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Zimbabwe to re-evaluate all mining contracts

By on July 3, 2009

Zimbabwe will re-evaluate all mining contracts and introduce a “use it or lose it” policy for its mining industry under a proposed law, Finance Minister Tendai Biti told Reuters on Friday.

The vetting of mining contracts by Zimbabwe’s unity government of President Robert Mugabe and Prime Minister Morgan Tsvangirai is likely to surprise investors at a time Harare is wooing them to help repair a battered economy.

Mining has become the leading source of foreign exchange, with gold accounting for a third of exports, but political turmoil, lack of energy and unfavourable regulatory rules has led to several mines closing.

“The government… is working on a new mining law, amendments to the mining laws, so that we comply with new standards for the extractive industries, which the World Bank is insisting on,” Biti said in an interview.

“That law will introduce the concept of ‘use it or lose it’ with respect to… mining claims. It will also introduce the re-evaluation of every mining contract that has been signed in Zimbabwe.”

Biti declined to say when the proposed law would be brought to parliament to avoid pre-empting the mines minister.

Some of the key players in Zimbabwe include Impala Platinum Holdings (Implats), the world’s second largest producer of the metal, which has the biggest mining investments in Zimbabwe. Its bigger rival Anglo Platinum and Rio Tinto also have mining interests in the country.

Implats and Angloplat officials in Johannesburg said they were unaware of Zimbabwe’s plan to re-check mining contracts, and would wait for more details before making a comment.

Prior to the new move to re-evaluate mining contracts, a vital concern for investors in Zimbabwe which has the world’s second-biggest platinum reserves and hefty deposits of diamonds, coal and nickel, was a law limiting foreign ownership of businesses, including mines, to 49 percent.

Biti said the proposed mining law would have flexible local ownership rules and seeks to empower Zimbabwe’s masses, rather than enrich a few.

“The concept of empowerment we want to see is mass empowerment, which is felt at the grassroots, village level,” he said. “This will be done through the establishment of a National Sovereign Fund to enable communities to benefit from the exploitation of the finite resources from their areas.”

Biti denied newspaper reports on Friday which said Zimbabwe — battling to raise $10 billion it says is required to rescue the economy — will receive $5 billion in loans from China in return for some platinum consessions.

He also denied a claim by Tsvangirai that Zimbabwe had won a $950 million credit line from China.

“There’s no foundation at all in reports that we have received $950 million from China,” he said.

Reuters.

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