New Dawn Mining Corp., operator of four producing gold mines in Zimbabwe, became the first foreign miner to have its proposals on black empowerment rejected by the government.
“We’ve rejected their proposals because they bypassed regulatory authorities when they bought Falcon Gold Ltd. and Olympus Mine without approval from the Competition Commission,” Saviour Kasukuwere, indigenization and economic empowerment minister, said today by phone from the capital of Harare. “These mines were bought outside Zimbabwe, but later merged here, which is unacceptable.”
Zimbabwe is the holder of the world’s second-largest reserves of platinum and ferrochrome after South Africa. The empowerment law, which forces foreign operators to cede or sell 51 percent of their local assets, affects miners including Anglo American Plc, Rio Tinto Group, RioZim Ltd. and Impala Platinum Holdings Ltd.
The law, known as the Indigenization and Empowerment Act, doesn’t allow white Zimbabweans or foreigners to own businesses with assets in excess of $1 million. No approvals have so far been granted.
Plans by mining companies to sell majority stakes to locals “fall short” of government expectations, Kasukuwere told state-owned television on July 6. The government will take steps to “take over those assets,” he said at the time.
About 173 mining companies, many of them closely held, submitted their plans to the southern African nation’s government explaining how they will dilute their foreign or white shareholdings.
New Dawn, which is listed in Toronto, didn’t answer calls to its switchboard today outside of office hours.