No compromise reached on indigenization law between Zimbabwean gov't and mining sector

07:55, June 23, 2010      

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Zimbabwe's Youth Development, Indigenization and Empowerment Minister Saviour Kasukuwere on Tuesday denied there was an agreement of compromise between the government and the mining sector on the indigenization law, Xinhua has learnt.

Under the indigenization regulations that came into effect in March this year, foreign owned companies with a net asset value of 500,000 U.S. dollars are required to shed 51 percent of their shareholding to indigenous Zimbabweans within a period of five years.

Companies were initially given 30 days to submit their compliance proposals but the deadline has since been extended twice, with the final deadline now at the end of this month.

The mining sector, largely controlled by foreigners, made a proposal requesting to be exempted from complying with the 51 percent threshold, arguing mining companies should sell at least 15 percent while the remainder will be accounted for by the various social responsibility programs they have undertaken.

Minister Kasukuwere told a press conference there was no such agreement. "I have heard about the proposals but they are just proposals," he said.

"The mining sector to us is where the resources of this country are and it is an area where the companies must be ready to do much more than what they are proposing. We expect much more and we are going to discuss with them, we have not responded yet to their proposal," the minister added.The government has since announced that the indigenization drive will first target the mining sector, the second largest foreign currency earner for the country after agriculture.

The minister said a sectoral committee to look at the specific issues of the mining sector has been set up and it will deal with this issue.

The committee is one of the 14 sub sector specific committees that have been established by the government to make recommendations on sectoral thresholds, time frame and other related issues.

"After that committee has set we will then be able to say where we stand as the government. At the moment they have not agreed with me," he said.

The mining industry, represented by the Chamber of Mines, last month proposed a compromise on the indigenization law, saying the government should recognize that most mining companies built schools and roads that benefit nearby communities.

The chamber said only 15 percent should therefore be in the hands of indigenous Zimbabweans in the mining sector.

"The position which we put together says a minimum of 15 percent equity," the Chamber's president Victor Gapare said.

"The rest to make up 51 percent will be in the form of social responsibility programs like building schools and hospitals."

The indigenization law has drawn mixed reactions from parties in the inclusive government, with President Robert Mugabe's Zanu- PF supporting the law while Prime Minister Morgan Tsvangirai's MDC- T is concerned with how the law will be implemented.

The MDC-T argues that the law should be implemented in a way that does not destroy the economy, indicating fairness and transparency should be guaranteed to ensure broad-based empowerment of the people.

Kasukuwere said while there was discord among the parties in the early days, there is agreement now among the parties on the indigenization law.

"This statement I am making is the position of the entire government of Zimbabwe," he said.

He said Cabinet has also approved some amendments to the indigenization regulations following consultations with stakeholders. Among them is the change of the term "cede" to "dispose" and the inclusion of community share ownership trusts to enable community participation in the economy. Kasukuwere said the term "cede' was one of the key concerns of stakeholders who felt the word implied forced takeover of shares without any compensation.

He said all shares held by foreign-owned companies will be sold, adding the amendments will be legalized on Friday.

Source: Xinhua


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