Zimbabwe’s new government may soon scrap a 51% requirement of local ownership for foreign investors in the diamond and platinum sectors, in an effort to re-engage international lenders, curb spending and attract investors to revive the country’s battered economy.
Mnangagwa’s administration has already repealed the 51% indigenization law, now only restricted to platinum and diamond mining.
The so-called indigenization laws intended to increase black Zimbabweans’ share of the economy, but were opaque and open to abuse.
President Emmerson Mnangagwa, who took the post in November after Robert Mugabe quit under pressure from the military, had already said he would revoke such rule on all other minerals, except from diamonds and platinum.
Last week, however, Mnangagwa hinted he might also free the sectors from the requirement, Bloombergreports:
“I only excluded diamonds and platinum for now. We do not have a real or deep-rooted or well-interrogated policy on diamonds or platinum,” the 75-year-old president said in an interview in his office in the capital, Harare. “Down the line when we are satisfied that this can also go into the open basket we will do so.”
Zimbabwe is home to the world’s second largest diamond and platinum reserves. It also known to have eight out of nine “rare earth” minerals and a processing capacity for gold, diamond and chrome.
The country’s platinum sector has attracted major producers, including Anglo American Platinum, Impala Platinum and Sibanye-Stillwater, which have had to relinquish control of their Zimbabwean mines to locals.
Activity in the diamond industry is not as easy to track and it has been plagued by controversy. Human-rights organizations have linked Zimbabwe’s military and intelligence agency with several companies operating in the Marange diamond fields, discovered in 2006. Such connections have been long hidden behind a wall of secrecy over revenue flows and ownership.
Zimbabwe has the world’s second-biggest reserves of platinum after South Africa.
In 2012, Partnership Africa Canada (PAC) report argued that Zimbabwe’s political elite had stolen about $2 billion in diamond revenue. The same year, corruption watchdog Global Witness claimed a Chinese diamond mogul ploughed $100 million into the CIO to fund covert operations against the opposition in exchange for diamonds traded outside official channels.
A 2013 parliamentary probe into the diamond sector found “irregularities and loopholes in the entire diamond value chain”, with clear discrepancies between the government’s books and figures provided by mining houses.
And just last year, Global Witness said it had uncovered further evidence suggesting state-owned Zimbabwe Mining Development Corporation (ZMDC) was set up by the country’s feared secret police “to secure a secret off-the-books source of financing.”
The group also said that of the $2.5-billion in diamonds Zimbabwe has officially exported since 2010, only $300 million were clearly marked in public accounts.