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Harare – Zimbabwe is probing Rio Tinto’s disposal of its stake in two mines in Zimbabwe, charging that disposed shares were held offshore, hence the justification to investigate them and determine if due procedure was followed.
Rio Tinto disposed of its 78% stake in the Murowa diamond mine and also sold off its 50% interest in the Sengwa coal mine. Both stakes were disposed of to RioZim, a separate, locally-listed entity that held 22% in Murowa and about half of Sengwa.
Zimbabwe’s Deputy Mines and Mining Development Minister Fred Moyo told Parliament on Wednesday that the government is probing the circumstances around the share disposal in Murowa and Sengwa.
“The shares were actually held offshore… we are still investigating to verify the manner in which the shares changed hands outside the country,” Moyo said in response to questions from parliamentarians.
Zimbabwe has since moved to consolidate the diamond mining industry in the country, forcing all gem miners into one firm in which the state will own half the shares. It has however not been clarified whether Murowa will be part of the merged entity.
In a 2015 note to shareholders, RioZim said the Murowa mine had “finalised its mine plan subsequent to the reporting period and operations will commence in the fourth quarter after nine months of stoppage”. It said it expected losses to continue into 2016.
Too many regulatory hurdles
Mining sources in Zimbabwe say Rio Tinto pulled out of Zimbabwe after encountering regulatory and operational hurdles. They said demands that foreign firms cede 51% majority shares as well as high mineral royalties and other mine fees were worsening the operating environment.
Parliament also heard on Wednesday that empowerment compliance plans submitted by foreign companies are now being reviewed. Foreign firms in Zimbabwe include South African platinum groups such as Impala Platinum [JSE:IMP], Anglo American Platinum [JSE:AMS], Aquarius Platinum [JSE:AQP] and other companies such as Standard Bank [JSE:SBK] among others.
However, the Indigenisation Ministry, which last week clashed with Finance Minister Patrick Chinamasa over compliance of foreign banks, said the foreign firms were lagging behind and should have complied over the last five years.
“The Cabinet issued a directive that the results of this exercise will be issued after the Cabinet Committee on Indigenisation have looked at all these issues.
“Currently, the processes of indigenisation are done by line ministries, so we are waiting for a comprehensive position from the various ministries which will be chaired by the Minister of Indigenisation,” said Mathias Tongofa, Deputy Youth, Indigenisation and Economic Empowerment Minister.
