Zimbabwe - Arabstoday
Harare Impala Platinum Holdings, the world\'s second-largest producer of the metal, is set to lose control over the unit holding 41 per cent of its reserves as Zimbabwe starts nationalising foreign-owned assets. Impala agreed in principle this week, in the face of a government ultimatum, to sell 31 per cent of the unit to a state agency and 20 per cent to employees and communities. Zimplats Holdings holds 134 million ounces of platinum resources, valued at $228 billion (Dh837 billion) at prevailing prices. \"You are effectively losing 20 per cent of your total resources,\" given that Impala will be left with half the deposits owned by Zimplats, said Clinton Duncan, a resources analyst at Avior Research. \"Impala\'s hand was forced.\" Zimbabwe, which with South Africa holds more than three-quarters of the world\'s platinum, gazetted a law two years ago that compels foreign-owned companies to cede or sell 51 per cent of their shares to black Zimbabweans or state-approved agencies. Impala owns 87 per cent of Zimplats. Impala, which produces about a quarter of global platinum supplies, said on Tuesday it will sell 31 per cent to the national Indigenisation Fund for an \"independently determined fair value\". That transaction will happen once it\'s been compensated for releasing land containing platinum to the value of $153 million to the government in 2006, Impala said. An employee group and one representing the community will each buy 10 per cent, to be paid for with dividends. Whether Impala receives appropriate value for the 31 percent stake \"remains to be seen due to Zimbabwe\'s limited cash flow situation,\" Avior\'s Duncan said. The government\'s ability to fund its share of any capital spending to develop projects \"is also likely be called into question,\" Justin Froneman, an analyst at SBG Securities, said in a note. While Zimplats accounted for 10 per cent of Impala\'s refined platinum production last year, it generated 18 per cent of profit. It\'s the lowest-cost producer of Impala\'s five operations \"I don\'t think we\'ve lost control of the crown jewels,\" David Brown, Impala\'s chief executive officer, told investors on a call on Wednesday. \"If they don\'t come up with the cash, then those shares don\'t get transferred,\" he said. \"The approach is not to stand in the stead of government to actually make available funding for the sale of those particular shares.\" Analysis: Dangerous precedent Zimbabwe is home to the world\'s second-largest reserves of platinum, increasingly used in devices that cut vehicle emissions as environment rules are tightened in Europe and the US. Its economy is recovering from collapse under President Robert Mugabe, who wants to call elections this year. \"The Zimplats transaction will set a dangerous precedent and poses a real threat to other investors,\" Anne Fruhauf, an analyst with Eurasia Group, said in e-mailed comments. \"The Zimplats debacle gives the impression that things are going from bad to worse.\"