April 22 (Bloomberg) -- The government in Zimbabwe, which has the world’s second-biggest platinum deposits, is preparing a law allowing it to seize controlling stakes in companies without compensation, according to a draft of the legislation.
The law would be an amendment to a 2007 act that compels foreign and white-owned companies such as Rio Tinto Group, Sinosteel Corp. and Impala Platinum Holding Ltd. to sell or cede 51 percent of their shares to black nationals or state-approved agencies. The current law also affects banks including Barclays Plc and Standard Chartered Plc.
“The motivation for this position arises out of the desire to ensure that the people of Zimbabwe benefit fully, and without cost whatsoever, from enterprises that exploit their God-given natural resources,” according to the draft obtained by Bloomberg News.
Zimbabwe last month endorsed a new constitution in a referendum last month, paving the way for elections, which must be held before Oct. 31. The southern African nation is governed by a coalition formed by President Robert Mugabe’s ruling Zimbabwe African National Union-Patriotic Front and Prime Minister Morgan Tsvangirai’s Movement for Democratic Change.
Anglo American Platinum Ltd. and Impala have agreed to cede stakes in their local units. The government is in talks with banks including Barclays and Standard Chartered about their compliance with the current local ownership law.
“The sentiment around this change is likely to be very negative,” Justin Froneman, a Johannesburg-based analyst with Standard Bank Group Ltd.’s securities unit, said in a phone interview today. “This further exacerbates the perception regarding regulatory challenges and risk around doing business in the country.”
Impala, which owns 87 percent of Zimplats Holdings Ltd. and is the world’s biggest producer of the metal after Anglo American Platinum, signed terms to sell 51 percent of the unit to the country’s black citizens in January.
Mugabe on March 1 said Zimbabwe shouldn’t pay for its stake in Zimplats because all the natural resources belong to the government.
Any measures that eliminate compensation would fall foul of both the new and the old constitution, Lovemore Madhuku, chairman of the National Constitutional Assembly, an association of civil-society groups, said today in phone interview from Harare.
“Under the constitution, the only property which can be acquired without compensation is land,” he said. “Everything else has to be compensated for.”
Anglo American Platinum fell 1.2 percent to 334.26 rand at 3:49 p.m. in Johannesburg trading. Impala gained 1.5 percent to 119.38 rand.
Zimbabwe’s economy, expected to grow 5 percent this year, is recovering from a decade of hyper-inflation that peaked at 500 billion percent in 2008, according to the International Monetary Fund. It dropped its currency in favor of five others including the dollar, the euro, the British pound, the South African rand and Botswana’s pula the following year.
Indigenization Minister Saviour Kasukuwere said he wasn’t immediately able to comment when contacted on his mobile phone.