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JOHANNESBURG — Just when Zimbabwe’s battered economy seemed to be turning a corner, President Robert Mugabe has fired a new salvo at foreign investors, threatening to expropriate the assets of Canadian gold miners and other companies.
With its gold and platinum mines and vast diamond fields, Zimbabwe has the potential to be one of Africa’s fastest-growing economies. But it has been severely damaged by a decade of political turmoil, including the seizure of white-owned farms and a controversial “indigenization” campaign to compel foreign companies to sell majority stakes to Zimbabweans.
Now, the government is reported to be drafting a new amendment, allowing it to take controlling stakes in foreign mining assets without paying any compensation.
The amendment, if approved, could affect companies such as Toronto-based Caledonia Mining Corp., which operates the Blanket gold mine, one of the more successful mines in the country. It could jeopardize the recent strong recovery in Zimbabwe’s gold sector, which increased its revenue by 19 per cent last year.
Caledonia and several other mining companies had spent months negotiating agreements to comply with Zimbabwe’s indigenization rules, and their gold production has finally begun to boom. But now those deals are at risk of being torn up, eliminating the compensation that the companies were counting on.
Most foreign investors in Zimbabwe are refraining from any official comment on the proposed amendment, since it has not been formally introduced and its exact status is unclear, although its existence was reported by several media outlets this week.
But the reported draft amendment is a blow to their hopes for a brighter future. While the government remains dominated by the autocratic Mr. Mugabe, the current cabinet is a coalition of Mugabe loyalists and members of his main opposition party, and it has helped to stabilize the country. Last month, the coalition won a referendum to approve a more democratic constitution, allowing some of the international sanctions against Zimbabwe to be lifted.
Yet now, just when the country seems on the verge of recovery, the investors are faced with the potential loss of their ownership stakes. “It’s very frustrating,” a Caledonia official said, speaking on condition of anonymity.
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