Government Insists On Taking Over Mines

Source: Financial Gazette (Harare)

Date: 6 March 2008

Author: Shame Makoshori

THE government will not turn back on plans to forcibly acquire mining assets using a controversial mining law despite fears that the planned take-over could worsen the capital flight being experienced in the country.

President Robert Mugabe on Friday last week said concerns among the business community that Zimbabwe might lose potential foreign investment if it forges ahead with the legislation would not deter him because the crisis-hit country was already suffering from massive smuggling of minerals by the foreign owned companies.

Last year, government initiated moves to expropriate 51 percent shareholdings from the foreign-owned mines accused of illegally trading in minerals at the expense of the country's economy.

President Mugabe said the best way to deal with the losses would be to take them over and give "trustworthy" local entrepreneurs to run them.

"Some have said we will lose investors (if we take over foreign owned mines), but we are already losing from the colonial investments," he told about 5 000 supporters gathered in Harare to launch his party's election manifesto. "We want to correct things and prove that, despite the sanctions we will survive," added President Mugabe.

Reports suggest that major mines have halted expansion programmes to monitor the outcome of the polices.

But President Mugabe said empowerment of the previously marginalised indigenous people was "absolutely necessary".

"The mining sector has remained a place that is closed from us," he told the chanting supporters.

"We do not know what is happening there and unless we are there as owners we will continue to be cheated. We want to restore (the country) as the leading gold producer. International prices of gold have gone up to more than US$900 per ounce, yet our tonnage per year has gone down."

"They say this year it might fall to 11 tonnes. In a country with huge gold reserves, this is just a shame. After the elections, after our victory, we must improve our supervision," President Mugabe added.

Apart from mines, government planned to take over controlling stakes in foreign owned financial institutions such as Barclays Bank and Standard Chartered Bank and Stanbic Bank, a subsidiary of Standard Bank of South Africa.

Indigenisation and Empowerment Minister Paul Mangwana last year warned the foreign owned banks would be "impacted" by the empowerment laws just like the mining firms.

"We were colonised by force. We are trying to correct that, we cannot expect them to smile," he told bankers who had warned of an acceleration of capital flight. "They frighten you that there will be capital flight, but they are neo-liberals, these banks are run by blacks but decisions are made in London. They want to create white islands in a liberated Zimbabwe. We are not going to take that," Mangwana said.