ZIMBABWE’S cabinet decision this week to select Kuvimba Mining House — a public-private partnership, whose shareholders have not been fully revealed — as the investment partner for the Redcliff-based Ziscosteel resuscitation has left a major public asset in the hands of a relatively shadowy entity with murky ownership.
This comes amid revelations political and corporate vultures around President Emmerson Mnangagwa are jostling to buy Zisco or its fines for a song. While Zisco is defunct and debt-ridden, it has iron ore fines worth at least US$500 million, according to a key mining source.
This is equivalent to its total debt. Fines come from natural raw iron ore through the process of mining, crushing and screening, where the ore is separated into lumps and fines. Iron ore is processed like this for the iron and steel-making industry. Although the government claims it owns 65% of Kuvimba, it has failed to openly declare who owns the other 35% and lay to rest fears of dodgy deals and corruption.
Finance minister Mthuli Ncube and Kuvimba’s former chief executive David Brown have claimed the government owns 65% of Kuvimba’s shares, while the remaining 35% equity is held by Ziwa Investments, a Zimbabwean subsidiary of the Mauritius-registered Quorus Management Services.
Kuvimba’s labyrinth of shadowy structures and web of intricate offshore entities — notably its relationships with Sotic International, Almas Global Opportunity Fund, formerly used by local tycoon Kudakwashe Tagwirei (pictured below) to invest in Sotic via the Cayman Islands, and Quorus — has not been publicly explained. Almas owns 65% of Ziwa Resources.
The other 35% is owned by Zimbabwe-registered Pfimbi Resources, whose directors are Tagwirei and his wife. Although Kuvimba and the government deny Tagwirei’s involvement, if Kuvimba is owned 65% by the government and 35% by Ziwa, then it means he is involved.
“The decision to appoint Kuvimba as Zisco’s investment partner is shadowy and strange,” a corporate executive told The NewsHawks.
“Government says it owns Kuvimba 65%, the other 35% is controlled by unnamed shareholders and yet it also owns Zisco 100%. So what sort of a model have they come up with here by giving Zisco to Kuvimba? In other words, how does government revive Zisco, which it destroyed to start with, by merely putting it under another public enterprise? In the first place, we don’t fully know who actually owns Kuvimba. Who is Ziwa? Who is Pfimbi? What’s their relationship? How does Zisco come in on this new deal? Who benefits out of this? This has not been sufficiently explained to the public. The answers given by authorities have at best been deliberately vague; at worst they amount to obfuscation.”
To further complicate issues, Zisco is entangled in a US$36.8 million dispute involving Hong Kong-based NJZ Resources (HK) Ltd, its subsidiary Buchwa Iron Ore Mining Company (Pvt) Ltd and the Minerals Marketing Corporation of Zimbabwe (MMCZ).
The dispute, which has been raging on since 2019, is now under arbitration which gets underway next week. The arbitration arises out of a tender award dispute between NJZ and Buchwa, which, acting through its agent MMCZ, neglected or failed to honour its obligations after the Chinese company performed its duties. As a result, NJZ says it suffered extensive losses and damages amounting to US$36.8 million.
Buchwa operated an iron ore mine, Ripple Creek, and the limestone quarry situated next to the steel works. These operations supplied Zisco with iron ore in the form of lump ore and fines, as well as the limestone required as flux for the furnace in iron and steel-making processes.
At its peak, Zisco produced one million tonnes of steel annually and employed up to 8 000 people. It was part of the backbone of Zimbabwe’s economy, working in an integrated way with Hwange Colliery and the National Railways of Zimbabwe. However, Zisco was destroyed through extended periods of mismanagement, corruption and looting.
In 2005, for instance, a scandal exploded at Zisco showing the company had been looted by ministers, politicians and top management. Previous efforts to resuscitate what was once sub-Saharan Africa’s largest integrated steel-producer have stalled and suffered stillbirths, including Essar Holdings’ US$750 million investment proposal in 2015.
The Indian investor had committed to take over Zisco’s debts to various creditors, which stood at US$500 million, but the deal collapsed amid divisions in the government over it. Later, the authorities’ decision to transfer the US$225 million assets to ZimCoke for a song sparked a fierce board dispute.
ZimCoke paid ZW$1 million in May 2019 as a transaction fee to take over Zisco’s critical coke ovens and an array of other assets from the integrated steelworks, whose assets have been stripped. Zisco’s non-core assets were sold to influential politicians and their cronies at giveaway prices. But Zisco’s Kuvimba deal has raised a stink in the public domain.
“If Kuvimba is a public enterprise, Zimbabweans have a right to know how the company is structured, organised and controlled. Repeated questions from the media and other stakeholders on its ownership have not been satisfactorily answered,” another business executive said.
Records for Kuvimba are not available in Zimbabwe’s company registry. However, according to United States-based civil society organisation The Sentry’s investigative report titled Shadows and Shell Games: Uncovering an Offshore Business Empire in Zimbabwe, Ziwa was registered by lawyers at Tagwirei’s law firm, linking the tycoon to the mining house.
The directors of Ziwa included Brown and Simbarashe Chinyemba, both of whom have previously appeared in companies associated with Tagwirei. Brown has since resigned as Kuvimba chief executive.
“By analysing hundreds of company documents, court filings, and communications, The Sentry’s investigation shows how Tagwirei used complex corporate structures to build and hide his wealth, potentially benefiting from preferential government treatment along the way,” the report said.
“Tagwirei has invested in gold, nickel, platinum, and chrome mines by hiding behind South African businesspeople and offshore structures in Mauritius and the Cayman Islands and by using lawyers and financiers who are seemingly happy to turn a blind eye to accusations of cronyism and corruption.
“New documents uncovered by The Sentry also show how Tagwirei has used similar networks to hide his financial interests in Zimbabwe’s new public-private partnership mining company, Kuvimba Mining House, with Zimbabwe’s Finance ministry reportedly collaborating to deflect public scrutiny from these arrangements.”
The corporate executive strongly questioning the new Kuvimba-Zisco deal said: “Against this murky background and dodgy arrangements, how does cabinet appoint Kuvimba’s as Zisco investment partner? After all, even when they say Kuvimba has now paid dividends to shareholders, it has not fully paid for Mazowe and Redwing gold mines owned by Metallon Corporation. Why doesn’t it pay for the gold mines first before rushing to Zisco, which is a much bigger entity? There is something rotten about this deal.”