Mining Sector Hit By New BEE Bombshell
HARARE, April 3, 2011- Renewed panic has gripped Zimbabwe's mining sector after the government last week gazetted new stringent regulations compelling foreign-owned firms to surrender a 51% shareholding to indigenous Zimbabweans.
The new regulations give black Zimbabweans linked to Zanu-PF carte blanche to seize foreign-owned mining companies, some listed on the Zimbabwe Stock Exchange. Youth Development, Indigenisation and Economic Empowerment Minister, Saviours Kasukuwere, gazetted General Notice 114 of 2011.
Under new regulations, all foreign-owned mining companies with a net asset value of $1 would have to cede controlling stakes to indigenous Zimbabweans by September 25 this year.
This is a change from the net value of $500000 gazetted last year. This is essentially means every foreign-owned mining firm should be sold to "designated" entities. There are fears "designated" means Zanu-PF officials or supporters as President Robert Mugabe is using seizure of foreign-owned mines as his campaign gimmick for fresh polls.
The shares are to be disposed to a "designated entity" within six months which may, in certain circumstances, be extended by a further period of not more than three months. The Government Gazette, however, defines, the "designated entity" as any one of several specified state-owned or controlled entities or an employee share ownership scheme. The value of the shares shall be calculated on the basis of evaluation agreed between the minister and the foreign mining firm concerned "which shall take into account the state's sovereign ownership of the mineral or minerals exploited or proposed to be exploited" by the foreign investor.
Affected companies are to submit indigenisation plans by May 9. Critics said the new black economic empowerment mining law was a bombshell. International companies with exposure to Zimbabwe-linked mining firms were reportedly selling off their stocks.