Zimbabwe privatises gold refinery for US$49m

Ten companies will take control of Zimbabwe’s privatised gold refinery, Fidelity Printers and Refiners (FPR), for US$49 million, Finance minister Mthuli Ncube said last week. This will be the first time that the refinery will be in private hands since it was established in 1988.

The sale, first announced in December last year, will see the new shareholders owning 60% of Fidelity Printers and Refiners, while the Reserve Bank of Zimbabwe (RBZ) retains the remaining 40%.

“The process of partial privatisation of Fidelity Printers and Refiners will be through offering 60% of its shareholding in the gold refinery business to producers of gold. The central bank will remain with 40% in the gold refinery company and 100% in the printing, minting and gold financing business. Ten shareholders have so far accepted to take shareholding in Fidelity Gold Refinery at a total consideration of US$49 million,” Ncube said. He did not name the shareholders.

However, under the ownership structure announced last year, companies will take shareholding-based on the average quantity of gold delivered to Fidelity over the previous three years. Large-scale miners will hold 50% shareholding, while 3% will go to gold buying agents and the remaining 7% to the small-scale producers through their representative bodies. Among the country’s largest gold producers are Kuvimba — which controls Freda Rebecca, Shamva and other mines — Caledonia Mining, which runs Blanket, and RioZim, which owns three gold mines.

Kuvimba’s biggest mine, Freda, produced 2,7 tonnes last year. Blanket Mine produced 1,6 tonnes while output at RioZim was 1,21 tonnes for 2020.

The privatisation of FPR came after lobbying from some players in the mining business. It follows the model of Rand Refinery, South Africa’s biggest refinery, which is owned by the five largest gold miners Anglogold Ashanti, Gold Fields, Harmony, Sibanye Gold and DRDGOLD.

The privatisation, however, will create fresh controversy over the ownership of mining assets, given the leading role that Kuvimba, whose shareholding structure has been subject to public scrutiny, is likely to play due to its commanding output.

FPR started refining gold in 1988, and at its peak producers from abroad sent in their gold for refining at its Msasa refinery in Harare. However, FPR has not used most of its installed capacity to refine 50 tonnes of gold per year, and its new owners will have to invest substantially in retooling.

The company, which buys gold from miners from at least a dozen centres around the country, has struggled to pay miners on time for gold deliveries, pushing miners to call for its privatisation. 

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