Wednesday, 19th April 2006 (2786 views)

Foreign mining companies with interests in Zimbabwe have run into further setbacks as President Robert Mugabe announced that he was backing plans to retain a 51 per cent controlling interest in any gold mines within the nation's borders.

New regulations, announced by mines minister Amos Midzi last month, suggesting the Zimbabwean government were intent on retaining influence over profits and policies in the mining sector were widely dismissed as a premature statement, pending a review.

However, President Mugabe voiced his support for the policy during the country's independence day celebrations this week, saying his country's interests must be maintained.

"We want a 50-50 situation, or 51 per cent in favour of Zimbabweans and the state and 49 per cent in favour of foreign investors," he said in a speech.

"We say so because when gold is taken away it does not grow again. The non-renewable resources are ours first. The investors will get a reward but we should strike a balance with what we keep for ourselves."

Foreign gold companies currently operating in the troubled African nation, including Metallon and Rio Tinto, will be angered by such a decision, say industry analysts.

The Zimbabwean Chamber of Mines has already warned that it could spell the end of the country's only remaining functional economic sector, following the collapse of agriculture and manufacturing.

The uncompromising policy of the government will demand the majority equity share in the mining companies without paying for it, a nationalist move expected to drive out many of the foreign investors that still remain and leave the industry in tatters.

 

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