Zimbabwe chrome miner given deadline to cede half its claims

* Give up claims or have them seized, govt tells miner

* ZimAlloys proposes to give up 20 percent of its ground (Adds mines official, detail)

By MacDonald Dzirutwe

HARARE, June 7 (Reuters) - Zimbabwe's second largest ferrochrome producer Zimbabwe Alloys has been given until the close of business on Tuesday to hand over half its chrome mining claims or risk having them seized, according to a letter from the government seen by Reuters.

The southern African nation holds the world's second largest deposits of chrome, which is smelted to produce ferrochrome, a raw material used in stainless steelmaking.

Zimbabwe's mines minister last year asked Zimasco, a unit of China's Sinosteel and Zimbabwe Alloys (ZimAlloys), which owned 80 percent of all chrome mining claims, to release some ground for distributing to new investors.

Zimasco said in April it had ceded half its mining claims to the government.

Francis Gudyanga, a senior official in the mines ministry, said ZimAlloys had failed to comply with rules set in October.

"Despite repeated efforts to have a common understanding you have remained evasive with regards to this matter," Gudyanga said in a letter dated May 30 addressed to the company, which was owned by Anglo American (LSE: AAL.L - news) until 2005.

"Therefore we will be giving you up to the 7th of June 2016 to present the claims to be handed over to the Ministry or risk the claims being acquired at our discretion or without notice."

Gudyanga said ZimAlloys had not yet responded to his letter and would only comment further on Wednesday.

It (Other OTC: ITGL - news) is not the first time Zimbabwe has asked a company to surrender mining claims.

In 2013 Zimbabwe announced plans to compulsorily acquire a third of claims held by platinum miner Zimplats. On March 3 President Robert Mugabe said his government would take over all diamond mines, unnerving investors who question Harare's respect for property rights and investment agreements.

ZimAlloys acting chief executive Kudakwashe Mahobele said the company was consulting shareholders on how to respond to the government's letter, adding that if it complied, this would mean giving away nearly 20,000 hectares of ground.

ZimAlloys has proposed to give up 20 percent of its ground and in return be allowed to export chrome ore. The government would also have to pay compensation for the land released. (Editing by James Macharia and David Evans)