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Kasukuwere, Malema birds of a feather

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Saviour “Tyson” Kasukuwere, Zimbabwe’s Minister of Youth, Indigenisation and Empowerment has been compared to South Africa’s own flag-bearer for youth, Julius Malema, president of the ANC Youth League.

And there are some similarities. In an interview with Miningmx, Kasukuwere railed against “colonialists”.

Commenting on heavy-legged approach of foreign mining firms to the Zimbabwean government’s indigenisation policy, Kasukuwere said days of “colonial looting of natural resources” in Zimbabwe were over.

That is reminiscent of Malema’s comments about white people in South Africa having behaved like criminals and that the land had been stolen and ought to be returned. It is emotive and polarising, but it sure guarantees political traction in certain quarters.

Says Kasukuwere on indigenisation: “This law cannot be ignored. It represents the aspirations of the people,” he said. “It provides for a just economic model. It provides the people with equity.”

But in other ways, Kasukuwere is unlike Malema. Favoured by Zimbabwe President Robert Mugabe for his hardline approach to foreign investors, Kasukuwere increasingly occupies a middle ground approach between Zanu-PF and the Movement for Democratic Change (MDC).

In a WikiLeaks dispatch, the US Embassy in Zimbabwe comments: “Realising that the future may not lie exclusively with Zanu-PF, he (Kasukuwere) is on a charm offensive, reaching out to both MDC factions and to Western diplomats.”

It continues: “He’s an important player given the political importance of youth and the economic importance of investment.”

Jonathan Moyo, a Zanu-PF politburo member, told Finweek in August that as the youngest member of the Cabinet, Kasukuwere had brought fresh impetus to indigenisation.“He has been given a serious mandate,” he said.

Moyo added, however: “But the jury is still out on him, although he has already shown some skills people didn’t think he had. He’s truly in the category of so-called Young Turks.”

But who really is Kasukuwere and where did he come from; moreover, how did he rise through the ranks?

He owns a trucking business, but keeps these private interests separate from his political career. One WikiLeaks cable describes him as “a thug”, but adds: “Kasukuwere is young, smooth and ambitious.”

So much has been written about indigenisation, that it is difficult to know just exactly what is being asked of foreign-owned companies operating in Zimbabwe.

In essence, 51% of all foreign companies’ assets in Zimbabwe, with turnover in excess of $500 000 a year, are to be sold to indigenous parties by 2015. However, its implementation has been far from straightforward.

Deadlines have been imposed and then extended; former agreements have been thrown into question, and in other cases, the Zimbabwe government has totally relented on its strategy that assets be locally-owned at all.

Take, for instance, the $750m invested by India’s Essar Group in Zimbabwe steelworks, Zisco, and an affiliated iron ore mine. In return, President Mugabe’s government allowed Essar Group control of the assets.

There has even been dissension in the ranks of the Zimbabwean Cabinet about whether indigenisation should be enforced at all.

Zimbabwe mines minister Obert Mpofu recently declined to cancel mining licence of Caledonia Mining forcing Kasukuwere to go back to the negotiating table, while Gideon Gono, Zimbabwe Reserve Bank governor, said banking licences would not be cancelled either.

“This is a national policy and everyone in the cabinet has supported it as such,” Kasukuwere told Miningmx in response to questions the policy was not wholly supported internally.

“People may have their personal views, but this is the law of our country,” he added. “Mining companies must understand this is a new beginning for Zimbabwe. They cannot continue to colonise our minerals,” he said.

Notwithstanding Kasukuwere’s support of indigenisation, the Zimbabwean government remains somewhat uneasy about it as a piece of legislation.

Amendments to its regulations have been gazetted twice this year in Zimbabwe’s Parliament, most recently in July.

Deadlines have also been extended twice. Further extensions have, however, been ruled out. “We will not make any more announcements,” said Kasukuwere. “We are moving quietly. The deadline has been reached. Action will be taken.”

One company currently working to an extended deadline of November 3, is Impala Platinum, which owns 87% of Zimplats, a platinum miner operating in Zimbabwe’s Ngezi region.

According to market sources, Zimbabwe is unhappy with the terms of an agreement signed in 2006 when current Impala Platinum CEO David Brown was the company’s financial director.

In terms of the deal, Impala agreed to release some 51m ounces of platinum or 99m ounces of 4E (platinum, palladium, rhodium and gold).

Impala said at the time, these minerals were outside its long-term expansion programme of its Zimplats subsidiary, which was then of about 1m ounces over a 50-year life of mine.

Zimplats was to receive an empowerment and cash credit of $153m for the release of the mineral-bearing ground. It was unclear at the time, if 51% local ownership would be made to stick. Now that it will, Impala is working to top up the offering to the Zimbabwean government.

Unfortunately, the negotiations are being held up by the interesting observation by Zimbabwe that the ounces given back to it in the release of ground agreement are not worth as much as the ounces Zimplats is currently mining. Zimbabwe’s government bases its view on a dollar-per-resource ounce valuation.

It is unknown how this will play out, but one solution mooted among the analysts is that the Zimbabwean government may agree to a joint venture structure with the likes of Impala Platinum as well as its rival, Anglo Platinum, which operates Unki mine.

In terms of the joint venture, structure miners would agree to the government becoming a partner on a 51% basis, but allowing the miners to increase their share in the assets from that base as and when capital on expansions is spent.

That would enable the Zimbabwe Cabinet to announce it had achieved its 51% goal while providing miners with comfort to grow expansion.

There is a lot at stake for both parties, especially Zimbabwe. Kasukuwere has commented that indigenisation must move forward but he will be mindful that Anglo Platinum — and Aquarius Platinum, which owns the Mimosa platinum mine in Zimbabwe — are already discounting no production from Zimbabwe.

The country stands to lose much.
Impala has suggested a potential investment in Zimplats, its lowest cost mine, to take it to 1m ounces, while Anglo Platinum has indicated it could triple the size of Unki to 280 000 ounces a year.

Mimosa’s phase 6 expansion could potentially increase production by 75% to 350 000 ounces a year.

For all the fighting talk, failing to facilitate the platinum miners puts at risk an estimated 7% to 8% compound average growth rate from 2011 to 2020 in Zimbabwe’s platinum industry.

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