adminleave the diamond industry in March, effectively inviting bids for its US$1,2 billion diamonds business, which also includes two other mines in Australia and Canada.
“Pre-emptive rights” are basically the rights of current shareholders to maintain their fractional ownership of a company by buying a proportional number of shares of any future issue of common stock.
Reuters reported last week that RioZim has opened talks with Rio Tinto in a bid to take full control of the Murowa Diamond mine as the global mining major seeks to leave the gem business, Reuters reported last week.
Locally-owned RioZim was created in 2004 when Rio, the world’s third largest miner, largely left Zimbabwe, while retaining its diamond interest.
Reuters quoted Mr Harpal Randhawa, whose private equity group Global Emerging Markets (GEM) recently bought 25 percent of the Zimbabwean firm, as saying that RioZim was keen to exercise its pre-emptive rights to acquire Rio Tinto’s shares in Murowa.
“We’re now in discussions with Rio Tinto Plc to acquire the 78 percent of Murowa that they want to offload,” he said.
Mr Randhawa, who said only time would tell if his group’s decision to invest in RioZim was “either brave or stupid”, said the firm was compliant with Zimbabwe’s empowerment laws as it was 54 percent controlled by locals.
The Zimbabwean Government is currently championing a law that seeks to transfer at least 51 percent shareholding in foreign firms to locals.
Several foreign firms, including the world’s two largest platinum miners, Anglo American Platinum and Impala Platinum are in talks with the Government over plans to turn over majority stakes in their local operations to Zimbabweans.
“The main constraint that indigenisation has put on any company is a capital constraint due to the limited ability of locals to inject capital,” said Mr Randhawa.
RioZim, battling to clear a US$50 million debt owed to local banks, badly needs to recapitalise its gold mines and develop its substantial coal and chrome concessions.
The company also operates gold, nickel and copper mines.
RioZim posted an operating loss for the year ended of US$8,1 million.
The loss was a significant downturn from a profit of US$9,3 million the company posted in 2010. — Reuters/Business Reporter.
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