HARARE, September 4 (The Source) – Zimbabwe’s largest platinum miner, Zimplats Holdings, says President Robert Mugabe’s government has approved its plan to sell 10 percent equity to workers but rejected the rest of the initial 2013 local ownership agreement signed by the two parties.
Zimplats, in January 2013 agreed to sell a majority stake to local black investors for $971 million to meet black ownership targets set by President Robert Mugabe under the law. However, in October the same year, government said it would review the plan, among other agreements.
Zimplats chairman, Sydney Mufamadi said government had eventually rejected the plan but acceded to the miner’s plan to transfer some shares to staff.
“Following the rejection of the indigenisation implementation plan (IIP) non-binding term sheet signed in January 2013 with the Government of Zimbabwe…. Zimplats and the government have agreed on the sale of a 10 percent equity stake to the Zimplats Employee Share Ownership Trust (ESOT) as part of Zimplats’ IIP,” said Mufamadi in the group’s integrated annual report released this week.
“The process for the sale of this 10 percent equity stake to the ESOT is now awaiting approval by the Reserve Bank of Zimbabwe (RBZ) of the vendor financing arrangements pertaining to the sale.”
Mufamadi noted that once the central bank’s approval has been obtained, Zimplats will proceed with the implementation of the sale of the 10 percent shareholding to the ESOT.
On January 15 this year, Zimbabwe gave businesses 60 days to amend previous agreements as part of changes to the controversial law which is blamed for low Foreign Direct Investment (FDI) in the southern African country.
Zimbabwe’s Indigenization Act — enacted in 2008 — requires foreign owned companies valued at over $500,000 to cede 51 percent to black locals.
Mufamadi expressed confidence that the central bank will approve the vendor financing scheme.
“It is my sincere hope and belief that we will ultimately achieve a position on Zimplats’ IIP that will be fair and equitable to all the parties and, most importantly, that will preserve the interests of all stakeholders,” he said.
Earlier this week, Zimplats reported a $74,3 million loss in the full year to June 30 compared to a $97,1 million profit in the previous year after losing key tax battles amid depressed sales volumes and lower metal prices.
The miner lost two long-running court battles against Zimbabwe’s tax authority and was ordered to pay additional profit tax and a penalty on income tax incurred in the 10 years to 2014.
Zimplats reported on Monday that the two judgements had resulted in a 314 percent increase in tax for the year to $130,5 million compared to the previous year.
Revenue during the year was down 29 percent to $408 million as platinum, palladium, rhodium and gold (4E) sales volumes fell from 477,905 ounces to 381,849 ounces during the year.