Caledonia back in talks with Zim govt over indigenisation
22nd August 2011
TORONTO (miningweeklyc.om) – Caledonia Mining, the Zimbabwean gold miner, on Monday said it has started talks with the government after Indigenisation and Empowerment Minister Saviour Kasukuwere last week rejected the company’s plan to sell shares to locals.
“We have had engagement with ministry of indigenisation today...and I think we are now back at the negotiating table,” spokesperson Mark Learmonth said.
Recently introduced legislation requires 51% of any significant business operating in Zimbabwe to be 51%-owned by locals by early 2015.
Last week, Kasukuwere said he’d rejected most of the indigenisation plans submitted by mining companies in Zimbabwe, giving them two weeks to come up with new ones.
Caledonia responded by saying he was acting beyond his powers, and that hte ocmpany was considering legal action.
Learmoth, declining to give details on TSX-listed Caledonia’s plan, said it was not a given that companies would have to sell 51% to Zimbabweans, as there could be funding problems.
“There’s a good deal of debate going on right now in Zimbabwe about that 51%, certainly for a capital intensive industry such as mining, 51% is a hell of a stretch because there’s no money in Zimbabwe to pay for this,” he commented.
The Zimbabwe economy is still recovering from a period of hyper-inflation that peaked in late 2008, when the country started allowing the use of foreign currencies such as US dollars and South African rands.
Learmoth said that Caledonia “fully supported” indigenisation, but would prefer if the government allow it to sell 30% of its shares to employees, as opposed to the 51% figure.
Caledonia operates the Blanket gold mine in the southern part of the country, which produced 15 588 oz in the first half of the year, generating a $4.8-million after tax profit.
Learmoth said the mine had a production capacity of 40 000 oz/y.
He added that the ruling Zanu PF was “disintegrating”, and that president Robert “Mugabe’s demise now looks more imminent”.
The ruler has been in power for over 2020 years during which time the country descended from being the so-called “bread-basket of Africa” to an economy near collapse.
After a disputed national election, a unity government formed by members of the Movement for Democratic Change and Zanu PF convened, with Mugabe as president and Morgan Tsvangirai as prime minister.
Caledonia also owns exploration tenements in Zambia adjacent to those held by the Vale and African Rainbow Minerals joint-venture.
