Zimbabwe Platinum Mines (Zimplats) parent company Impala Platinum Mines, has said populist sentiments on indigenisation will have a serious knock-on effect on the fledgling economy as investors are primarily attracted by a stable environment in which their investments are guaranteed protection.
Fellow platinum-producing mining giant, Aquarius Platinum Limited, a holding company of Mimosa, said it was in the process of engaging the government with a view to reaching an agreeable position regarding indigenisation.
The two were among companies given a 14-day ultimatum to submit “acceptable indigenisation proposals” or risk losing their operating licences.
“It doesn’t matter who you are — Indian, Chinese or South African — you want a stable investment climate. That for me is the only issue, really.
That’s a pity, because that can halt investment in Zimbabwe when investment is exactly what Zimbabwe needs right now,” Impala Platinum Mines chief executive officer David Brown told the South African media at the weekend.
Zimplats, together with Aquarius Platinum and Anglo Platinum, have been key in transforming the country into one of the leading producers of platinum group metals.
“The President (Robert Mugabe) himself said on several occasions we are a model investor. He’s appreciative of our involvement in the social fabric of the country. That’s providing jobs, trying to enhance infrastructure and also various social projects in the areas we mine,” said Brown.
“I think at the end of the day politicians will always indulge in populist rhetoric. I get that. I understand that’s their job’s mandate. I can see that’s what they do because it will get people to vote for them. But I don’t think one should do that at the expense of growing the economy.”
Brown said the company had submitted a three-part indigenisation plan. The first is about the transfer of pure equity.
“We reckon that’s somewhere between 25% and 26% — we’re quite happy with that. Still, people should understand there are real cost associated to that. If people give you a cheque up front there would be no cost associated. But in reality that’s not going to happen.
“Such a deal would usually entail some deferred payment method, using dividends or methodology to repay the purchase price. There is a cost associated to that. Us bearing that cost is part and parcel of our commitment to empowerment. There’s a lot of emotion about these agreements. But we have a valid contract, we have a binding contract and that contract is in essence what I’d like to see honoured.”
The second part relates to the release of mining rights in 2006 to the State after Zimplats released around 36% of its platinum resources on its Great Dyke operations in exchange for empowerment credits.
The third part has to do with social infrastructure credits.
“At the time when we discussed these matters it was accepted it would be taken into account. That’s why I believe the plan we submitted to government maintains that balance.
“We’ve run the numbers and the numbers we’ve run would indicate if you have a non-contributory, non-dilutive stake of 20% or more you won’t be able to expand. Not because you don’t want to; not because you want to be difficult. The economics just don’t add up.”
In a trading update to shareholders, Aquarius Platinum said: “Mimosa’s senior management remains in discussions with all of the various relevant Zimbabwean authorities in order to ensure that a satisfactory position is arrived at within the timeframes required by the relevant legislation,” said Aquarius.