Covid-19 delays Fidelity unbundling

LIVINGSTONE MARUFU

The proposed unbundling of Fidelity Printers and Refiners (FPR) has been delayed as the Covid-19 pandemic has stalled meetings in which board members of mining houses are supposed to meet to discuss the offer, central bank governor, John Mangudya, has said.

Last year, the Reserve Bank of Zimbabwe said it was unbundling FPR into two units—gold refining and printing and minting units.

RBZ would retain the printing and minting business but dispose of 60% in the gold refining unit.

The big mining houses have been offered a 50% stake, while the small-scale miners and FPR gold buying agents were offered 7% and 3% respectively.

“We expected the FPR privatisation to kick start by January 2020 but because of Covid-19 pandemic the process is anticipated to take a little bit of time,” Mangudya told Business Times this week.

“Various large-scale miners are carrying out some board meetings to come up with their findings before they make some submissions to us.”

He said while some mining houses are carrying out virtual meetings, bringing various shareholders together was a challenge during the lockdown period.

“The process may take time that we anticipated but I don’t think gold miners or dealers will reject an opportunity to be a shareholder and it is exactly what they have been clamouring for be it in the media or various fora,” Mangudya said.

RBZ is expecting  that the gold producers’ compliance levels in the trading of gold will significantly increase as they will be part of the decision making process in gold trading. 

The privatisation of FPR comes after lobbying from some players in the mining business.

Large scale miners’ representative body, the Chamber of Mines of Zimbabwe said no proper meetings have been held so far and referred the matter to RBZ.

“The best source to talk to for now is RBZ as currently we don’t have any detailed information on the transaction and we are still yet to do anything since the pronouncement,” the Chamber of Mines chief executive Isaac Kwesu said.

Gold miners want Zimbabwe to fully liberalise the marketing of gold so as to allow miners to sell their own production, a suggestion that Mangudya has publicly opposed, saying he feared it would worsen smuggling.

Gold Miners Association of Zimbabwe chief executive Irvine Chinyenze said RBZ should just bring in more players in the gold buying sector to promote competition.

“Giving shareholding to miners and dealers is a good starting point but we need more players,” he said.

On the proposed ownership structure, Chinyenze said: “As an affiliate of ZMF, small scale miners representative body, we are yet to carry out a meeting concerning the privatisation.”

The unbundling of FPR follows the model of Rand Refinery, South Africa’s biggest refinery, which is owned by the five largest gold miners—Anglogold Ashanti, Gold Fields, Harmony, Sibanye Gold and DRDGOLD.

Among the country’s biggest gold producers are RioZim and Caledonia Mining.

FPR started refining gold in 1988, and at its peak producers from abroad sent in their gold for refining at its Msasa refinery. 

However, FPR has not used most of its installed capacity to refine 50 tonnes of gold per year. fffffffffff