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Zimbabwe Mine Takeover Further Divides Coalition Government

A Zimbabwean miner works underground at Metallon Gold mine, country's largest gold miner, in Shamva about 80 km (50 miles) north of the capital Harare, June 14, 2011.
A Zimbabwean miner works underground at Metallon Gold mine, country's largest gold miner, in Shamva about 80 km (50 miles) north of the capital Harare, June 14, 2011.

Zimbabwe announced this week it is taking a majority ownership in foreign mining firms that have not transferred 51 percent of their equity to Zimbabweans. The move comes under controversial black empowerment laws that now further divide the uneasy coalition government.

Empowerment and Indigenization Minister Saviour Kasukuwere said Thursday that non-compliant foreign mining companies had effectively ceded controlling shares to the Zimbabwean government without compensation.

The announcement impacts all foreign mining concerns which had failed to comply with the 2011 deadline to have majority black ownership - part of a series of black empowerment and indigenization laws.

'No going back'

Kasikuwere, a member of President Robert Mugabe’s ZANU-PF party, said that there is no going back on the decision.

“Whether we go to court or not, one thing is certain: the people of this country shall benefit from their resources," he said. "We are determined to move in that direction. Why should the people of this country suffer when we have resources? We have a country with money, we have a country with resources, we are only seeking friends, partnerships where we share equally resources. We come from the history of colonialism. We have to deal with issues of colonial challenges that have been left upon us.”

ZANU-PF argues that the 2009 empowerment laws are the best way to reverse inequities left from white rule, which ended in 1980.

But the party's coalition partner, Prime Minister Tsvangirai and his MDC party, say application of the law in this way will cause chaos and scare away desperately needed foreign investment.

Tsvangirai reacted immediately to Thursday’s announcement, saying part of the government cannot act unilaterally to nationalize companies. He said the matter is still under discussion.

But Kasukuwere dismissed his statement. “I think there has been one person who has been the focal point in terms of the indigenization," he said.

"Otherwise we don’t want to cause confusion to the investors when it is not necessary. I’m the minister responsible for the implementation of the law. The prime minister, yes he is my supervisor, but he will find it necessary to use the necessary protocol to get in touch with the minister and not to try to usurp the powers of the minister.“

Indigenization policies

Tsvangirai’s ally, Finance Minister Tendai Biti, has said publicly that indigenization policies can work if applied correctly. He addressed the topic at an investment conference in Harare recently.

“Indigenisation per se, nobody should be worried about it," he said. "Because it is democratization of the economy. It is important in fragile states such as Zimbabwe. The challenge is the way we’re doing it and the measures we are sending. That makes me very cross. At the end of the day, indigenization is pitted against investment when the two could easily complementing each other. One is democratization and one is expanding the social base of the economy. I would rather own one percent of an elephant rather owning 100 percent of a rat.”

Kasukuwere has dismissed the MDC argument that the indigenization laws scare away investors. He notes that many of the major foreign mining companies have already complied with the law and will remain in Zimabawe.

Ralph Mhuruka, an independent economic analyst in Harare, says the bigger issue is not government infighting over indigenization laws, but the fact that they are not benefitting ordinary Zimbabweans as intended.

“If you pay attention what has been happening, you see the government being the main participant in indigenization," said Mhuruka. "And that is wrong, because they are crowding out all the entrepreneurs who are supposed to be participating in that space. What should naturally happen in economic empowerment [is] private participants being able to negotiate their own deals. Government must just do a supervisory role. But we see the government on the forefront like the case of Zimplats pushing.

Zimplats is owned by a South African platinum mining giant, which the Zimbabwe government last month said was the first one to surrender its majority to government. But the South African company has said it has a technical team working out the transfer of majority ownership and that the Zimabwean government would have to pay for its holdings.