ONE of the biggest gold producers in Zimbabwe, Kuvimba Mining House, is expected to be a key shareholder in Fidelity Printers and Refiners (FPR).
FPR is a subsidiary of the Reserve Bank of Zimbabwe (RBZ).
According to Finance Minister Mthuli Ncube, the government has agreed that 10 gold miners would buy 60% of FPR to boost compliance levels in the trading of the mineral.
Ncube did not name the 10 miners.
However, the Zimbabwe Environmental Law Association (ZELA) said it had noted with concern that the identity of the proposed buyers remained a mystery raising suspicions over the transparency of the lucrative transaction.
“There is an expectation from citizens that the government will share the names of the companies and their ultimate beneficiaries,”
“This is necessary to remove suspicions that citizens always have that such mining deals are targeted to benefit the investors at the expense of the country’s development efforts.”
The environmental lobby group, however, claimed one of the mystery buyers was Kuvimba Mining House.
Kuvimba Mining House is a state-led mining project that holds some of the nation’s most valuable gold, platinum, chrome and nickel mines with strong links to controversial business tycoon Kudakwashe Tagwirei.
According to the government, Kuvimba’s revenue would be used to revive the country’s moribund economy.
“Currently, there are speculations that Freda Rebecca (now under Kuvimba Mining House) is likely to be one of the companies that will be considered to take up equity in FPR since it is one of the biggest gold producing companies in Zimbabwe.
“According to information that has been shared in the media, the government has a controlling stake (65%) in Kuvimba Mining House. However, this information cannot be verified by the public as there is no public disclosure of beneficial registry.”
Media reports say that Kuvimba’s core mining assets were until recently owned by or tied to Tagwirei.
The government won’t say where it got the funds to cover its purchase of the mines, smelters, and platinum concessions the Kuvimba venture says it now owns.
Some mines under Kuvimba include; Freda Rebecca Gold Mine, Bindura Nickel Corporation (BNC), Shamva Gold Mine, Jena Mine, Elvington Mine, Sandawana, Homestake, Zim Alloys, and an investment in Great Dyke Investments (GDI).
ZELA said the unbundling of FPR should be supported by due diligence processes.
“Use of a three-year average delivery of gold to FPR as a key factor to be considered in choosing the companies to take up equity in FPR is not enough, given that the Government is incorporating the private sector in the management of gold.
“Shareholders must demonstrate that they will be able to comply with the best international standards on the promotion of human rights including proposals to eliminate Illicit Financial Flows (IFFs) or adopt OECD guidelines on responsible sourcing.
“Government might also consider including a condition that shareholders should have a clean tax clearance certificate or evidence of good human rights promotion record as part of its application to acquire shares in FPR,” ZELA noted adding that due diligence processes will help government to lure responsible investments into the gold sector and reduce risks chances of illicit financial flows by irresponsible investors.”
By bringing private players, the government is meeting conditions set by the London Bullion Market Association (LBMA) on responsible sourcing to avert human rights violations, avoid conflicts, comply with anti-money laundering standards whilst also fighting terrorist financing practices.
“Being an LBMA accredited refiner provides an assurance that the country’s practices and processes in gold refineries are aligned to the requirements of the Organisation of Economic Cooperation and Development (OECD)’s guidelines on Responsible gold sourcing. Compliance with OECD requirements on responsible sourcing and LBMA accreditation will ensure that our gold exports fetch the highest return on the international market,” ZELA added.
“The unbundling of FPR could release resources needed for the government to comply with LBMA’s requirements on responsible sourcing if adequate legislation is put in place for the private companies to comply with.”
Zimbabwe’s LBMA membership was nullified in 2008 after failing to meet the required conditions on gold production levels.
For Zimbabwe to be re-admitted into LBMA, it must annually produce 10 tonnes of gold.
FPR sells its gold to international markets mainly through refineries in South Africa and Dubai.
“The value that the country acquires from selling its gold to Rand Refineries in South Africa is lower than the value that it would get if the gold export stocks were to be sold directly to LBMA and one of the major reasons is that these refiners charge for the refinery process which they do on the country’s gold exports,” said ZELA.