reason to want to work with anyone
else . here for a common approach for the moment,"
said a mining official.

Robertson said the government of Zimbabwe believed in
intimidating everyone into acquiescence. It had in
fact institutionalised the mentality of intimidation
against the mining community. But because businesses
were the real producers and had the wealth, they could
easily employ their power.

"Business has the power but it is not using that
power," Robertson, Johannesburg-based Zimbabwean
economists Lloyd Mutore and Trymore Madondo said.
South African businesses perhaps feared losing their
mining rights to Chinese and Russian investors who are
courting Zimbabwe.

"But by being passive, they will still lose anywhere .
For them it is a lose-lose situation unless Uncle Bob
is perhaps out of the picture," said Mutore.

It was also not certain whether the Chinese and
Russians would invest where others have left.

The Zimbabwe Independent reported last week that
Chinese conglomerates had now stopped work at various
infrastructure projects in Zimbabwe due to lack of
payment.

South African investors have not only taken over
Zimbabwe's mining sector, they have invested in other
listed Zimbabwean conglomerates abandoned by Western
investors. MTN is reportedly in negotiations to take
over the government's NetOne cellular company, the
second largest. Absa has taken over the Commercial
Bank of Zimbabwe and Nedbank was reportedly
considering investing in the Merchant Bank of Central
Africa.

"It seems the guiding principle for South African
businesses is to invest cheaply now in the hope that
the Mugabe era would be over soon and then they start
reaping the rewards," said Mutore. - Independent
Foreign Service 

 

 

 

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