Reuters reports that a key Zimbabwe mining group has proposed that locals have 10 percent ownership of foreign-owned companies, and not the 51 percent the government wants under a draft law that has shaken investors and could further damage an already ravaged economy.

Zimbabwe's government has proposed in a draft law that "indigenous Zimbabweans" take 51 percent ownership of all foreign companies, including mines and banks.

Chamber of Mines of Zimbabwe President Victor Gapare told Reuters the government had in principle agreed to its proposals.

"We have given the government our proposals that equity (should be) a minimum of 10 percent, then empowerment credits will make up to...15 percent and this will cover local procurement," Gapare told Reuters in an interview in Cape Town.

"One of the concessions the government has given is that if a company lists on the local stock exchange, that will be considered as local empowerment mainly because most of those shares will be bought by local pension funds," Gapare said.

Junior Mines Minister Murisi Zwizwai told Reuters a revised Mines and Minerals Act, would "go to the cabinet this month on its way to the parliament". He gave no further details.

Analysts believe the law would frighten away much needed investment to fix an economy severely damaged by the collapse of commercial agriculture following President Robert Mugabe's seizure of white-owned farms since 2000.

Mining group Rio Tinto said this week the plans to impose local ownership rules on foreign firms threatened its diamond operations.