Rio Tinto's Murowa Diamonds cedes 51-% stake to Zimbabwean government

Anglo Australian miner RioTinto's Zimbabwean subsidiary Murowa Diamonds has ceded 51-per cent stake to the Zimbabwean government in order to comply with a new law giving local blacks majority shares in foreign companies, state-owned Herald newspaper said on Saturday.

"Murowa Diamonds wrote to us yesterday saying they have given up 51 per cent shares and these would be given to our people," the newspaper quoted Indigenisation minister Saviour Kasukuwere as saying.

In order to give greater control of the economy to locals, Zimbabwe had given a 25 September deadline to all foreign companies to submit plans to offload 51 per cent of their shares to the black community by 2015.

But around 700 companies have yet to cede to the deadline, and the government has already issued warning to follow the law or risk de-registration, said the paper.

Zimbabwe holds the world's second-biggest reserves of platinum and chrome after neighbouring South Africa, and the Murowa mine, located near Zvishavane in the south-west of Zimbabwe, is one of three operating diamond mines in Zimbabwe.

Rio Tinto holds a 78-per cent interest in the company and the remaining 22 per cent is owned by Riozim Limited, an independent Zimbabwean owned and listed company.

Started in 2004, the open-pit Murowa diamond mine produces about 250,000 carats per annum through its processing plant. Current estimates put the mine reserves at 19 million tonnes of ore, with an ore grade of 0.9 carats (180 mg) per tonne.

At a planned production of 500 000 tonnes per year, the mine could produce 450 000 carats per year. Last year, the mine produced 139,000 carats of rough diamonds.