Kuvimba primed to anchor key mining projects
IN 2019, the Government launched a roadmap to grow the mining sector to US$12 billion by 2023 through leveraging on the country’s diverse mineral wealth.
Some critics described the plan as over-ambitious as it was likely to be stymied by lack of foreign direct investment, inefficient utilities, poor transportation, particularly rail, and lack of skills and competencies.
However, the Government, in partnership with foreign investors, has come up with a strategy to take the lead in driving investment in the mining sector following the establishment of Kuvimba Mining House — an anchor company likely to be a game-changer.
Currently, the Government holds 65 percent in the venture, while foreign investors own the remainder.
Kuvimba already has interests in mining assets, including gold, chrome, nickel, gemstone, platinum group metals (PGMs) and chrome.
It wholly controls gold mines Freda Rebecca and Shamva.
It has a 85 percent stake in Jena Gold Mine, 74 percent in Bindura Nickel Corporation and 47,8 percent in a multibillion-dollar platinum project, Great Dyke Investments.
The group is reportedly mulling buying ZimAlloys and Sandawana Mine.
In addition, it is set to embark on exploration works at Golden Kopje and Elvington gold mines to establish their commercial viability.
The decision to lead mining investments through Kuvimba have been described as “tactical”.
“In my view, this is a very good move and tactical,” economist Professor Gift Mugano said.
“Tactical because . . . based on my knowledge on investments nexus and national development agenda, successful countries have won it on the basis of creating an anchor company or companies which become s a game-changer, or come with disruptive changes in a specific industry. I see Kuvimba Mining House as one such initiative which is structured in an anchor company set-up.”
He said the investment is likely to have a multiplier effect on the economy.
“The proposed strategies that Kuvimba are expeditiously implementing, in my view, will significantly help the country achieve a US$12 billion economy in two ways.
“First, through its direct injection of capital, which we understand is in the region of US$1 billion.
“This kind of investment will have a significant causal and multiplier effect, which can be in the region of US$9,4 billion if the Zimbabwe multiplier effect is still at 9,43 times.
“Second, because it is coming into the sector in massive size, coupled by the fact that it has a diversified focus in terms of its mining interests, this initiative is going to play a catalyst role in promoting investments in the mining sector as other peers will expand their existing operations in order to remain relevant.”
It is believed Kuvimba’s expansive reach in terms of mining interests will help the country to effectively implement the “use-it-or- lose-it” policy, “which had been ineffective in previous years because of lack of competition”.
Mr Carlos Tadya, a researcher with a local think tank, said it was critical for the Government to play a big role in mining in order to benefit from its mineral wealth.
Kuvimba chief executive officer Mr David Brown said the group was planning to raise US$1 billion for acquisitions and capital expenditure.
“We require about US$1 billion to build our mines and ensure that catch-up capital is made,” he told Bloomberg, an American-based news agency.
Mr Brown also told our sister paper The Herald that the group was targeting “a number of mining assets not being utilised to full capacity; those that have been underfunded but have resources, we want to bring them back to life”.
Finance Minister and Economic Development Professor Mthuli Ncube said Kuvimba would materially help plans to grow the sector to US$12 billion within the next two years.
In the 2021 Budget, Prof Ncube allocated $131,4 million towards resuscitating mines under the Zimbabwe Mining Development Corporation (ZMDC), including Shabanie Mine, and the opening of new mines.
However, there are several other mining projects in the pipeline in coal, diamond and chrome that are also going to help Zimbabwe meet targets. But Prof Mugano said the question has always been whether these kinds of deals would be effectively implemented.
“My faith is based on the fact that a contract of management which will implement these investment deals was given to David Brown, an internationally respected mining executive, and if the Government allows (Mr) Brown and his team to independently run this project, I can argue that we are on good track to the US$12 billion economy,” he said.
Mr Mukasiri Sibanda, an expert in resource governance, said State equity participation in mining is a great idea and should be supported by good corporate governance.
“State-owned mines have not always done well, and bringing knowledgeable people such as Mr David Brown is a departure from the past. It shows we are learning from our past mistakes,” Mr Sibanda said.
Investment vehicles, which form the Government’s 65 percent shareholding in Kuvimba, comprise the War Veterans Fund; the Sovereign Wealth Fund; the National Venture Fund, which represents the interests of youths and women; the Insurance and Pension Commission; the Government Pension Fund; the Global Compensation Deed Fund (for compensation of former commercial farmers); and another vehicle for depositors who suffered foreign exchange losses.
This year, the mining industry is projected to rebound by 11 percent, driven by planned expansion programmes aimed at increasing production. Further, expected improvement in availability of power supply and foreign currency are expected to increase production and capacity utilisation to 80 from 61 percent.