Shakeup plans for foreign mines in Zim

Harare - Zimbabwean President Robert Mugabe's party has proposed a measure to seize majority stakes in foreign-owned mines without paying compensation, ahead of an election expected this year.

According to a draft seen by Reuters, Mugabe's Zanu-PF wants to change laws compelling foreign companies, such as the world's top two platinum miners, to turn over majority stakes to local blacks by removing any obligation to pay for the stakes.

The empowerment drive is part of Mugabe's re-election campaign and also ties in with Zanu-PF's plan to portray itself as a black liberation movement recovering assets seized by white colonialists.

"The motivation for this position arises out of the desire to ensure that the people of Zimbabwe benefit fully, and without cost whatsoever from enterprises that exploit their God-given natural resources," part of the notice said.

Hurdles

The proposal faces hurdles in parliament, but even if it does not pass it is likely to stoke concern from foreign investors about 89-year-old Mugabe's plans if he extends his 33-year rule in a vote expected in the second half of the year.

When his party seized white-owned farm lands more than a decade ago, investor confidence was undermined, sending the economy on a downward spiral.

Shepherd Mushonga, an opposition Movement for Democratic Change lawmaker who chairs the parliamentary legal committee, said it would be unconstitutional for the government to take over shares in foreign mining companies without paying compensation.

Legislation

All amendments to legislation need the approval of the committee, dominated by MDC members, to have legal effect. Zanu-PF has also lost its majority control of parliament to the MDC and a smaller MDC faction.

In January, the world's second largest platinum miner Impala Platinum Holdings [JSE:IMP] (Implats)  agreed to sell a 51% in its local unit to black investors for $971m to meet local ownership targets.

Anglo Platinum [JSE:AMS] (Amplats) and Rio Tinto have previously said they had agreed to empowerment deals with the government.