Page last updated at 16:28 GMT, Wednesday, 25 June 2008 17:28 UK

Mining firm defends Zimbabwe plan

Action Aid hold a demonstration outside the Anglo American company AGM
Anglo American has been criticised for earlier projects in Africa

London-based mining giant Anglo American has defended plans to develop a platinum mine in Zimbabwe.

The project in the central district of Unki would be worth about $400m (200m) and would be Zimbabwe's largest foreign investment, the Times newspaper said.

Zimbabwean President Robert Mugabe has been condemned over violence against the political opposition ahead of the second round of presidential elections. The UK government has urged firms not to actively support the current regime.

"Where businesses are helping the Zimbabwean regime, they should reconsider their position now," Prime Minister Gordon Brown told MPs on Wednesday.

'Full compliance'

Several UK firms have a presence in the country, although many have said that they will not expand their investment.

Advertising firm WPP said on Wednesday that it would look to complete the sale of a minority stake in a Zimbabwean firm as soon as possible, after it emerged that a senior manager there had been advising Mr Mugabe in a private capacity.

Anglo American is deeply concerned about the current political situation in Zimbabwe and condemns the violence and human rights abuses that are taking place
Anglo American statement

Anglo American said in a statement that it had been an investor in Zimbabwe for 60 years, and that the Unki platinum project had been in development since 2003.

"Anglo American is deeply concerned about the current political situation in Zimbabwe and condemns the violence and human rights abuses that are taking place," the company said.

"Anglo American is monitoring the situation in Zimbabwe very closely and is reviewing all options surrounding the development of the project.

"It has been made clear to Anglo American that if it ceases to develop this project, the government of Zimbabwe will assume control."

The company added that it was in "full compliance with all relevant national and international laws relating to its activities in Zimbabwe".

Speaking on BBC Radio 4's PM programme, Anglo American chairman Sir Mark Moody Stewart rejected suggestions that the company was acting unethically.

"Investments cannot be turned on and off," he said, adding that the project was not benefiting Mr Mugabe's regime and would be needed in a post-Mugabe era.

"This is a very complex and difficult situation. It's not an easy decision. It's not a popular decision. But we do not run our business purely on popularity. We have to do... what we consider to be responsible."

'Natural fit'

Analysts said that Anglo American's move was driven by a desire to boost profits, as demand for commodities grew and rivals stepped up competition for resources in Africa - including firms from China.

The increased demand for platinum, used in the electronics industry and in catalytic converters for cars, has caused world prices for the metal to soar.

Zimbabweans queuing for bread outside a supermarket in Harare
Foreign businesses operating in Zimbabwe are under growing scrutiny

Nearly 90% of the world's platinum reserves are in southern Africa and the largest producer by far is Anglo American, through its subsidiary, Anglo Platinum.

David Hart, senior energy and resources analyst at Fat Prophets, told the BBC that Anglo's move was not a surprise and should not be seen as an endorsement of the Zimbabwean leadership.

"Anglo American has got the largest platinum operations in the world and Zimbabwe is rich in natural resources, so it's a natural fit," he said.

"The problem is political. Firms like Anglo are probably putting plans in place for life post-Mugabe."

Losing bet?

He added that firms investing in Zimbabwe faced a "tricky situation", with whoever came into power after President Mugabe being likely to want to re-examine any deals that were done.

"While $400m is a lot of money, it's not something that would break Anglo if they lost it," Mr Hart added.

"But if it gives them a foot in the door and a head start in deposits they can develop, then that would be money well spent."

Earlier this year, a BBC File on 4 programme discovered that nearly 20,000 South Africans had been displaced by Anglo American.

Anglo American said the displacement had occurred as it was treating safety as a priority and that it was aiming to make communities better off.

The rising price of platinum has seen a new wave of open-cast mines in South Africa, the world's largest producer.

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