Zimbabwe must offer foreign miners a consistent legal framework, the right to keep a controlling stake in operations and a greater share of profits to encourage investment, the head of Anglo American Platinum (AMSJ.J) said.

Amplats predicts a 20% decline in earnings

The country, home to the world’s second largest reserves of platinum after South Africa, is pinning hopes on a recovery in its mining industry after a coup that pushed out veteran leader Robert Mugabe, whose rule saw the economy plunged into chaos.

But decades of laws that deterred investors with tough terms and frequent changes, low global platinum prices and a crumbling economy have left Zimbabwe’s mineral wealth largely untapped.

“We are not investing in any material growth,” Chief Executive Chris Griffith told Reuters, adding that Amplats was considering investing in a small process to optimize operations, a process known as “debottlenecking”.

“But that is not betting the farm on Zimbabwe yet,” he said, adding that terms now on offer and an uncertain global outlook for platinum meant the world’s top producer of the metal had no immediate plans for major investment in Zimbabwe.

The southern African nation requires platinum and diamond companies to hand over at least 51 percent of operations to the government, a rule that had extended to the rest of the industry until it was changed last year for other metals.

Amplats, which owns the Unki platinum mine and is building a $62 million smelter, would be among major multinationals that the new mining minister, Winston Chitando, would hope to woo as the nation prepares for elections in six months.

But platinum prices are hurting those recovery prospects.

The industrial precious metal is down more than 50 percent from a record high of nearly $2,300 per ounce in 2008 due to a supply glut and shrinking demand from autocatalyst makers and jewelry buyers in China, the world’s biggest consumer.

“CHOPPING AND CHANGING”

Griffith met Zimbabwe’s Chitando to discuss issues plaguing the industry, including laws and rules on processing that he said had changed three times since work on Amplats’ new smelter started.

The Amplats CEO told the minister that constant changes made taking any investment decision difficult.

“I said (to Chitando): ‘You think I will bring half a billion dollars to Zimbabwe when you guys keep chopping and changing the rules? There is no way I will do that.’”

Unki, the smallest of three platinum mines in Zimbabwe, is Amplats’ only operation outside South Africa.

The smelter under construction will produce a matte product that will be sent to the company’s refinery in South Africa.

As well as concerns about not keeping a controlling stake, miners were concerned that companies were only allowed to retain 20 percent of their foreign earnings, Griffith said.

Following years of cost cuts and asset sales, Amplats paid its first dividend in seven years last week.

“The market is improving all the time so as we get to that position one of the things that will be a key consideration is: does the market want the extra ounces?” he said.

Zimbabwe will impose a 15 percent penalty tax from Jan. 1, 2019 on exports of platinum producers which do not build refining facilities in the country, Chitando told a mining conference on Wednesday.

Impala Platinum (IMPJ.J), Zimbabwe’s largest platinum producer, said last year “neither the smelter nor the export levy is affordable” and could lead to the closure of its Mimosa mine.

Writing by Zandi Shabalala; Editing by Pratima Desai and Edmund Blair