Mining ZimbabweLatest Mining News, Policy and Industry Updates

GOVERNMENT’S plans to dispose of its controlling stake in the country’s sole gold buyer Fidelity Gold Refinery (FGR) is under scrutiny by some gold producing firms shortlisted for the US$49 million transaction, the Zimbabwe Independent can reveal.

The gold buyer was offered to seven private entities that include Kuvimba Mining House.

Major gold producers included in the deal see red flags in the involvement of  some companies in the deal.

“It has taken a long time in order for us to complete the due diligence on all the possible investors.

“Yes indeed, Fidelity is a good investment. The value of the US$49 million was determined by reputable external auditors who carried out the valuation of FPR,” he said yesterday.

But sources close to a series of meetings between authorities and the seven shortlisted players told the Independent this week that leading gold producing firms RioZim and Caledonia were hesitant to partner some of the potential suitors vying for Fidelity.

As first reported by the Independent on August 20, 2021, government, at that time had selected Kuvimba Mining House, Better Brands, RioZim, Caledonia, Pan-Africa Mining, Zimbabwe Miners Federation (ZMF) and Yellow Credit as prospective new private shareholders at the country’s sole gold buyer.

During a series of meetings facilitated by authorities to bring together the shortlisted private players, sources said, questions arose around the suitability of Kuvimba Mining House, Better Brands and ZMF.

It also emerged that there were concerns that Fidelity, at US$80 million, was overvalued. Suitors consider it too old and its equipment outmoded to be worth that much. They also see its lack of a London Bullion Marketers Association certification as a liability.

Kuvimba, which until last year did not exist, has struggled to offer satisfactory answers on its shareholding structure. But it is now on the cusp of becoming the country’s largest gold producer after embarking on an acquisition spree of lucrative gold assets around the country.

It has, in its short existence acquired Shamva Mine, Freda Rebecca and mines held by Zimbabwe Mining Development Corporation (ZMDC), namely Elvington, Jena, Golden Kopje.

Government has claimed 65% ownership of the entity but has dithered in disclosing the owner of the remaining 35%, sparking questions on the Fidelity arrangement.

According to Finance minister Mthuli Ncube and Kuvimba’s former chief executive David Brown, government owns 65% of Kuvimba’s shares, while the remaining 35% equity is held by Ziwa Investments, a Zimbabwean subsidiary of the Mauritius-registered Quorus Management Services.

Kuvimba’s maze of structures and web of intricate offshore entities has not been disclosed.

Notably, Kuvimba’s relationships with Sotic International, Almas Global Opportunity Fund – allegedly used by local businessman Kudakwashe Tagwirei to invest in Sotic via the Cayman Islands – and Quorus have not been disclosed.

Almas owns 65% of Ziwa Resources while the remainder is owned by Zimbabwe-registered Pfimbi Resources, whose directors are Tagwirei and his wife. Tagwirei is on US sanctions over his alleged abuse of public funds.

Sources, in multiple briefings, said the credentials and status of Kuvimba, among other key concerns, was “of grave concern to other gold producing firms who were shortlisted to take over Fidelity.”

“In meetings with the governor of the central bank John Mangudya, it appears that there has been virtually no movement around the deal largely as a result of the involvement of Kuvimba and Better Brands,” the source said on condition of anonymity.

“The ownership of a gold exporting entity is important. If that entity is owned by someone who is sanctioned, it becomes increasingly difficult to do business.

“Ownership of Fidelity is important and the proposed transaction should serve as a conduit to the international market.

“Fidelity is also not licensed by the London Bullion Market Association,” the source added.

Relating to ZMF, its president Henrietta Rushwaya was last year arrested at the Robert Mugabe International Airport while allegedly attempting to smuggle a 6kg gold worth US$366 000 to Dubai.

Rushwaya’s former driver and staffer at ZMF, Tashinga Masinire, was also arrested in South Africa in 2021 with a bullion contraband worth US$780 000.

Sources close to negotiations to seal the Fidelity privatisation deal added that the involvement of ZMF and its image further rattled the key gold buying firms which wanted to conduct business in a transparent manner.

“During the matchmaking meetings and internal discussions, the key gold producing firms also raised questions on the suitability of ZMF. Basically they do not want to be associated with characters who have been accused of smuggling gold. They want to keep their distance,” the source said.

When contacted for comment, Rushwaya refuted the claims as unfounded.

Better Brands, owned by businessman Pedzai Sakupwanya, which is also vying for a seat among the shortlisted private shareholders, was also a “turn off” for the large-scale gold producing firms angling to take over Fidelity.

Sakupwanya has trended on social media platforms, flaunting gold bars and wads of United States dollars.

According to the firm’s website, Sakupwanya is Better Brands “founder and director” who “is a pro-active businessman, entrepreneur, who takes cognisance of the community requirements and is the duly nominated and elected (Zanu PF) DCC (District Coordinating Committee) Zone chairperson and shadow councillor for Goromonzi Ward 21”.

In February last year, Sakupwanya, who is widely known as “Scott”, found himself in the eye of a storm after his company allegedly grabbed 132 gold mining blocks from Redwing Mine in Penhalonga.

“Some of the characters making up the cast of shortlisted candidates will not wet the appetite of a firm that aims to conduct business openly,” another source close to the ongoing negotiations told the Independent.

Sakupwanya did not respond to questions sent to him via WhatsApp.

Investigations by the Independent last year revealed that a company called Yellow Credit was also interested in snapping a stake in Fidelity. However, efforts to uncover the beneficial owners of the entity drew blanks, as its registration records at the Company’s Registry could not be found.

A company chaired by former Chamber of Mines president Victor Gapare, called Pan-African Mining (PAM), is also among the potential new shareholders at FPR. PAM operates the Aryshire and Muriel gold mines in Mashonaland West.

Questions sent to Rio Zim and Caledonia had not drawn any responses at the time of going to print.

When the Independent disclosed the identities of the private players vying to take over Fidelity, Mangudya declined to name the candidates, saying that would be done after completion of the due diligence exercise running for six months.

“Identity of the entities that have shown interest to purchase stake in Fidelity Printers and Refiners (FPR) are from the primary gold producers, the association of the small-scale gold producers and the FPR buying agents. Their names will be released at the closure of the offer in six months’ time,” Mangudya said at the time.

“The due diligence on those that have shown interest to acquire shares in FPR is ongoing to ensure transparency, adherence to international best practice and to provide ample time to the would-be new shareholders to also carry out their own due diligence on the transaction,” he said, adding that the valuation of FPR was carried out by Grant Thornton before the central bank resolved to unbundle 60% of FPR.

The deal is worth US$49 million, which is the 60% stake the government intends to offload to private players.

Zimbabwe Independent 

Government has put in place a host of measures to boost gold production starting this year as it angles the sector to contribute significantly towards the attainment of national vision 2030, Mines and Mining Development Minister Winston Chitando revealed this on Friday.

Zimbabwe’s gold output rose by 55.5 percent to 29.6 tonnes in 2021, with large-scale gold producers delivering 11.2 tonnes to Fidelity Gold Refinery (FGR), while small-scale producers contributed the remainder.

According to Minister Chitando, the gold sector was targeting over 40 tonnes of gold in 2022 and deliberate mechanisms have been designed to boost the output by big mining companies whose contribution has been eclipsed by small-scale miners lately.

Minister Chitando said some of the measures to drive production up included the opening up of new and viable gold mines, reopening old ones with huge potential as well as hastily clearing the backlog of mining title issuance.

Gold is a key foreign currency earner for Zimbabwe besides tobacco, accounting for over 70 percent of the nation’s annual foreign currency inflows.

Earlier this year Reserve Bank of Zimbabwe (RBZ) Governor, Dr John Mangudya, said he projected gold output to surpass 2021 level to settle at over 35 tonnes this year.

But speaking on the sidelines of the monthly cleanup campaign in the Msasa Industrial area on Friday, Minister Chitando expressed confidence the 2022 gold output level will likely surpass the 40 — tonne mark, adding his ministry was working closely with the Chamber of Mines of Zimbabwe and the Zimbabwe Miners Federation (ZMF) to coordinate efforts and ramp up production of the yellow metal.

“We are hopeful that we will go way beyond 40 tonnes this year as we are working closely with Chamber of Mines of Zimbabwe and ZMF to promote production. We are also addressing the issue of backlog in the issuance of mining titles, opening of new mines, and reopening of old mines, these are all-inclusive measures to scale up production,” said Minister Chitando.

He gave Shamva, Eureka, and Blanket mines as examples of mines that had the potential to significantly contribute to this year’s production. However, he called for more tolerance on some newly established mines as it takes more time to grow output.

“We have Shamva, which is working towards doing four tonnes per annum, Blanket Mine has finished re-deepening of the shaft, we have in Guruve Eureka Mine, which came into production so there are quite a number of projects taking place and you find that with time the contribution of big mines will also be going up going forward,” he added.

The country produced 19 tonnes of gold in 2020, down from 27.6 tonnes in 2019 and 33.2 tonnes in 2018.
2021 saw a strong recovery in production for some key minerals with gold output increasingby 50 percent, while exports increased to US$5, 2 billion which is 83 percent of aggregate national exports which is a huge number compared to US$3, 2 billion that was generated in 2020.

Mining industry report from late last year indicated that mining executives had intentions to ramp up production with a target of attaining average growth rates of between five percent for PGMs to as high as 32 percent from the diamond sector.

Chamber of Mines has, however, highlighted funding gaps and infrastructure challenges as some bottlenecks stalling the mining sector performance, which carries great potential to contribute to the country’s GDP.

The country has the potential to improve from mining growth levels witnessed in 2021 but it remains suppressed by challenges that include issues encompassing dilapidated railway network, roads as well as inconsistent power supply.

The Sunday Mail

THE Zimbabwe Energy Regulatory Authority (Zera) on Friday announced an upward review of the price of petrol and diesel, saying the war pitting Russia and Ukraine had partly contributed to the hike.

Diesel now costs $195, 99 per litre up from $168, 17 while petrol is at $195, 72.

In hard currency, both diesel and petrol will trade at a base price of US$ 1, 51, according to a statement from the regulatory authority.

“The fuel price increase has been prompted by the international crude oil prices which continually went up following tensions in Eastern Europe. Government has had to subsidise the final price to cushion the economy,” reads part of the statement.

Commenting on the price increase, Indigenous Petroleum Association of Zimbabwe chairperson Mr Aaron Chinhara said last week’s upward review of fuel duty by Government had also contributed to the price surge. “The hike in fuel did not only emanate from the tension in Europe but also an increase in fuel duty, which was increased by four cents on petrol and a cent on diesel on Friday.”

Zimbabwe National Chamber of Commerce chief executive Mr Chris Mugaga said the Russia-Ukraine standoff has an impact on both fuel and wheat prices in the country.

“The fuel price hike was too immediate and not dragged, which shows how vulnerable our economy is to growing-political risks worldwide.

The longer the standoff between Russia and Ukraine, the more significant will be the impact of such developments on oil prices.”

The Sunday Mail 

HWANGE Colliery Company Limited (HCCL) is inviting tenders from “eligible” dealers to buy scrap metal at the firm’s concession in Matabeleland North Province.

In a statement, HCCL said the request for invitation to tender was issued by the company’s engineering department for the buying of scrap metal that had been disposed of in the form of obsolete equipment and plant structures.

“The company invites eligible scrap metal dealers to submit sealed tenders for the purchase of scrap metal in HCCL. The bidders should demonstrate their technical and financial capability to prepare, load and transport the scrap metal from HCCL concession,” said the colliery.

Completed bids should be addressed and delivered at HCCL offices in Hwange before close of business on Friday 18 March 2022.

Meanwhile, in the past concerns have been raised by industry over the continued exportation of scrap metal as the move was disadvantaging local businesses who need the raw material.

Given that Zisco was not operational, scrap metal has become a critical value chain component hence it is in high demand locally and abroad.

However, the Government has announced that it has secured a local investor, Kuvimba Mining House, as a strategic partner to revive Zisco, which ceased operations in 2008.

The closure of the company that was once Zimbabwe’s steel manufacturing giant was largely due to maladministration and the adverse impact of the illegal sanctions.

Kuvimba has reportedly proposed to invest up to US$1,3 billion over three years to revive operations at Zisco.

In the past, efforts to resuscitate Zisco hit a brick wall after foreign investors such as Essar Global, Jindal Steel and Power as well as Global Steel Holdings of India and Hong Kongbased firm, R and F, failed to agree on terms with the Government leaving stakeholders dejected.

However, stakeholders have expressed optimism that the selection of Kuvimba Mining House as the lead investment partner in the resuscitation of Zisco would yield positive results this time around.

Kuvimba is a reputable player in the mining and metals sector and has previously been involved in the resuscitation of Jena Gold Mine in the Midlands province as well as Shamva Gold Mine in Mashonaland Central province.

The industrial sector has also highlighted that due to scrap metal exports, local firms were being compelled to spend more importing the scrap and thus rendering the domestic players uncompetitive.

Scrap metal is largely used by steel manufacturers and foundries. 

The Chronicle

The Zimbabwe Investment and Development Agency (ZIDA) expressed reservations over the eight percent management fees from gross revenue proposed by Kuvimba Mining House (KMH), a company selected to revive the Zimbabwe Iron and Steel Company (ZISCO), Business Weekly has established.

The Government selected Kuvimba to revive ZISCO, once Africa’s largest steel mills after ZIDA recommended three investors from six that had initially shown interest in the Kwekwe- based integrated steel works.

Kuvimba, which is owned 65 percent by the Government, has proposed to enter into a threeyear management contract with ZISCO and inject US$1,3 billion into the business to revive mining and steel processing operations, according to a due diligence report submitted to Government in November 2021.

The contract, ZIDA described as “too rich” would be for three years, after which ZISCO may choose to extend or assume full responsibility of operations. It is targeting to reach annual output of one million tonnes of steel in three years from the date of signing the contracts.

The Cabinet selected Kuvimba among three shortlisted potential investors, paving way for negotiations and signing of binding agreements.

Industry and Commerce Minister Dr Sekai Nzenza said negotiations for binding contracts would commence soon.

Kuvimba proposed a management fee of 8 percent but ZIDA, which conducted a due diligence on ZISCO’s potential investors, said a flat management fee “seems loosely structured and may be lopsided” to the advantage of Kuvimba.

Kuvimba owns various mining assets in Zimbabwe including gold, platinum, nickel and chrome.

Eight percent management appears too rich, there is need for revenue split to be equitable.  We would…propose that the management fees be structured differently,” ZIDA said.

“A lower base management fee of say 5 percent plus an incentive above an agreed IRR hurdle of say 15 percent would align parties’ interests.
“We are happy to elaborate and debate this matter,” said ZIDA in its November 22 due diligence report.

ZISCO stopped operations in 2008 due to mismanagement and lack of funding to retool.

Since then, the Government engaged various potential investors in a bid to re-open the company but with limited success. Kuvimba won the tender ahead of other two final bidders who had expressed interest in ZISCO, which used to employ 5 000 people.

However, ZIDA said Kuvimba was already involved in mining in the country and expert knowledge in the extractive sector, giving an edge over other potential bidder. ZIDA said

Kuvimba has managed to revive distressed companies such as Shamva Gold Mine, Freda Rebecca, Sandawana and Jena.

“Funding will be through debt and quasi-equity facility,” said ZIDA, adding Kuvimba “has existing relationships with funders and mobilization will be easier.” Who else was in the race

PAI International, incorporated in England and Wales submitted its unaudited financial results for the period ended 30 November 2020, showing an asset base of 27 000 pounds.

It proposed to partner with AEEPL, Anglo American, CMS, Blue International and other local firms. Anglo American would undertake mining operations with AEEPL being a technical partner for steel manufacturing. PAI and its partners would work with the ZISCO and take joint decisions on the revival of the company.

PAI had also proposed share ownership and options schemes to incentivise workers.

In addition, it had proposed technical partners to be off takers of the steel products, so share agreements would be part of the strategy of financing the operations.

Further, it proposed to attract financing through an Initial Public Offering on the Johannesburg Stock Exchange, where it hoped to attract enough financial resources to further develop the company’s operations.

ZIDA recommended that PAI was a small company, which was established in 2019 and had not been involved in any mining venture.

On its proposal to extinguish the debt, through offering shares to the public in a new stock issuance, ZIDA noted that PAI did not guarantee that the company would garner positive attention since companies that offer IPO lacked a proven record of operating publicly.
Epikaizo and Sebeuzani
Epikaizo and Sebeuzani submitted a joint proposal where the former would mobilise funds from the United States in the form of US Treasury bonds to the tune of US$3 billion while the later would coordinate technical partners for the project.

The directors for the joint venture company are Engineers M Chivaura and T Revanewako, who once worked for ZISCO, and Dr R Chamba.

The joint venture indicated it would mobilise US$3 billion through US Treasury bonds upon submission of an evaluation report on ZISCO.

The company sought to determine the value of ZISCO assets from a valuation exercise and geological reports to raise capital.

If the outcome was favourable, it would engage technical partners with expertise in mining and steel production.

Government shareholding would be negotiated, taking into consideration the equity brought by other parties to the project.

Its technical partner in the bid was SMS Group, a Germany family-owned business established in 1817 and has branches in 90 countries including in South Africa.

SMS has more than 100 years of experience in ferrous and nonferrous plant technology.

The resuscitation strategy sought to do away with blast furnace operations and introduce new ultra-low-cost technologies which eliminate the expensive and highly polluting coke making processes for use of coking coal.

Epikaizo would also seek to invest in a 600MW power plant using environmentally compatible coal technologies and incorporate new mineral beneficiation processes.

In its recommendation, Epikaizo-Sebeuzani joint bid has failed to satisfactorily explain its investment of US$3 billion.

According to their submissions, the company would use United States Treasury Bills for financing the proposed deal.

THE Zimbabwe Diamond and Allied Minerals Workers Union (ZDAMWU) has rejected a 50% salary offer tabled by mining companies as a pittance, and insisted on United States dollar salaries.

In a statement, ZDAMWU secretary-general Justice Chinhema said recent salary adjustments which were reached between the National Employment Council and the Associated Miners Workers Union of Zimbabwe were a farce.

Workers in the mining sector have been awarded a 46% to 50% wage increase which will see the lowest paid employee earning $45 000 up from $30 000.

The highest paid will earn about $104 000, up from
$71 000.

According to the Nec, the mine workers will also receive United States dollar allowances ranging from US$198 and US$460 depending on their grades.

“The increments are nothing, but actually a selling out salary negotiation outcome. This is a mockery for the mine workers considering that the poverty datum line is pegged at $70 000 and most mining districts across the country are using US dollar, rand and pula,” Chinhema said.

“Those who claim to represent mine workers are representing their own selfish interests. As a union, we are reiterating that a minimum pegged around US$400 paid as per retention is at least acceptable. We need to at least revert to 2018 structures of US$286 and the remaining balance in RTGS [real time gross settlement]. We have since launched a court challenge so as to restore mine workers’ salaries.”

Employees in the private and public sectors are clamouring for United States dollar salaries as the local currency keeps losing value. But government has insisted that there is no going back to dollarisation.

Newsday

A fight has erupted in the gold rich Mazowe area — 40km north of Harare where a group of farmers are reportedly disrupting operations at a mine.

A long running attempt to have the alleged intruders at Zawadi Mining removed have drawn blanks as the provincial leadership in government and police are accused of failing to resolve the matter.

The fight over the lucrative gold claims has since spilled into the courts as owners of Zawadi Mining Private Limited led by Asante Mayeka are battling a group of farmers operating under Revmark Mining Syndicate.

Zawadi has sought protection from the alleged invaders but the police are taking longer than expected to act. Zawadi Mining filed a complaint against Revmark syndicate members with the police in June 2020 under case number RRB 471475 ZRP Concession. Again, no action was taken.

Sources said Revmark Mining Syndicate was given an opportunity to present its case to Mavhunga.  This was after Revmark syndicate members gained entry into the Zawadi mining claims.

Mavhunga did not respond to questions sent via WhatsApp while her mobile phone went unanswered several times.

The fight over the mine spilled into the High Court where Justice David Mangota referred the matter to the Mines and Mining Development ministry for resolution. Revmark (the applicant) had escalated the matter with the High Court against Zawadi Mining.

In part the July 21, 2021 judgment reads, “Where upon after reading documents filed of record and hearing counsel it is ordered by consent that the application be and is hereby withdrawn.

“The dispute between the parties be and hereby referred to the ministry of Mines and Mining Development for resolution. 1st respondent (Zawadi) shall continue erecting its fence around the claim known as Murodzi 45 and shall provide access for the applicants to and from their fields and pastures between the hours of 6am and 6pm.

“The applicant hereby undertakes not to, in any way interfere with the mining operations of Zawadi Mining Pvt Ltd including carrying out any mining activities within that mining company’s claim known as Murodzi 45. In the event that the applicant breach paragraph (4) of this order, the 1st respondent be and is hereby authorised to close the entrance leading to its claim known as Murodzi 45.”

But Revmark has allegedly been in breach of the court order.

The dispute is raging like veld fire, prompting Zawadi’s lawyers to petition police Commissioner General Godwin Matanga.

In a letter dated December 23, 2021, Joel Mambara and Partners representing Zawadi Mining pleaded for Matanga’s intervention.

The letter reads: “We act on behalf of our client Zawadi Mining Pvt Ltd, a company duly registered with the laws of Zimbabwe. Hence note our legal interest. Our client made a report of theft of gold against Vavarirai Revesai and his accomplices, Isaac Mukazi, Christopher Mukazi, Anymore Makarichi, and Andrew Chaboka under RRB4714575.

“They are threatening our client‘s employees as of December 23, 2021 in violation   of a court order HC 37557/1. As of today nothing has happened and the police did not go to collect samples to determine the correct value of gold stolen as well as conduct any investigations,” the letter reads.

“What it basically means is that the police are now under-policing /investigating and as such the case runs the risk of being thrown out of court for lack of evidence. I must state that I am a holder of mining rights and our client mine is registered under Murodzi 45 concession.”

Revmark Mining Syndicate leader Vavarirai Revesai’s phone went unanswered after several attempts to get his comment while Zawadi representatives declined to discuss the matter, saying it was subjudice.

Police spokesperson Paul Nyathi was not available for comment.

The Independent