Zimbabwe Plans to List Company Holding State Mining Assets
The nation’s finance minister said that Zimbabwe, banking on mining to end two decades of economic stagnation, plans to list the company in which it has placed state mining assets to raise cash to fulfill government obligations.
Late last year, the government created Kuvimba Mining House Ltd., which holds 65 percent of the state pension fund and sovereign wealth fund, to house its platinum, gold and nickel holdings. It intends to use the company’s revenue to fulfill a laundry list of requirements ranging from compensating white farmers for farm infrastructure held captive two decades ago to improving pensions.
“In the next two years, it will be a highly profitable group,” Finance Minister Mthuli Ncube reveals. “When we eventually list, government will offload some of its shareholding.”
creation of Kuvimba, meaning trust in the Shona language, is the government’s latest attempt to kickstart its mining industry. While local ownership requirements and a frequently changing currency regime have discouraged companies, investors from Russia, Cyprus and Nigeria are now exploring the excavation of platinum mines in Zimbabwe, which has the third largest metal reserves in the world.
Kuvimba plans to rehabilitate aging mines and develop new ones, in addition to partnering with Russian investors in a platinum venture. The company is likely to be listed on a stock exchange denominated in dollars that was established last year in the resort town of Victoria Falls, as well as another hard currency exchange, the minister said.
The remainder of the business is owned by a consortium headed by David Brown, the former chief executive officer of Impala Platinum Holdings Ltd. of South Africa, he said, without providing details of the arrangement.
“We are looking for international skills, skills with a track record and he has a track record,” Ncube said.
Kuvimba money will also be used to support entrepreneurs, compensate people who lost the value of their bank deposits when the local currency crashed, reinforce funding for 1970s liberation war veterans, and provide seed capital for a new pension fund for government workers, he said.
According to Bloomberg, the initial refusal of Zimbabwe to compensate white farmers was a problem that soured Zimbabwe’s relationship with multilateral lenders and the West. The nation is now planning to appoint advisers to assist it raise the $3.5 billion it agreed to pay.
With Kuvimba “the government has put something on the table, it has skin in the game,” Ncube noted. “Everything now hinges on concluding the appointment of the adviser and then the work of fund raising will begin in earnest.”