RBZ to sell Fidelity Printers & Refinery

Reserve Bank of Zimbabwe has announced its intention to unbundle and dispose of part of its stake in Fidelity Printers and Refiners.

According to a statement from RBZ governor John Mangudya, the unbundling of FPR is designed to partially privatise the gold refining business by allowing private players to acquire a stake in the entity. Fidelity, which has a gold buying monopoly, needs recapitalisation to support its gold buying operations.

Its gold refinery was established in 1987 with an annual gold refining capacity of 50 tonnes and capacity of analysing to a purity level of up to 99.999, commercial operations commenced in April 1988. However, because, it is no longer accredited to the London Bullion Market Association, gold is sent to Rand Refinery in South Africa for hallmarking, to allow it to trade on the international market. Gold can however be sold ex-Harare.

The gold industry remains important in the socioeconomic development of the country through its contribution to export earnings, government revenue and employment, among other contributions. It is the largest contributor to mineral export earnings at around 35%.

RBZ says that the partial privatisation will secure and endear the private sector's interests in the production and marketing of gold in Zimbabwe. By being part of the decision-making process on gold trading, it is expected that the gold producers' compliance levels in the trading of gold will significantly increase.

Under the unbundling structure, the RBZ will retain 40% shareholding in Fidelity and dispose of 60% shareholding to both the large scale and small-scale gold producers. 50% of the shareholding will be offered to primary gold producers using a three-year average delivery scale. Using the same scale 3% will be offered to main FPR gold buying agents and the balance of 7% to small scale producers through their representative bodies such as the Gold Producers Association and the Zimbabwe Miners Federation.

Freda Rebecca, which is now under the control of Kudakwashe Tagwirei-linked Sotic International, is the country's single largest gold producer. It also has a gold buying licence. Other notable producers are Blanket Mine, How Mine, Pickstone Peerless and Eureka Mine (both under Padenga), RioZim, Duration, Sabi Gold and Bilboes (Victor Gapare).  Better Brands Jewelry under Scott Sakupwanya is one of the top gold buying agents for Fidelity.  

RBZ will however retain 100% equity in the printing and minting business for national security reasons. The unbundling does not remove FPR's monopoly.

Mangudya also said that it will dispose Tuli Coal to Government in fulfillment of a long-held desire to sell its entire equity in the asset, which is capable of producing thermal coal, for the benefit of the economy.

Tuli Coal is situated in Beitbridge 35km west along the great Limpopo river on the South African and Zimbabwe border. It has approximately 30 million tonnes of proven coal reserves and before its closure ran an open cast mining operation which works on two nine-hour shifts.

The disposal of Tuli will leave the RBZ with 13 other subsidiary companies, which are FPR, Aurex, Export Credit Guarantee Corporation, Finance Trust of Zimbabwe, Homelink,  Carslone (dormant gold mine), Fiscorp, a dormant administrator of quasi fiscal activities, Transload dormant producers of bio-diesel from jatropha, Venture Capital Company of Zimbabwe, which is also dormant, ZAMCO, and investment companies; ResZim Investments, Arigato and Hailcat.