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Cabinet approves $350 million Ziscosteel deal

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Ziscosteel Zimbabwe

GOVERNMENT yesterday approved the $350 million investment deal in which ZimCoke (Pvt) Ltd will revitalise the coke plant within Ziscosteel, creating more than 800 jobs in the process.

Of the $350 million, $133 million will be capital injection while $225 million will cover the debt owed by Ziscosteel to Germany bank, KFW.

This will give ZimCoke full ownership of the coking plant. At full tilt, the project is expected to produce 500 000 tonnes of coke annually, for both local use and export markets.

Government’s Transitional Stabilisation Programme (TSP) targets re-opening of closed mines, expansion of those that are operating below capacity and opening of new ones.

Briefing journalists after yesterday’s Cabinet meeting, Information, Publicity and Broadcasting Services Minister Monica Mutsvangwa said the deal, whose agreement was signed in 2017, had been given the nod.

“Following a presentation by the Minister of Industry and Commerce, Cabinet approved the operationalisation of the agreement between Ziscosteel and ZimCoke (Pvt) Ltd,” she said.

“The agreement entails the revival and running of the coke oven batteries, which have not been operating since 2008. At full production, ZimCoke will manufacture half a million tonnes of coke in a year. The project also involves rehabilitation of Redcliff Water Supply infrastructure, production of tar and pitch for road making as well as the refurbishment of locomotives and wagons.”

Expanding on the deal, Industry and Commerce Minister Mangaliso Ndlovu said it will bring life to the town of Redcliff.

“The agreement has to do with Zim Coke running the coke oven batteries that are at Ziscosteel and this will entail the processing of coking coal for the purposes of exporting coke therefrom,” he said.

“This is an agreement that was signed in 2017 but needed fine tuning and we have gone through that. All issues that needed to be cleared have been cleared.”

On the amount of money involved, Minister Ndlovu said: “It’s an investment that will be worth $133 million in capital injection but it also involves ZimCoke taking over the Ziscosteel debt to Germany company, KFW of $225 million. All in all, it’s an investment worth more than $350 million, which we expect to create not less than 800 jobs and really bring more life to the town of Redcliff. They will be also be involved in improving the water system in the town.”

Meanwhile, Minister Mutsvangwa said Cabinet had received an update from the Minister of Local Government, Public Works and National Housing on the ongoing recovery programme with respect to the Cyclone Idai disaster. “The Minister informed the Cabinet that progress continues to be registered in regard to the opening of access routes to affected areas and the distribution of relief assistance,” she said.

“The statistics on lives lost so far stand at 344, inclusive of those buried in Mozambique. Out of the 347 persons reported as missing, 206 names have been provided with the help of the surviving relatives and neighbours, leaving a balance of 141 unnamed persons still missing. A total of 79 relatives have provided samples for DNA testing. The assessment of the cost of the damaged school infrastructure has been completed in all districts.”

She added: “Following His Excellency the President’s meeting last week with the private sector, various offers of assistance continue to be received for the construction and rehabilitation of infrastructure as well as re-integration of pupils affected by the disaster into the education system.

“Special emphasis is on the rehabilitation and reconstruction of schools so as to ensure the expeditious resumption of learning in the affected areas, Cabinet was informed that work has already started with respect to spatial planning and eventual relocation of some affected communities. A programme is also underway to spearhead the recovery of destroyed businesses through a Government-sponsored financing facility.”The Chronicle

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Zimbabwe agrees to pay $3.5 billion compensation to white farmers

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Zimbabwe White Farmers

Zimbabwe agreed on Wednesday to pay $3.5 billion in compensation to Zimbabwe white farmers whose land was expropriated by the government to resettle black families, moving a step closer to resolving one the most divisive policies of the Robert Mugabe era.

But the southern African nation does not have the money and will issue long term bonds and jointly approach international donors with the farmers to raise funding, according to the compensation agreement.

Two decades ago Mugabe’s government carried out at times violent evictions of 4,500 Zimbabwe white farmers and redistributed the land to around 300,000 Black families, arguing it was redressing colonial land imbalances.

The agreement signed at President Emmerson Mnangagwa’s State House offices in Harare showed white farmers would be compensated for infrastructure on the farms and not the land itself, as per the national constitution.

Details of how much money each farmer, or their descendants, given the time elapsed since the farms were seized, was likely to get were not yet clear, but the government has said it would prioritise the elderly when making the settlements.

Farmers would receive 50% of the compensation after a year and the balance within five years. Finance Minister Mthuli Ncube and acting Agriculture Minister Oppah Muchinguri-Kashiri signed on behalf of the government, while farmers unions and a foreign consortium that undertook valuations also penned the agreement.

“As Zimbabweans, we have chosen to resolve this long-outstanding issue,” said Andrew Pascoe, head of the Commercial Farmers Union representing  Zimbabwe white farmers.

The land seizures were one of Mugabe’s signature policies that soured ties with the West. Mugabe, who was ousted in a coup in 2017 and died last year, accused the West of imposing sanctions on his government as punishment.

The programme still divides public opinion in Zimbabwe as opponents see it as a partisan process that left the country struggling to feed itself. But its supporters say it has empowered landless Black people. Mnangagwa said the land reform could not be reversed but paying of compensation was key to mending ties with the West. Reuters

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Old Mutual’s Share Price Is Focus in Zimbabwe’s Currency War

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Old Mutual Shares Zimbabwe

The share price of one of Africa’s oldest insurers is taking centre stage in Zimbabwe’s battle to bring order to its chaotic foreign-exchange system.
In the latest in a series of attempts to stabilize its currency, the government wants to eradicate the Old Mutual Implied Rate.

The gauge, used by domestic companies to determine the future cost of goods and services, calculates a potential forward rate for the Zimbabwe dollar by measuring the difference between Old Mutual Ltd.’s share prices in Johannesburg, London and Harare.

The indicator is among many “contrived phantom exchange rates” in use that “conspire to defeat fiscal policy,” the government said in a June 26 edict that halted trading on the Zimbabwe Stock Exchange and stopped most mobile-banking transactions.

The OMIR is one of the multiple exchange rates Zimbabweans use daily to navigate the nation’s myriad economic challenges, including annual inflation of almost 800%.

A perennial shortage of cash means anyone who has physical banknotes is able to negotiate exchange rates with brokers who pay the funds onto mobile-money platforms. The brokers can then sell the hard cash at an even higher rate.

That’s resulted in a widening gap between the official rate of 63.7 per U.S. dollar, and the amount at which it trades on the streets of Harare, which is now at 100.

“People have relied on making money from buying and selling Zimbabwe dollars, and not from any real production,” said John Robertson, an independent economist based in Harare. “It’s what has created these distortions.”

The OMIR also feeds into the black-market Zimbabwe dollar rate, which the nation’s bourse uses, along with the official rate, to determine the value of stock prices.

Old Mutual, founded in Cape Town in 1845, is not involved in determining the rate. Market participants take the company’s share prices in South Africa, the U.K. and Zimbabwe, convert each of them into the U.S. dollar, which should typically trade near par.

The finance minister, however, in March restricted trading in the shares of Old Mutual and two other companies by making the stocks no longer fungible or regarded as being equal in value to those traded on other exchanges, in a bid to prevent outflows caused by the dual listings.

Despite the move, investors poured into Old Mutual, using it as a proxy to the U.S. dollar because of its offshore listings, pushing the Zimbabwe-listed stock up 90% since the beginning of May. The shares in Johannesburg and London were little changed, resulting in the implied rate doubling to 122 as the gap between the securities widened.

Zimbabwe’s benchmark industrial index has risen more than sevenfold this year, reaching a record on June 24, and giving the overall bourse a market value of about 229 billion Zimbabwean dollars ($3.6 billion). None of the stocks in the 57-member index has declined this year as Zimbabweans seek a haven from runaway price increases and the weaker currency, which has slumped to 63.7442 per U.S. dollar after a 25:1 peg put in place since March was abandoned.

Suspend Listing
Authorities now want to eliminate the OMIR before allowing any trading to resume on the Zimbabwe Stock Exchange, people familiar with the matter said, asking not to be identified because the talks are private. The OMIR was the focus of various meetings on Monday between members of Zimbabwe’s stockbrokers’ association, the stock exchange, the Securities and Exchange Commission and the Treasury, the people said.

Measures being considered to include suspending Old Mutual’s shares from the Harare-based bourse, having the securities traded only in dollars, or moving the listing to the Victoria Falls Stock Exchange, a market that will only trade in foreign currency once it opens later this year, the people said.
Nick Mangwana, the government’s spokesman, referred queries to the finance ministry. Several calls and text messages sent to Finance Minister Mthuli Ncube and central bank Governor John Mangudya seeking comment weren’t answered.

“There has not been any official communication from authorities in Zimbabwe to Old Mutual,” the Johannesburg-based company said in an email “We have asked our local subsidiary to reach out to our stakeholders in Zimbabwe to try and understand the circumstances around ZSE closure and other related matters.”

Discussions over the halting of trade on the stock exchange are ongoing and the outcome is still uncertain, SEC Chief Executive Officer Tafadzawa Chinamo said by phone. Zimbabwe Stock Exchange CEO Justin Bgoni said on Sunday that the bourse would wait for guidance from regulators.

In comments at a briefing after a cabinet meeting on Tuesday, the finance minister said that stockbrokers should assure their clients that their investments in the stock market are safe and that the bourse will reopen once investigations are complete. Bloomberg

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Zimbabwe government suspends mobile money transactions

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Nick Mangwana

Zimbabwe government has, with immediate effect, suspended all monetary transactions on phone-based mobile money platforms to facilitate investigations that will lead to the arrest and prosecution of people responsible for sabotaging the economy.

In a statement this evening, Secretary for Information, Publicity and Broadcasting Services, Mr Nick Mangwana, said the measures will include the suspension of all trading on the Zimbabwe Stock Exchange.

The suspension will be in place until mobile money platforms have been reformed to their original purpose and when all the present phantom rates have converged into one “genuine rate that is determined by market forces under the foreign currency auction system which was launched by the Reserve Bank of Zimbabwe” on June 23. Operational modalities and details of the envisaged measures will be announced by the relevant monetary, regulatory and law enforcement authorise in the next few days.

The government will ensure that prudent measures are put in place to mitigate and prevent any collateral damage that the interventions may cause to the innocent public that was using the mobile money platforms. The Herald.

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