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 meet government obligations, the nation’s finance minister said.
Late last year, the government created Kuvimba Mining House Ltd., in which the state pension fund and sovereign wealth fund hold 65%, to house its holdings in platinum, gold and nickel. It intends to use revenue from the company to meet a laundry list of requirements ranging from compensating White farmers for infrastructure on farms that were seized two decades ago to improving pensions.
“In the next two years, it will be a highly profitable group,” Finance Minister Mthuli Ncube said in an interview last week. “When we eventually list, government will offload some of its shareholding.”
The creation of Kuvimba, which means trust in the Shona language, is the latest attempt by the government to kickstart its mining industry. While companies have been deterred by local ownership requirements and a frequently changing currency regime, investors from Russia, Cyprus and Nigeria are now exploring digging platinum mines in Zimbabwe, which has the world’s third-biggest reserves of the metal.
In addition to partnering Russian investors in a platinum venture, Kuvimba plans to rehabilitate aging mines and develop new ones. The company will likely be listed on a dollar-denominated stock exchange that was established in the resort town of Victoria Falls last year, as well as another “hard currency” exchange, the minister said.
The rest of the company is owned by a consortium headed by David Brown, the former chief executive officer of South Africa’s Impala Platinum Holdings Ltd., he said, without giving details about the arrangement.
“We are looking for international skills, skills with a track record and he has a track record,” Ncube said.
Money from Kuvimba will also be used to back entrepreneurs, compensate people who lost the value of their bank deposits when the local currency crashed, bolster funding for veterans of the 1970s liberation war and provide seed capital for a new government worker pension fund, he said.
Zimbabwe’s initial refusal to compensate White farmers was an issue that’s soured Zimbabwe’s relationship with multilateral lenders and the west. Now the country plans to appoint advisers to help it raise the $3.5 billion it has agreed to pay.
With Kuvimba “the government has put something on the table, it has skin in the game,” Ncube said. “Everything now hinges on concluding the appointment of the adviser and then the work of fund raising will begin in earnest.”