HARARE – One of Zimbabwe’s top gold miners Rio Zim says foreign investors withdrew an offer to invest in the firm because of concerns over President Robert Mugabe’s controversial plan to transfer control of the mining sector to local blacks.

Rio Zim chairman Tichaendepi Masaya said the investors, who he did not name, had shown keen appetite to invest in the firm during seven months of negotiations only to pull the plug on the deal because of fears over plans by the government to limit equity that foreigners can hold in local mining firms.

"Foreign investors who had shown appetite and capacity for the deal withdrew recently due to the limitations on the equity stake imposed by the indigenisation and empowerment legislation," Masaya said in a circular to shareholders.

Masaya lamented the opportunity to raise badly needed capital lost when the investors pulled out of the deal, adding that before developing cold feet Rio Zim’s foreign suitors had even offered “short term financial support pending the conclusion of the rights issue."

Mugabe’s previous government used its majority in Parliament in 2007 to ram through the indigenisation law requiring all foreign-owned companies to cede at least 51 percent of their shares to black Zimbabweans.

Indigenisation Minister Saviour Kasukuwere, a hawkish ally of Mugabe who is spearheading the empowerment programme, has said the indigenisation campaign will begin with the mining sector, the bedrock of Zimbabwe’s fragile economy. 

Kasukuwere has given foreign owned mining firms until June 2 to submit details of how they plan to sell majority stake to local blacks by September, under the programme that he and Mugabe claim is necessary to ensure blacks benefit from the country’s lucrative mineral resources.

But critics say the empowerment campaign is a ploy by Mugabe to seize thriving businesses and hand them over to his allies as a reward for support much in the same way that the veteran leader’s land reforms were executed in the name of the people but benefited his top lieutenants the most.

Prime Minister Morgan Tsvangirai, who says he is for genuine indigenisation of the economy that benefits ordinary Zimbabweans, has castigated Mugabe’s empowerment drive as “looting by a greedy elite”.  

Besides Rio Zim, other big mining firms under pressure to sell controlling stake to local blacks include the country’s largest platinum miner Zimplats, owned by Impala Platinum (Implats), the world’s second largest producer of the metal used in the automotive industry.

Mwana Africa, which owns Bindura Nickel Mine and Freda Rebecca gold mine and Zimbabwe’s largest gold miner Metallon Gold Zimbabwe are also some of the companies being targeted by the empowerment drive. -

By Zimonline