Zimbabwe President Robert Mugabe says mining companies have nothing to fear from a proposed new law that would nationalize foreign owned mines. Despite Mr. Mugabe's assurances, foreign-owned mining companies remain worried and have frozen plans to increase capacity.
Mr. Mugabe has told members of his ruling ZANU PF party that any amendments to mining laws are still under discussion.
Last month, the minister of Zimbabwe's mine industry, Amos Midzi, said that the government planned to change the law and take 51 percent of some key foreign-owned mining companies, without compensation.
Midzi said that the proposed new law had been agreed to by the Cabinet, which is presided over by Mr. Mugabe.
Since the uproar over the proposed nationalization of mines, Mr. Mugabe has had at least one meeting with mining executives. He was reported to have told them they had nothing to fear and should continue with their plans to expand their operations.
A Zimbabwe economist with specialist knowledge of the mining sector, John Robertson, says foreign mining houses are still waiting for written confirmation of Mr. Mugabe's assurances. Because they are public companies whose shareholders are private investors, they cannot hand over their companies that easily.
"The main message that these companies gave the government was that they would simply pull out right now," he said. "And that the further development that might have taken place would simply stop. In money terms, this means right now on hold, is some hundreds of millions of U.S. dollars worth of development work that would have enlarged the productive capacity of several mines to an enormous extent."
Robertson said the Zimbabwe government may have not realized until recently that they could not take over mines as easily as they took over the 90 percent of white-owned commercial farms in the past six years. He says the government does not have the expertise to run the mines.
"I think that is one of the issues they did not anticipate, that international experts in what ever field, engineering, mining are easily able to find jobs elsewhere," he noted. "They were happy to work for international companies presently in Zimbabwe. If you told them today they have now become employees of the Zimbabwe government most would be reaching for passports and household removal company telephone numbers within minutes."
Other analysts in the mining sector say that Mr. Mugabe will not abandon plans to take over foreign-owned mines, but may reduce the percentage of ownership he takes.
Zimbabwe is going through its worst financial crisis, which began after the commercial agricultural sector, formerly the mainstay of the economy, was nationalized.
Agriculture used to earn 40 percent of Zimbabwe's foreign currency, and was a regular exporter of food to the region. Only about five to 10 percent of nationalized land is now used and Zimbabwe struggles to feed itself.