Zimplats confident of breaking indigenisation impasse

shareholding for Zimplats in ongoing consultations with the Government.
The Indigenisation and Empowerment Act requires foreign-owned companies to sell at least 51 percent of their equity to black Zimbabweans.
But Implats said it would have preferred a situation where it retained controlling stake in the company and would keep negotiating with Government. Their initial indigenisation plan was rejected on the basis that it did not address the pertinent issues regarding the ownership of the mining firm.
“We will continue to negotiate with Government, but would want to have control of entities as we believe we can deliver best value for the country and the company by maintaining that control value,” said Implats chief executive Mr David Brown when he presented his firm’s results in South Africa last week.
The Zimplats indigenisation plan was rejected along with those of 14 other foreign-owned firms on the grounds that they fell short of requirements of the legislation.
He said a 51 percent equity level was “hugely problematic” in that this would result in future growth opportunities in the industry becoming retarded.
Such opportunities included a possible third phase expansion and other potential developments at Zimplats, which he said necessitated a stable investment climate.
Zimplats’ expansion was progressing and would see the miner increase production by 90 000 ounces to 270 000 ounces of platinum in the 2014 financial year.
The Implats chief executive said: “Recent developments regarding indigenisation have made future investment decisions somewhat problematic.”
He was also quick to point out that that ownership levels needed to adequately reflect the risks and rewards associated with the mining sector.
Zimplats’ indigenisation proposal comprised an equity ownership plan of 25 percent, with a 19,5 percent credit against indigenisation and the balance adding up to 51 percent made up of social infrastructure credits.
“This sort of level would be agreeable but obviously we need to finalise some areas around that to get up to the 51 percent level. But, an adequate and appropriate level of ownership will be the final result,” he said.
Government contends indigenisation is aimed at economically empowering locals and ensuring they participate in the mainstream economy.
It also argues that local communities in which the mines operate should benefit as minerals are finite resources and mining firms leave ghost towns in the areas when the mineral was mined out as happened in Mhangura. Over 700 companies (and more than 175 mining firms) have so far submitted their indigenisation and empowerment plans to the Government.
Those that submitted indigenisation plans below legislative requirement have been given between seven and 14 days to come up with acceptable proposals.
Failure to comply with requirements of the empowerment law may result in fines, imprisonment or cancellation of operators’ licences with the Government taking over operations and ownership of the firms.