Zimbabwe foreign miners to meet ownership deadline: ministry official

Foreign mining firms operating in Zimbabwe are on track to meet a September deadline to sell majority stakes to local investors, though the government will be flexible in its approach, a senior ministry official said.

Earlier this month major mining firms had to submit plans for how they expect to comply with controversial regulation to hand stakes of at least 51 percent to locals.

They have until the end of September to comply with the law, unless they successfully apply for an extension.

Analysts have said that meeting the September deadline is all but impossible in cash-strapped Zimbabwe. But Prince Mupazviriho, permanent secretary for Youth Development, Indigenisation and Empowerment, said the plan was on track.

"I don't see why (we will not meet the deadline). What we now have to do is to finalise the arrangements," he said on the sidelines of a London conference on Wednesday.

"Don't take conclusion to mean within which the full amount has been paid, but within which it has been agreed."

He said the need to clarify details in regulation -- not least the issue of who qualifies as an indigenous Zimbabwean -- would not interfere with efforts to complete sale plans.

Zimbabwe has huge mineral wealth -- the second-largest platinum reserves in the world but also gold, diamonds, ferrochrome, coal and iron ore -- but the mining sector is starved of capital after years of decline.

The government estimates the sector will need $6 billion over five years but has struggled to attract investors, who are put off by an uncertain investment climate and unclear legislation.

Both Mupazviriho and Tapiwa Mashakada, minister for Economic Planning and Investment Promotion, told potential investors in London the government would be flexible in its approach to empowerment legislation, which is aimed at redistributing control of the country's natural wealth.

They said the deal by India's Essar to take majority control of troubled steel maker ZISCO would be a model to follow. Essar -- whose deal could almost triple foreign direct investment into Zimbabwe this year -- will take 54 percent of the steelmaker, with the government keeping 36 percent.

"The government won't grab 51 percent. This law is not about nationalisation, it is not about expropriation," Mashakada said.

Mashakada said the government had learnt its lessons after a chaotic land reform programme.

He said the local ownership target of 51 percent was an aspiration, which could be met either by seeking a local partner or through a management buyout or employee share ownership scheme.

"This is what we aspire to move toward," Mupazviriho said.

Zimbabwe has said it plans to set up a sovereign wealth fund in which it will pool unspecified wealth from untapped mineral resources. Mupazviriho said details were still being decided.

But even enthusiastic supporters -- not least the Zimbabwean head of AIM-listed African Consolidated Resources, which is exploring for minerals in Zimbabwe -- say the lack of clarity and certainty as well as unrealistic laws will continue to put off investors, unless issues are resolved.

ACR is locked in dispute with the Zimbabwean government over a discovery of alluvial diamonds in Marange, in the east of the country.

But Chief Executive Andrew Cranswick told the conference ACR was betting the investment climate would improve by the time its projects were ready to begin producing.

"With a 10 to 15 year cycle, if you wait until the investment climate is perfect until you begin the exploration process, you are 10 or 15 years behind the curve ... prices will be extremely expensive," he said.