HARARE, March 19 (Reuters) – South African sugar producer Tongaat Hulett said its spending on communities in Zimbabwe should count as equity to enable the firm comply with a black economic empowerment law.

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President Robert Mugabe’s government is promoting indigenisation of company ownership, forcing all foreign-owned firms to sell a minimum of 51 percent shares to blacks.

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Tongaat said it has trained farmers, bought them farming inputs and paid for roads, schools and hospitals in communities where it operates in the southern African country.

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“I respectfully submit that the indigenisation law requires review to remove the emphasis on shareholding and focus on empowerment credits,” Sydney Mtsambiwa, Tongaat’s managing director in Zimbabwe told a committee of parliament.

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Empowerment credits are points awarded to a company for investing in communities and count as equity, authorities say.

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Mtsambiwa said the requirement for foreign companies to sell their shares as stipulated by the law was scaring off investors.

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In October 2012, the government gave Tongaat two weeks to submit a plan showing how it planned to sell 51 percent of its shares in its Zimbabwean operations, or face forcible seizure.

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The government has not followed through on its threat but Mtsambiwa said very few foreign investors would accept losing control of their investment.

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Mtsambiwa said Tongaat was developing 4,000 hectares of virgin land to resettle black cane farmers and had already secured $20 million from banks to fund part of the project.

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This is part of a plan by Tongaat to use a total of 24,000 hectares of land to resettle black farmers, he said.

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Tongaat has a 50.35 percent stake in Hippo Valley Estates and wholly owns unlisted Triangle Sugar Corporation. Both firms own sugarcane plantations in southern Zimbabwe.

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