Two weeks after its representatives met Zimbabwean President Emmerson Mnangagwa on the sidelines of the World Economic Forum in Davos, Lafarge Cement announced last week that it had found a buyer for its 76.45% stake in Zimbabwe’s second-largest cement maker.
The sale did not surprise the market as Lafarge’s holding company, Holcim, announced in January that exiting the Zimbabwean market could be the next step after similar divestments in Ghana, Brazil, Malawi and Zambia.
Five bidders have been shortlisted by Lafarge, including three Chinese companies, an anonymous African billionaire and a Zimbabwean company, Fossil Mines.
In the list, Chinese company Huaxin Cement was widely cited as the favorite to buy the Zimbabwean listed cement maker after buying Lafarge Zambia and Lafarge Malawi last year.
But markets were shocked on Monday last week when Lafarge announced it had entered into a binding sales agreement with Fossil Mines, a company run by Obey Chimuka, a Tagwirei business associate.
An investigative report into Tagwirei’s expanding business empire in Zimbabwe, published by The Sentinel in July 2021 disclosed the close business ties between him and Chimuka, the latter having served on the boards of Tagwirei-linked companies such as Sotic International and Landela Mining.
Fossil Mines, which has no manufacturing history, has been the beneficiary of multimillion-dollar public works contracts, including road infrastructure projects such as the Beitbridge Highway and Mbudzi Interchange in Harare.
Last year, Fossil has bought a 4.4% stake in Great Dyke Investments (GDI), a $3 billion platinum mining project that was until this week jointly owned by Russia’s Vi Holding and Kuvimba Mining House, a company strongly linked to Tagwirei.
As news of Fossil’s major “triumph” to acquire Lafarge swept the markets in Harare on Monday, Vi Holding announced that it was pulling out of GDI and that its 47.8% stake would be sold to its Zimbabwean partners, Kuvimba and Fossil, again.
GDI had planned to start production in 2021 with output reaching 860,000 tonnes per year to become Zimbabwe’s largest platinum producer.
But the company is struggling to raise the $500 million needed for the first phase of the project, thanks in part to the involvement of sanctioned Tagwirei and the Russians.
“The decision to leave the project is linked to global sanctions by Western countries against Russia, which naturally apply to Russian investments abroad,” the company said.
The Zimbabwean government claims to control Kuvimba, but its assets, which include gold, nickel and platinum, are the same as those held until at least 2020 by Tagwirei-linked company Sotic International, which has been sanctioned by the United States and the United Kingdom for allegations of corruption.
Zimbabwe government says Tagwirei not involved in Kuvimba, with state holding 65% stake and the rest owned by Ziwa Investments, another private Zimbabwean company.
But questions remain over how the government financed the purchase of $2 billion in mining assets that until December 2020 belonged to Tagwirei’s Sotic International.
Some Zimbabwean government and mining industry officials said Tagwirei and the government set up Kuvimba to protect the businessman’s mining companies from US and UK financial sanctions that allegedly hampered their operations.
The South African Impala Platinum, which owned the concession until 2006 before abandoning it under pressure from Robert Mugabe, had been courted to join the GDI consortium, but had declined the offer due to lack of transparency in the shareholding and for fear of being implicated in the sanctions.
“Tagwirei’s face in GDI’s image has affected access to financing for this mining project at a time when GDI needs an additional injection of capital. Lack of transparency over who owns Kuvimba Mining House has hampered efforts to attract a new financial partner for the Darwendale mine.
“Investors fear that Kuvimba Mining House will be used to mask the face of the military in the project,” reads a recently released report by non-profit organization, the Center for Natural Resource Governance. DM