SA companies feel the heat in Zimbabwe
The gloves are off for the Zimbabwe units of JSE-listed sugar producer, Tongaat Hulett, St a nda r d Bank a nd Mzi Khumalo’s Metallon Gold as it has emerged that the empowerment ministry has now classified the three South African companies’ local units as unwilling to comply with the controversial indigenisation policy.
Zimbabwe promulgated the Indigenisation and Economic Empowerment Act in 2007 and has sought to implement it ahead of elections expected in July. President Robert Mugabe and his Zanu-PF party have adopted the policy as the centrepiece of their re-election bid although economists, fund managers and investors have criticised the law, saying it drives away much-need foreign direct investments.
While foreign mining companies have already been forced to comply with the policy, i ndigenisation and economic empowerment minister, Saviour Kasukuwere, has now set his sights on the banking sector, in which he is facing stiff resistance from other Government officials. The banks have been given a final June deadline to comply through giving away 51% shares.
Reliable sources with knowledge of developments regarding the indigenisation of foreign companies in Zimbabwe last week told Finweek that the empowerment ministry has classified local units of Tongaat Hulett, Standard Bank and mining firm, Metallon Gold under Section 5 of the empowerment policy. The section deals with companies deemed as unwilling to give away majority shares.
“Three companies have been identified as unwilling to give away shares. The empowerment minister may decide to have the companies operating licences and land leases cancelled in the case of Metallon and Tongaat Hulett,” said a knowledgeable Government official.
Tongaat controls Triangle and more t han 50% of t he Zimbabwe Stock Exchange-listed Hippo Valley Estates. The Zimbabwe units contributed 19% to Tongaat’s total interim revenue and 32% to operating profit in the half-year period to September.
Metallon Gold has a market value of about $320m and employs about 3 600 workers. In Zimbabwe it owns f ive gold mines, including Arcturus mine, Shamva mine, How mine, Redwing mine and Mazowe mine while Africa’s biggest bank, Standard Bank, has a majority control in Zimbabwean-based bank, Stanbic.
Other manufacturing companies have already complied with the policy and these include cement manufacturers, PPC and Lafarge Cement, while in the mining sector, Impala Platinum’s Zimbabwe operation, Zimplats; Unki – owned by Anglo American Platinum – and Mimosa, which is jointly owned by Implats and Aquarius Platinum, have already agreed to cede majority shares. Final indigenisation agreements for the foreign mining companies are expected to be concluded in June following the signing of “non-binding” agreements.
Kasukuwere confirmed to Finweek t hat t he t hree companies have now been tagged as unwilling to comply. “Tongaat Hullet, Standard Bank and Metallon Gold – we are now covering them under Section 5; these are companies that are against the law and I t hink t here will be a notice on t his soon,” Kasukuwere said.
There are fears that failure to comply with the indigenisation policy could result in the three companies being forced out of the country. They are also accused of refusing to give money to community
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