Realist, not conformist analysis of the latest financial, business and political news

Zimbabwe Kills Black Empowerment Mining Ownership Limits In Pursuit Of Capital

Zimbabwe has insisted that platinum mines should have significant local ownership as part of a policy of black empowerment. The problem with this being that no locals have the sort of capital required to set up platinum mining and processing operations. Those locals, that local economy, therefore gained substantial portions of nothing. The only people with the money to be able to fund such projects are foreigners and they’d really rather prefer to own all of whatever they’re funding rather than half. Thus no funding if they can’t own all:

[perfectpullquote align=”full” bordertop=”false” cite=”” link=”” color=”” class=”” size=””] Zimbabwe will scrap a law that denies foreign platinum mining companies control of their operations in the country, the mines minister said on Thursday. Foreign platinum and diamond miners have been restricted to only 49% ownership of their Zimbabwe operations by the black economic empowerment law introduced during Robert Mugabe’s rule. The law was aimed at increasing black Zimbabweans’ stake in the mining sector, but foreign investors said its implementation was often murky and open to abuse. [/perfectpullquote]

Murky and open to abuse – well, yes, that Africanisation of the farming sector worked about as well as was to be expected too, didn’t it? At best substantial commercial farms have been turned into peasant plots, at worst the farms were parcelled out to political favourites and then essentially abandoned. The entire sector is now wrecked of course.

The No Breakfast Fallacy: Why the Club of Rome was wrong about us running out of minerals and metals

The mining sector is a little different, no mines have been forcibly localised. But it’s also true that no new investments have been coming in. For who would like to carry 100% of the costs of a project and yet only gain 40% of the benefits of it?

Allowing that 100% foreign ownership is exactly what will allow – won’t guarantee but will allow – further investment in that mining sector. Yes, you’re right, this is capitalism and that capitalism does require that the capitalists see an opportunity to make their money back before they’ll invest their capital. Deny them that and they’ll not come at all.

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5 years ago

Next you’ll be telling us that Europeans investing their money in African farms, mines etc. weren’t exploiting the place. That would be heresy.

Matt Ryan
Matt Ryan
5 years ago

Fool me once, shame on you. Fool me twice, shame on me.

Not sure who is going to be suckered into dealing with the Zim government again. Need to be a pretty tidy return to risk it.

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