Zimbabwe May End Local Ownership Rule for Diamonds, Platinum

President Emmerson Mnangagwa has said a local ownership requirement on all other minerals will be abolished, and diamonds and platinum could be next.

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Zimbabwe is contemplating lifting the current requirement that companies mining platinum or diamonds be at least 51-percent owned by black citizens of the country.

According to Bloomberg, President Emmerson Mnangagwa has announced that the ownership requirement on all other minerals will be abolished, leaving the government to assess its platinum and diamond industries more carefully.

The president stated, “[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.” He also added, “[d]own the line when we are satisfied that this can also go into the open basket we will do so.”

Platinum and diamonds are key for the country’s economy, but growing concerns over the ownership law from countries that operate mines within Zimbabwe are starting to cause problems.

Two of the world’s biggest platinum companies, South Africa’s Anglo American Platinum (JSE:AMS) and Impala Platinum Holdings (JSE:IMP), operate mines in Zimbabwe, but have slowed investment plans due to unease over relinquishing control of their mines to locals.

The current law, which was created under the guise of protecting and increasing black Zimbabweans’ share of the economy, has proved to be opaque and open to abuse.

It is hoped that repealing the law will re-engage international lenders, curb spending and attract investors to revive the country’s economy. With Russian and Chinese investors showing interest in setting up operations, chances are change is coming.  

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Securities Disclosure: I, Nicole Rashotte, hold no direct investment interest in any company mentioned in this article.

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