Pyrrhic victory for Mugabe as Rio Tinto gives up control of tiny diamond mine, but likely drops $200 million expansion
News reports on Saturday say Rio Tinto's Zimbabwe subsidiary Murowa Diamonds has ceded 51% of its equity to comply with a new law that requires Zimbabweans to own the majority of foreign companies.
Rio Tinto says on its website it has completed a feasibility study and received environmental go-ahead to expand Murowa production 8-fold at a cost of $200 million. Saturday's report cast serious doubts on whether the investment, which requires foreign capital, would now be made. It appeared in recent weeks as if Zimbabwe was soft-pedalling the indigenization laws, but Rio Tinto's capitulation has now put pressure on Impala Platinum, struggling to hold onto its $20 billion worth of reserves in the country.