Zimbabwe will use mineral earnings to partly compensate white farmers who lost farms during land reform programme and pensioners whose savings were wiped off during the conversion of values from Zimbabwean dollars to US dollars in 2008, Finance and Economic Development Minister Professor Mthuli Ncube has said.
This would be done through owning shareholdings in some strategic mines, thus giving the Government leverage required to utilise revenues of its mineral resources.
Prof Ncube told Business Weekly in an interview that the recently established resource firm, Kuvimba Mining House, in which the Government owns 65 percent shareholding is one such vehicle the State will use to raise funds to partly compensate white farmers and thousands of pensioners as well as depositors who suffered losses during the transition from an exchange rate of US$1: $1, initially to US$1: $2,5 and thereafter determined by the interbank activities.
Ziwa, a vehicle wholly owned by Mauritius-based company Quorus owns 35 percent in Kuvimba. A quick online search of both Ziwa and Quorus did not yield results.
Kuvimba already has interests in various mining assets including, gold, chrome, nickel, gemstones, and platinum group metals (PGMs) and chrome. The company owns 100 percent shareholdings in gold mines Freda Rebecca and Shamva.
It owns 85 percent stake in Jena Gold Mine, 74 percent in Bindura Nickel Corporation and 47,8 percent in multi dollar billion platinum project Great Dyke Investments.
Kuvimba is evaluating prospects of buying chrome smelter, ZimAlloys and Sandavanna mine. In addition, it is set to embark on exploration works at Golden Kopje and Elvington gold mines to establish commercial viability of the two mines.
It is also looking to buy Kwekwe based gold mine Globe and Phoenix. On the existing operations, Kuvimba is looking at ramping up production at Shamva, which resumed operation in April last year to make it the country’s largest gold mine, producing nearly five tonnes of the bullion per year. More funds would be invested in Jena Gold Mine, with annual output expected to increase from the current levels of between 250 and 300 kg to as much 900 kg in the next two years.
Part of Government’s shares in Kuvimba have been allocated to the Insurance and Pension Commission and the mineral dividends are expected to compensate pensioners.
Implementation of the Commission of Inquiry’s recommended compensation for loss of value suffered during the pre-2009 period was slowed down by the 2019 currency reforms.
However, IPEC has registered progress on implementation of the compensation schemes in response to 2019 currency reforms through ensuring equitable allocation of revaluation gains arising from currency reforms.
The Government also allocated shares in Kuvimba to Global Compensation Deed Fund whose mineral dividends will go towards compensating white commercial farmers.
Other vehicles, which form Government’s 65 percent shareholding in Kuvimba are the War Veterans Fund, the Sovereign Wealth Fund, and the National Venture Fund, which represents the interests of youth and women and the Government Pension Fund.
In July last year, Zimbabwe agreed to pay US$3,5 billion in compensation to white commercial farmers. Farmers would receive 50 percent of the compensation after a year from the date of signing and the balance within five years.
As part of a broader reform process under the TSP, Government introduced a market determined exchange rate on February 20, 2019. The transition resulted in currency losses to small and vulnerable households with deposits less than US$1 000. The movement in the exchange rate resulted in a loss for such depositors. The Government pledged to compensate such depositors.
As such, an investment vehicle has been established and allocated shares in Kuvimba.
Economist Eddie Cross however said “dealing with the debt issue in bits pieces” was a misplaced approach.
“Why do we treat farmers’ debt as special,” said Cross. “We need a comprehensive approach to deal with all Government liability…bits and pieces approach will never work.”
Chief executive David Brown said Kuvimba will continue looking for opportunities as it strives to become a mining powerhouse. “Essentially, there are a number of assets not being utilised to full capacity. Those that have been underfunded but have resources, we want to bring them back so that the resource can be extracted for Zimbabweans,” he said.
“We will continue to look for such assets.”