Zimbabwe plans to use profits from a mining venture to help settle a $3.5 billion compensation claim from white farmers and settle a two-decade dispute that’s soured the country’s relations with Western nations and global lenders.
The government owns 65% of Kuvimba Mining House Ltd who intends to raise $1 billion for acquisitions and capital expenditure.
It will invest a “significant amount” of the cash raised on the Darwendale platinum project, which belongs to Kuvimba’s Great Dyke Investments unit (partially owned by Russian investors), according to Chief Operating Officer David Brown.
REPAIRING RELATIONS WITH MULTILATERAL LENDERS
If successful, the company could help meet the $3.5 billion the government agreed to pay thousands of white farmers it began evicting from their land in 2000 in a failed land reform program that has seen Zimbabwe’s economy collapse.
Resolving the dispute is key to repairing relations with multilateral lenders who have shut off finance to the country, Bloomberg reported.
Proceeds from Kuvimba will “be used to compensate the former White commercial farmers who lost their farms in 2000,” Mthuli Ncube, the country’s finance minister, said in an interview.
REAL ESTATE
Zimbabwe is also considering selling real estate and raising debt to meet the compensation bill and has appointed three advisory firms to help it, Ncube said.
Zimbabwe has the world’s third-largest reserves of platinum which is seen as key to reviving the economy and the country is wooing investors from as far afield as Russia, Cyprus, and Nigeria to try and develop new mines.
About $100 million of Kuvimba’s money will be spent on acquisitions and capital expenditure over the next 12 months, Brown said in an emailed response to questions.
“We require about $1 billion to build out mines and ensure that catch-up capital is made,” he said, referring to about three years during which little investment was made in the assets.
KUVIMBA EYES EXPANSION
The group, whose portfolio includes gold, nickel, and platinum assets, will raise part of the money internally through its operations, he said.
It will also sell debt.
Kuvimba is held by government pension funds and Zimbabwe’s sovereign wealth fund, Ncube said. In addition to compensating White farmers, profit from Kuvimba will be used for pension payments that are in arrears, Zimbabwe’s finance minister added.
Kuvimba has three working gold mines producing about 10,600 ounces of the metal each month, and owns a nickel mine with monthly output of 550 tons.
The company is negotiating to buy Metallon Gold Zimbabwe Ltd.’s Mazowe mine.
It is also looking at other metals such as lithium, nickel and copper and exploring opportunities elsewhere in Africa, Brown said.
Credit: Bloomberg