WSJ.com - Zimbabwe Is Rewriting Mine-Ownership Laws February 10, 2005 WORLD NEWS DOW JONES REPRINTS This copy is for your personal, non-commercial use only. To order presentation-ready copies for distribution to your colleagues, clients or customers, use the Order Reprints tool at the bottom of any article or visit: www.djreprints.com. • See a sample reprint in PDF format. • Order a reprint of this article now. Zimbabwe Is Rewriting Mine-Ownership Laws By JACKIE RANGE DOW JONES NEWSWIRES February 10, 2005 CAPE TOWN, South Africa -- Zimbabwe is drawing up new laws to enforce black ownership of the country's mining assets that could be introduced as early as this year. But a senior government official says the change wouldn't be as disruptive as an overhaul of agricultural-land-ownership laws that caused a plunge in production. Still, the new laws could have a major impact on international mining companies operating in Zimbabwe by forcing partial or total ownership changes. While Zimbabwe's natural resources include diamonds, gold, coal and nickel, the main growth industry for the country is platinum. According to David Murangari, chief executive of mining industry lobby group the Chamber of Mines of Zimbabwe, the country holds between 14% and 15% of the world's platinum reserves. This component of catalytic converters in cars and fuel-cell technology is found in Zimbabwe's Great Dyke, a series of ridges covering more than 480 kilometers. Among assets that could be affected are platinum mines owned by South Africa's Impala Platinum Holdings Ltd., or Implats, and London-based Rio Tinto PLC's new Murowa diamond mine. T.E.N. Chigudu, permanent secretary at Zimbabwe's Ministry of Mines, said in a recent London interview that the country's mining legislation is set to be overhauled. "We are hoping this year," he said. Zimbabwe's existing Minerals Act was established in 1961 when the country was still under white minority rule. Mr. Chigudu stressed implementation won't take a similar approach to Zimbabwe's controversial change in agricultural-land ownership, where some white farmers were stripped of their land. Many new black farmers were inexperienced, causing a slump in production, while foreign investment plunged. Meeting with reporters in Cape Town yesterday, Zimbabwe Mines Minister Amos B. Midzi sought to allay fears that assets could be seized by the government if new mining laws are introduced. "We are not going to expropriate," Mr. Midzi said, adding that a new mining policy would be developed after "proper consultation." Mr. Midzi said Zimbabwe's Ministry of Indigenization and Economic Empowerment has introduced for discussion an "overarching" policy covering all sectors that recommends 50% of assets be sold, and that new companies have 50% indigenous participation. But he said each sector has the right to devise its own suggestions on ownership level. Mr. Chigudu said options under consideration cover differing black-ownership quotients in the mining sector, including individuals or consortia being permitted to buy a stake of any size in an asset, or business, or to buy up to an ownership ceiling such as 50% or 25%. The government is also considering providing loans for stakes in Zimbabwean assets, he added. Cathie Markus, an executive director of Implats, the world's second-biggest platinum producer, said its understanding is that Zimbabwe wants to bring its mining-asset-ownership legislation in line with South African law. That country's black economic-empowerment program for the mining industry requires 15% of assets to be held by historically disadvantaged black South Africans within five years and 26% within 10 years. Implats has stakes in two mining projects in Zimbabwe -- a 50% stake in the Mimosa mine 125 kilometers east of Bulawayo, a joint venture with Aquarius Platinum Ltd.; and an 84% stake in Zimbabwe Platinum Mines, with the balance held by independent shareholders. In May last year, Rio Tinto restructured its Zimbabwean subsidiary to retain only a 78% interest in its Murowa diamond mine, with RioZim Holding, an independently owned Zimbabwean company, owning the remainder. A person familiar with the situation said this 22% ownership was put in place to target any future local-ownership requirements. Lisa Cullimore, Rio Tinto's spokeswoman, said the company hasn't had definitive guidance from Zimbabwe on the timing of any eventual ownership rules. Write to Jackie Range at jackie.range@dowjones.com1 URL for this article: http://online.wsj.com/article/0,,SB110798796787650511,00.html Hyperlinks in this Article: (1) mailto:jackie.range@dowjones.com Copyright 2005 Dow Jones & Company, Inc. All Rights Reserved This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit www.djreprints.com.