TINASHE MAKICHI THE Reserve Bank of Zimbabwe (RBZ) has put its 100% owned Fidelity Printers and Refiners (FPR) off the market amid indications that the country’s sole gold buyer was on the verge of being hit by United States sanctions.
The deal to dispose of FPR was worth US$49 million, which was the value of the 60% stake that the government intended to offload to private players.
The acquisition was offered to seven private entities, including mining giant Kuvimba Mining House, which has been acquiring redundant mines countrywide.
Kuvimba Mining House, which until 2020 did not exist, has emerged to be arguably the country’s largest gold producer after embarking on an acquisition spree of lucrative gold assets around the country, including Shamva Mine, Freda Rebecca, and mines held by Zimbabwe Mining Development Corporation (ZMDC) namely Elvington, Jena, Golden Kopje, and Sandawana.
RBZ governor John Mangudya said FPR was now off the market, adding that a decision was reached where the central bank remains the sole shareholder.
“FPR is not for sale anymore and a decision was reached with the central bank board. RBZ remains the 100% shareholder of FPR and it is not for sale anymore. That is the position,” Mangudya said.
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At the time of the proposed deal, the government had selected Kuvimba Mining House, Better Brands, RioZim, Caledonia, Pan Africa Mining, Zimbabwe Miners Federation (ZMF) and Yellow Credit as prospective shareholders.
A well-placed source revealed that the decision to put FPR off the market was made in consultation with President Emmerson Mnangagwa.
“The President had to put a seal of approval as indications were strongly pointing towards the sanctioning of the country’s sole gold buyer,” the source said.
There are also indications that the RBZ’s plans to dispose of its controlling stake in FPR were rejected by the country’s major gold producing firms.
It is alleged that leading gold producing firms like RioZim and Caledonia were hesitant to partner some of the potential suitors vying for Fidelity.
During a series of meetings facilitated by authorities to bring together the shortlisted private players, there were reports that questions arose mainly on the suitability of some of the shortlisted firms.
It also emerged that there were concerns around the valuation of the asset with indications that some players felt Fidelity was too old and its equipment outmoded to be worth US$80 million.
The also saw its lack of a London Bullion Marketers Association (LBMA) certification as a liability.
The country lost its LBMA membership in 2008 after it failed to meet the prerequisite gold production.
Officially, FPR sells its gold to international markets mainly through South Africa and Dubai refineries and the value that the country acquires from selling its gold to Rand Refineries in South Africa is lower than the value that it would get if the gold export stocks were to be sold directly to LBMA.
FPR received gold deliveries of 29 629, 61 kg in 2021, a 55,5% increase from the 19 052,65 kg delivered in 2020.
FPR is a security printing and gold refinery company wholly owned by the RBZ. It was established in 1966 and it operates from a printing and gold refinery plant located in Msasa industrial area in Harare and a coin minting facility in Bulawayo.
The company plays a critical role in export earnings since gold contributes a significant percentage of foreign currency revenues.
FPR also services its sister entity – Aurex Jewellery, making its role in the economy key. Aurex is wholly owned by the RBZ.