HARARE – Zimbabwe will effectively nationalise half of the country's key resources sector by setting up a sovereign wealth fund to own 51% stakes of mining companies, a government minister said on Wednesday.
Saviour Kasukuwere, Minister of Youth Empowerment and Indigenisation, said the government in the resource-rich country would publish guidelines on mine ownership regulations on Friday and the rules take effect within a week.
The move is likely to discourage foreign investment and will hit foreign miners in the state including AngloPlat and Impala Platinum, the world's largest and second largest platinum producers, and Rio Tinto, which runs a diamond mine in the country.
"In the mining sector specifically, we have been getting a raw deal all this time with companies taking money out of the country," Kasukuwere said.
Kasukuwere said earnings from mineral exports reached $1,7-billion in 2010, about 30% of the country's estimated yearly GDP, but that mining companies had only paid $4-million in taxes to the government.
President Robert Mugabe has rattled investors with his government plans to force foreign-owned firms to sell at least 51% to local blacks.
Mugabe, shunned by Western governments who suspect him of using violence and rigged elections to stay in power, has seen overseas aid dry up and investment deterred as his destitute country has faced greater global isolation.
Analysts said years of mismanagement by Mugaba'e ZANU-PF has only made things worse for an economy that was crushed by hyperinflation a few years ago.
Mugabe signed the Indigenisation and Economic Empowerment Act in 2008 and the government has issued regulations providing details of how foreign-owned companies should achieve at least 51 percent black ownership within five years.
Officials from the rival Movement for Democratic Change (MDC), forced into a power-sharing government with Mugabe after disputed 2008 elections, have been campaigning for foreign investment to add strength to a nascent economic recovery that came after the unity government was formed.
MDC offiicals have also tried to ally concerns about the law that the government said was aimed at addressing the unresolved economic imbalances left by decades of white minority rule, and would ultimately create a stable economy and fair society.
But foreign companies regularly cite the law as their main concern about investing in the southern African country.
Shares in Zimplats Holdings, a unit of Implats, is down nearly 20% since the start of this month and the company said in a statement to the Australian Stock Exchange the fall could be attributed to news around the new ownership rules.
"Obviously (this is) just more bad news but we will get the clear picture of what the intentions are after the elections," said Stephen Roelofse, a mining analyst at Metropolitan Asset Managers.
Mugabe has called for elections this year, ahead of plans drawn up in the power-sharing deal, angering the MDC which said the early vote would cause economic and social chaos.