adminover the indigenisation issue.
Zimplats has consistently failed to submit an acceptable indigenisation proposal that complies with the indigenisation law in Zimbabwe, insisting on credits which have been rejected out of hand.
Government’s insistence on the full implementation of the 51 percent has to be viewed within the context of Zimplats’ flawed agreement and special mining lease with the Government, which should rightly be feeling cheated either by omission or commission.
It was extremely naïve and irresponsible for the Implats board to assume it could fortify its operations in Zimbabwe with a flawed and exploitative agreement.
Zimplats acquired a special mining lease for US$1 but now wants to sell back 36 percent of the land from the very same special mining lease and extensions thereto, back to the Government for US$153 million or 29,5 percent empowerment credits.
Last year, Finance Minister Tendai Biti openly condemned as “exploitative” the Zimplats deal, which paved the way for the company to acquire BHP’s Special Mining Lease I; in fact, Minister Biti proposed stripping and re-shaping the contract to cut out further exploitation.
Minister Biti also questioned with fervour the legal soundness of people who negotiated the provisions of the deal on behalf of Government.
Instead of structuring a compliant proposal as in the case on New Caledonia, that provides for reasonable return for the current shareholders via the vendor financing of the indigenous shareholders, Implats stands to lose significant value if it is forced to cede shares to the indigenisation fund.
Based on the current market capitalisation of Zimplats on the Australian Stock Exchange of US$1,2 billion, 29,5 percent is equivalent to US$354 million.
It seems quite extraordinary that Zimplats chairman Mr Dave Brown, whose arrogance has seen him alienate the Indigenisation Ministry and board, is still trying to lead the negotiations, when the minister has refused to deal with him.
Zimplats has in the past appointed emissaries, who have been totally ineffective in negotiating on their behalf, and it is believed that Mr Brown was last week still continuing to rely on such assurances.
What is clear is that Mr Brown and his advisors are totally uninformed about Government’s position, as clearly articulated by President Mugabe during the launch of the Mimosa Community Trust in Zvishavane last month.
It is no coincidence that the Indigenisation Ministry fired off the letters to the mining companies soon after the President made it clear that the Government should proceed to take over the companies that were not willing to comply with the 51 percent.
For some strange reason, Mr Brown continues to believe that the policy is being driven by Youth Development, Indigenisation and Empowerment Minister Saviour Kasukuwere, and hence the attempt to engage emissaries to him.
Minister Kasukuwere was quoted as saying: “We can’t allow major companies like Zimplats to be controlled by foreigners, whose interests are completely at odds with the national interests of Zimbabweans.
“We have a major liquidity crisis in Zimbabwe, yet companies like Zimplats were allowed to hold most of their cash in offshore accounts. That is completely unacceptable and could be an attempt to sabotage our economy.”
Through a waiver of applicable exchange control regulations, the special mining lease allowed Zimplats to maintain offshore foreign currency accounts to deposit all its platinum sales, only remitting a portion of the sales to its local account held by South African lender Stanbic Bank.
Apparently this was to enable Zimplats to pay its non-resident suppliers.
This is rather ironic, given that, in terms of Clause 14 of Special Mining Lease I, Zimplats is supposed to prioritise goods and services produced by Zimbabwean companies and nationals and to “establish and follow appropriate procurement and tender procedures for the acquisition of goods and services”.
Zimplats, however, did not abide by the terms of the agreement and instead signed agreements to procure the bulk of its goods and services from South Africa, where its majority shareholder Implats is based, denying the economy the downstream “trickle-down” benefits, using companies such as DRA.
According to Minister Biti, “the Government will still have a duty and an obligation to disinfect the toxic elements of the agreement even if the process of indigenisation affects radical changes to the company’s shareholding”.
At a recent investment conference in South Africa, Minister Biti was at odds with Prime Minister Morgan Tsvangirai.
It appears that the Prime Minister, who reportedly gave private assurances to Mr Brown, is completely out of touch with the details of the flawed and exploitative agreement that gave rise to the empowerment credits being claimed by Implats.
Online Reporter