Wednesday, March 08, 2006

mugabe intends to grab mines, wreck those industries too....

JOHANNESBURG, 7 March (IRIN) - Mining company Implats says the Zimbabwe government's plan to take a 51 percent controlling interest in mining operations in the country "is not in the best interests of developing the platinum industry in Zimbabwe".Newspapers in South Africa and Zimbabwe have devoted many column inches to the news that the government planned to become the majority shareholder in the country's estimated US $20 billion mining sector.According to South Africa's Business Day, Zimbabwean Minister of Mines Amos Midzi told the Zimbabwe Chamber of Mines last week that the cabinet had approved draft proposals requiring mining companies to surrender 51 percent of their assets to the government and/or indigenous groups, depending on the commodity. The government would pay only for 26 percent and the remainder would be a "free carry".Midzi reportedly warned that alternative foreign investors had been identified to take over equity in mines if the current external shareholders did not co-operate...

The proposal was thus intended to ensure that Zimbabwe "benefits from its own resources".The "free carry" part of the scheme was based on the belief that the government would warehouse those shares for eventual purchase by indigenous groups.But, he cautioned, "we must be very careful - already Zimbabwe is perceived as a lawless country, and as people who do not respect international agreements." Taking a fast-track land restitution approach to reforming the ownership structure of the mining sector could mirror the effects of farm invasions on agriculture."This [mining sector reform] must be executed in a manner that is beneficial to mining companies as well as government, particularly at this delicate stage where we want to be perceived as willing to be part and parcel of the global community," Nikisi said. ..

Sounds good on paper: Let the locals take over the mines and reap profit.
Ah, but what that means is that the government will force out foreign investment and let locals (read corrupt politicians and their friends) buy the shares with useless money.
Since outside investment is stopped, the mines won't be upgraded, since equipment costs money...and who is going to invest money into a business that won't reap profit?

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