BUSINESS kingpin Kudakwashe Tagwirei has long had a commanding position in Zimbabwe’s US$100m-a-month fuel import market, and owns major stakes in banking, telecoms and the country’s largest platinum mines.
But it is unclear how much he controls in his own right and
to what extent is holding stakes on behalf of top political and military
figures.
Should Tagwirei gain control of Fidelity Printers and
Refiners, he would become the leading force in the country’s main foreign
exchange earner, the gold industry.
Fidelity’s gold purchases amounted to US$700m in the first
10 months of last year, and its refinery has an annual capacity of 50 tonnes.
Fidelity has agents buying on its behalf from artisanal and small-scale miners
around the country.
The RBZ is planning to unbundle Fidelity into two business
entities — a gold refining unit and a printing and coin minting business.
Although it will retain the printing business, the central
bank announced that it will offer a 60% stake in the gold refinery and
marketing arm to large-scale gold producers, major gold buying agents and
small-scale producers through their associations.
A three-year average delivery of gold to Fidelity will be
used by the RBZ to determine its offer to the various players.
The central bank has not explained the period over which
the three-year average would be worked out, but a mining industry source said
this would be calibrated to ensure Tagwirei scoops a sizeable interest in
Fidelity.
The source said Tagwirei and associates in his company
Sotic International have been pushing for a model similar to South Africa’s
Rand Refinery, which is owned by major gold mining companies.
They were the proponents of the unbundling exercise, the
source said, and have been using their influence on the State and its
institutions to get a grip on the plant.
Tagwirei has been on a buying spree of mining assets in the
country, using Sotic or its wholly owned subsidiary Landela Mining Ventures.
This included Sotic’s 2019 purchase of a 74,73% stake in Bindura Nickel
Corporation from Asa Resources, and Landela’s acquisition of one of Zimbabwe’s
biggest gold mines, Freda Rebecca.
Freda Rebecca was licensed as a gold buyer by Fidelity in
June last year. The mining firm has stitched up a lucrative gold-buying funding
arrangement with the largest commercial bank in the country, CBZ Holdings,
reported to be 30%-owned by a Tagwirei company.
Freda Rebecca aims to buy a tonne of gold every month for
the next three years under the arrangement — equivalent to over 60% of the 19
tonnes that Zimbabwe officially purchased last year.
Landela also bought Shamva gold mine, with capacity to
produce 21 000 ounces (0,6 tonnes) a year, from Mzi Khumalo’s Metallon last
year. Khumalo’s operations in Zimbabwe were hobbled by a politically charged
dispute with the government, allowing Landela to step in at an advantageous
price.
Landela is targeting six more mines, including four that
had been mothballed by the Zimbabwe Mining Development Corporation, with a capacity
to produce at least
85 000 ounces (2,4 tonnes) a year, according to Sotic CEO
David Brown, who is also Landela’s CEO and former chief executive of South
African mining company Impala Platinum.
Two of the mines, Metallon-owned Mazowe and Redwing, are
“as good as in the bag”, according to two sources familiar with discussions.
Metallon was forced to put most of its mines under care and maintenance after
failing to get “proper compensation” from Fidelity for its gold production.
Between 2016 and 2019, the company lost US$82m, and sued for a US$132m claim
for lack of profit during the period.
Considering that Landela also assumed Metallon’s liability
in the acquisition of its mines, an industry source speculated that the claim
on Fidelity could also be transferred to the new mine owners, who may leverage
that for a higher stake in the gold refinery.
It was Sotic again that was handed the military’s stake in
a US$4 billion platinum joint venture with Russian investors. Mining executives
said the deal was “unimaginable”, and suspect that Sotic may simply have acted
as a cover for the army, whose involvement was scaring investors away.
The military, through Zimbabwe Defence Industries, under US
sanctions, and the Zimbabwe Mining Development Corporation, together held 30%
of the joint venture, known as Great Dyke Investments, also headed by Brown.
In December, Mnangagwa disclosed that a new, hitherto
unknown entity, Kuvimba Mining House, had become the new owner of Sotic and
Landela’s gold and platinum assets. It is once again Brown who is in charge of
Kuvimba.
The government is a 65% shareholder in the new entity, with
the remaining 35% belonging to another mysterious company Quorus, registered in
Mauritius, where information on ownership is kept secret.
“Tagwirei is not part of that vehicle. The speculation is
unfortunate,” said Brown. Brown and Finance minister Mthuli Ncube have not
explained how privately held assets, bought using offshore capital, suddenly
belonged to the State.
There is no explanation for the latest move, mining sector
executives say, other than that the government is now trying to distance
Tagwirei from the investments because of the US sanctions.
— Africa Confidential
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