Wednesday, February 3, 2010

Rio Tinto (NYSE:RTP) Zimbabwe Mine Threat

Rio Tinto

Rio Tinto (NYSE:RTP) could experience what a number of other foreign companies have had to experience in Zimbabwe, the loss of their operations because of the imposition of what is called local ownership rules.

According to the company's chief executive for diamonds and minerals, Harry Kenyon-Slaney, the situation could be a real threat to their diamond operations in the country.

Even so, at least the Zimbabwe government is communicating with the company, something they haven't necessarily done in the past concerning similar circumstances.

What the Zimbabwe government does is give people living in the locality an ownership stake in the company; in this case the Rio Tinto Murowa diamond mine in Zimbabwe.

"We are staying on course in Murowa in Zimbabwe; the only threat to our operations is the indigenisation programs," Kenyon-Slaney sais, speaking at a Cape Town mining conference.

"Partnerships are also a key focus of our Murowa diamond mine in Zimbabwe."

Last year was way down from 2008 as far as diamonds produced at the mine, with only 124,00 carats produced in 2009, down by 53 percent from the year before.

The indigenous program would allow locals to be given a 51 percent ownership in any foreign company, which not only would entail mines, but banks and other businesses as well.

Zimbabwe President Robert Mugabe had made promises if mining companies would start to invest in the country again, they wouldn't have to be concerned about being expropriated. So the obvious question is, what is there to talk about if that is true?

Rio Tinto

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