BY MELODY CHIKONO/TINASHE KAIRIZA
AS Treasury maintains a tight lid over the identity of gold producers who snapped 60% shareholding in Fidelity Printers and Refiners (FPR), emerging details show that Kuvimba Mining House, Better Brands, RioZim, Caledonia, Pan Africa Mining, Zimbabwe Miners Federation (ZMF) and Yellow Credit are the prospective new private shareholders at the country’s once sole gold buyer.
The transaction, valued at US$49 million and announced this month by Finance minister Mthuli Ncube, sources say, has, apart from introducing a new shareholding structure, also triggered sweeping managerial changes at the company, which the Reserve Bank of Zimbabwe (RBZ) used to buy, refine and export Zimbabwe’s bullion.
The decision to dispose of significant stake in Fidelity was announced by Ncube in his Mid-Term Budget Review statement and will result in government holding a 40% stake in the entity to be renamed Fidelity Gold Refinery (FGR) after the finalisation of the partial privatisation deal.
Under the high-stakes policy move, Fidelity will be unbundled into two strategic units, namely FGR and the Printing and Minting Company of Zimbabwe (PMCZ) as the country enters into a new era of liberalised gold marketing.
RBZ governor John Mangudya declined to confirm the identities of the new shareholders, saying this would be done when the unbundling process is finalised after six months.
He said all entities that have shown interest were subjected to a meticulous due diligence exercise.
“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.
“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 the valuation of FPR was carried out by Grant Thornton before the central bank resolved to unbundle 60% of FPR.
“The value of US$49 million, being the 60% of FPR, was therefore professionally determined,” he said. “We have not yet met the would-be new shareholders since the due diligence is still underway. As stated in the Mid-Term Monetary Policy Statement, we expect to complete the FPR unbundling process in six months’ time. We shall keep the public informed on this unbundling process.”
But the Zimbabwe Independent in an investigation on the multi-million-dollar transaction, which has been kept under wraps by fiscal and monetary authorities, unmasked the identity of the new majority private shareholders in FGR, the quantum of equity each of them will hold in the restructured entity and personalities who will steer the company in managerial positions.
Acting managing director Peter Magaramombe, who has been acting in that role since the departure of Fradreck Kunaka in March last year, is set to assume the role substantively, top government sources said. His most immediate role is to oversee the privatisation exercise which is supposed to be finalised in six months.
According to highly-placed official sources, Kuvimba, which until last year did not exist, but has emerged to be arguably the country’s largest gold producer after embarking on an acquisition spree of lucrative gold assets around the country, including Shamva Mine, Freda Rebecca, and mines held by Zimbabwe Mining Development Corporation (ZMDC) namely Elvington, Jena, Golden Kopje, and Sandawana, will hold 12% stake in FGR.
At the time Kuvimba acquired Shamva Mine, through Sotic International, a Mauritius-based company backed by Almas Global Opportunity Fund — a firm registered in the Cayman Islands, the firm’s then executive David Brown claimed that government held 65% equity in the new outfit.
Brown, who also doubled up as Sotic’s executive, announced the company’s ambitious plans “to become a significant player in the gold industry in Zimbabwe”.
Amid all the shareholding intrigue shrouding Kuvimba, which is reportedly linked to magnate and Zanu PF benefactor, Kuda Tagwirei, the firm, sources said, will hold a “sizeable stake in the reconfigured FPR.”
“It is clear as daylight whose interest will be represented when Kuvimba is finally announced as one of the key shareholders in the unbundled FPR. High-level meetings held indicate that Kuvimba will have a bigger say in the privatisation of Fidelity,” a source close to the ongoing restructuring exercise of the sole buyer of the precious metal told the Independent this week.
Kuvimba had not responded to questions sent by the time of going to print.
However, among the cast of new shareholders envisaged at FPR is RioZim, once the country’s largest gold miner.
RioZim corporate affairs executive Wilson Gwatiringa could neither deny nor confirm whether the mining firm will be among the new shareholders, but said the firm would support government’s plans to privatise the entity.
“Whatever government is doing to privatise Fidelity Printers; they believe it is for the best and as players we will just work with whatever the new order will be,” he told the Independent this week.
Sources said ZMF, largely constituted by small-scale miners and whose name has been blighted by gold smuggling allegations by its key staffers, would also have a seat among the new shareholders at FPR.
Last year, ZMF president Henrietta Rushwaya, whose matter is still pending at the courts, was caught at the Robert Mugabe International Airport while attempting to smuggle a 6kg gold contraband worth US$366 000 to Dubai.
Rushwaya’s former driver and staffer at ZMF, Tashinga Masinire, was also arrested in South Africa with a bullion contraband worth US$780 000.
Contacted for a comment this week, Rushwaya declined to respond saying she was on leave.
Under the new shareholding structure announced by Treasury, 7% of the 60% stake offloaded by government will be taken up by small-scale miners through their representative bodies.
In that light, an outfit chaired by former Chamber of Mines president Victor Gapare, called Pan African Mining (PAM), will also be among the new shareholders at FPR. PAM operates the Aryshire and Muriel gold mines in Mashonaland West.
“During recent meetings held by the new shareholders, PAM was also represented,” a source who spoke on condition of anonymity told this publication this week.
Gapare said he was not aware of the privatisation drive at FPR and was concentrating on his private business.
Better Brands, owned by businessman Pedzai Sakupwanya, would also be within the new shareholding structure, the top sources said.
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, 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 Red Wing Mine in Penhalonga.
Questions sent to Better Brands via e-mail did not draw any responses. Sakupwanya had also not responded to questions sent directly to him at the time of going to press.
Caledonia Mining Corporation is also said to be among the private players set to acquire shares within RFP. The mining firm, which runs Blanket Mine in Zimbabwe, has projected gold output to rise between 61 000 and 67 000 ounces in 2021.
Sources said the company also had representatives during high-level meetings held by stakeholders in the privatisation process.
“By the scale of its operations and output, Caledonia will also be among the elite class of players to assume shareholding in Fidelity,” a source said.
Caledonia, in response to questions, said: “As a public company, we can only say what is already in the public domain. So in response to our capex investments, we have spent over US$100 million over the last five years of which US$67 million was on the central shaft.”
A company known as Yellow Credit completes the list of new shareholders. Attempts to unravel the beneficial owners of Yellow Credit were fruitless as the company file could not be obtained from the Companies Registry.
Privatisation of FPR, in part, is perceived as a solution to curb rampant gold smuggling that prejudices Zimbabwe an estimated US$1,5 billion annually.