An analysis of Freda Rebecca Gold Mine’s Gold Buying Licence & the proposed partnership with CBZ


DATE: 2 July,2020

Zimbabwe Environmental Law Association


The FREDA REBECCA Gold Mine, a subsidiary of Landela Investments has been licenced to buy gold direct from small scale miners and artisanal miners operating on its 60 000 hectares of gold claims across the country, chiefly in Manicaland and Mashonaland Provinces. The news about this latest development circulated on various online media outlets including the  ZBC news online of 20 June, 2020 ( the online media article, the FREDA Rebecca Gold Mine general manager, Eliakem Hove confirmed this latest development and outlined the nature of the gold buying licence as follows; (i) Freda Rebecca  will be  buying gold from small-scale miners, who are operating from our claims, so it will be  mobilising unaccounted for gold and officialise  it to Fidelity Refiners and Printers (ii) Under the plan, Freda Rebecca will buy from sellers at the current US$45,000 per kg of gold ( US$45 per gramme of gold) set by Fidelity on the 26th of May 2020, (iii) CBZ’s  branches will be used as gold collection and cash payment centres, (iv) the gold will ultimately be sold to the RBZ subsidiary, the Fidelity Printers and Refiners  (FPR). and (iv) The company targets to buy one tonne of gold every month for the next three years under the arrangement with Fidelity and CBZ, adding up to 12 tonnes annually, almost half of the total 27.6 tonnes delivered to Fidelity last year.

The news about the Freda Rebecca Gold Mine getting a licence to buy gold from small scale miners and artisanal miners came barely three weeks after the Fidelity Printers and Refiners (FPR) announced a new gold trading framework. With effect from 26 May 2020, FPR started paying a flat fee of US$45 per gram of gold from ASGM. The review of the framework has been received by the miners with mixed feelings as currently FPR takes up to about two weeks to pay the miners. The overall objective of the new gold trading framework introduced by the FPR was largely to incentivise ASM to deliver more gold to FPR and curb illicit gold trade. The FPR has been trying but with little success to put in place policy measures to uproot  illicit gold trade mainly due to its gold pricing  policy which has been unfavourable to the ASM  sector.  FPR via the Reserve Bank of Zimbabwe (RBZ) enjoys a monopoly in gold buying, refining and export. Subsequent to the announcement of the new gold trading regime, ZELA issued  a statement ( to respond to the new gold trading  measures announced by FPR. In its response to the FPR press statement, ZELA noted that the new trading regime was falling short of essential means to extinguish the illicit gold market as the rate of US$45 per gramme of gold was not aligned with the gold price movements on the international market.  In summation, ZELA noted that the lack of  availability of cash by FPR and the setting of a gold buying price that leaves a gap for illicit gold trade to continue would compromise the ability of the new gold trade arrangements to attract more gold to the  formal system and contribute towards the government’s foreign currency mobilisation in the ASGM sector. The ASGM sector is a critical employment sector including assisting the country in domestic resource mobilisation .

Understanding FPR’s New Gold Trading framework for Large Scale Gold Miners

As part of the new gold buying requirements for large scale gold buyers, one must have a mine producing not less than 50 kgs of gold per month. In January 2018, FPR set US$ 10 000 as an amount that a prospective company would need to disclose in its bank account as proof of funds to undertake gold purchases. These are the requirements that Freda Rebecca can meet given its scale of gold production. Further to the press statement released by FPR on 26 May 2020, FPR explained during a press conference that this new gold buying requirement is designed to flash out foreign buyers who have no interest in gold production. It is important to understand that licensed foreign big buyers were fingered in illicit gold trade. Further to the new conditions for awarding of gold buying licences to big private buyers, FPR also indicated that Gold deliveries from LSM are now being paid 70% in US$ transferred to the relevant company’s Nostro Bank account and the remaining 30% being liquidated to local ZW$ at the prevailing official exchange rate. The RBZ argued that Large Scale Mining (LSM) need not to be paid 100% in foreign currency because they have a lot of transactions that they perform in local currency.

Probably, the entrance of Freda Rebecca into the gold buying business and in particular buying from the ASM sector, if executed well, may mark the beginning of the realisation of positive dividends from the recently adopted gold buying framework. However, it is important to note that its scale of production demands more scrutiny as Zimbabwe lacks systems to continuously monitor the trading of gold between LSM and ASM. There is need to create monitoring systems to ensure that the government will not lose more gold from LSM the same way it has been losing it from FPR agents. 

What is triggering the government to leverage on the low hanging fruits in the Gold Sector?

ZELA notes that the gold sector has always been the largest foreign currency earner for the government. This development is coming at a time when the economy is moving towards full dollarization  and one would think that the government might be feeling the pressure  to generate more foreign currency to revamp production in critical sectors and   pay civil servants who are now demanding their salaries in hard currency.. Prices of gold make the gold mining sector a low hanging fruits in terms of generation of foreign currency despite the COVID-19 induced production constrains that are existing in the sector. Prices of gold on international market continue to be buoyant and the government might be looking forward to capitalise on this to mobilise the much needed foreign currency through mopping up illicit gold trade.Gold increased its price by approximately 2.4% between 26 May, 2020 and 20 June, 2020. 

However, it is important to look at the development from a political economy perspective paying particular attention to the political interest and criminality implications in this whole issue. The mining sector in Zimbabwe does not only serve the economic interests of the country. Politicians derive huge incentives from the operations of the mining sector especially in the ASGM sector. The ASGM sector has been highly linked with and controlled by politicians and there is an incentive to provide them with opportunities to get rents out of gold trade ( (  There is a huge possibility that, the decision to give Freda Rebecca, a licence to buy gold, is not only motivated by genuine considerations, but also by the narrow economic interests of the ruling elites. Freda Rebecca has been recently acquired by Landela Investments, a company that is allegedly linked to  Kudakwashe Tagwirei( Kudakwashe Tagwirei is a businessman who is alleged to be very close to the President of the country. The gold mines that he is allegedly linked to have been accused of fuelling illicit gold activities ( There are also allegations that Kudakwashe Tagwirei owns some shares in the CBZ bank( The same Landela Investments is reported to have acquired and injected fresh capital into Shamva Gold mine, a company that previously owned by Metallon Corporation ( ). It would then seem as if Freda Rebecca got the license on the basis of the relationship between its beneficial owners and the political elites in Zimbabwe. If indeed the proximity to power of the owners played a role in getting a gold trading license, then this confirms the whole narrative around state capture or regulatory and policy capture in Zimbabwe. The issuance of the Gold Buying License to Fredda Rebecca could be linked to new Gold Trading framework which pegged gold prices at $45 per gramme to accommodate and make way for the likes of Fredda Rebecca in the gold trade value chain.

Could this be Freda Rebecca’s Corporate Social Responsibility (CSR)?

ZELA notes that there is not too much details as yet with regards to how the deal will unfold. However, based on the information  that was circulated widely, it is clear that Freda Rebecca will buy gold from ASMers  at FPR’s set price of  US$45 000 per kilogramme ( US$45 per gramme) and the idea is to officialise it to the FPR, which is a sole buyer and exporter of gold in Zimbabwe. However, the first question that one would ask is: What are the interests of  Rebecca in this whole deal? One would think that this is something that Freda Rebecca will do as part of its Corporate Social Responsibility (CSR). There is a positive angle to look at if one chooses to see this deal from CSR perspective.  From the information that is given, Freda Rebecca will work closely with ASMers operating in its tributaries   and provide an opportunity for them to be registered. According to information that circulated, there are opportunities for CBZ to provide   loans to support increased production in the ASGM. ZELA has been always arguing that Large Scale Mining (LSM) companies have a role to play in facilitating growth and formalisation of  the ASGM sector. Provision of technical and financial support to ASM is essential to the growth and formalisation of the ASM sector. The partnership deal may go in a long in addressing informality and growth challenges of the sector if it is implemented and the framework is designed in such a way that will not allow the passage of  too much risks to the miners. Artisanal miners have been victims of political interference and loosing of claims. 

By using CBZ’s branches as collection and cash payment centres, the company will lure some  ASMers to bring their gold to the formal system. FPR has been struggling to timely pay ASMers because of cash challenges. This has been contributing to illicit gold trade as the miners turn to the black market where instant cash payment is guaranteed.

The registration process presents an opportunity for government to reverse the no questions asked policy on gold selling and push for gold tracing as part of the formalisation agenda of the ASGM sector. This might be a good move as we have the EU conflict minerals regulation (2017) coming into force in January, 2021 which would want to trace all minerals coming into Europe and see if responsible sourcing standards are  met.

Much as financial and technical services are important for formalisation of the ASM sector, more needs to be done. Government should put in place a comprehensive legal framework to regulate the operations of the ASGM sector in a transparency manner and adopt some of the international best practices into the law. ZELA continues to argue that lack of finalisation of Mines and Minerals amendment Bill, mining cadastral system remain some of the key impediments to the sector’s growth and generation of maximum dividends from the gold mining sector in Zimbabwe. The Ministry of Mines and Mining Development (MMMD) must chip in by enhancing transparency and accountability in the administration of mining titles through computerisation of the long overdue mining cadastre system. Artisanal mining must be prioritised in the long overdue reform of the old Mines and Minerals Act with compliance burden being distinguished with those of LSM.  Buying from artisanal miners who are not licenced may pose challenges unless if they are given tributary agreements and organised into cooperatives or syndicates. A formal recognition of the ASM sector and a move to license them would allow for responsible mineral resource sourcing and tracing for mutual benefit.

What could be the risks?

Being a private organisation, there is a possibility that Freda Rebeca might want to get rents through buying gold from ASMers.  Freda Rebecca might have been attracted by the US$ 45 per gramme that is now being offered to the ASM sector. No concerns of such nature would have been raised if this was a parastatal like Zimbabwe Mining Development Corporation (ZMDC). There are arbitrage risks created by FPR’s 100% and 70:30% foreign currency retention ratios for the ASGM and LSM, respectively. Large scale gold producers can funnel their gold as small scale producers in order to get payment of US$45 per gram that is offered to ASMers. In the past, different royalty rates for AGM and LSM including different payment arrangements for gold deliveries created arbitrate opportunities for LSM to funnel their gold under ASGM. In response, the 2019 Midterm Budget Review Statement increased royalty rates of ASGM from 1% to 2% to narrow the gap of 3% royalty fee for gold below US$1,200 from LSM.  The arbitrage opportunities can be proven through a calculation of an effective price that a Large Scale gold miner gets after producing and selling to Fidelity Printers and Refiners (FPR) at the international market price for gold.

Assuming that a Large Scale Gold miner produces a gramme of gold and this is sold at US$ 57.01 which was the prevailing international market price as at 30 June, 2020. Applying foreign currency retention of 70%: 30% means that the Large Scale Producer will get US$ 39.91 from the selling of this gramme (transferred into its Nostro Account) and US$17.1 will be liquidated into ZW dollars. Converting US$17.1  into Zim dollars  at the RBZ’s auction rate of US$1=ZW$63.7 ( as at 30 June, 2020)  gives ZW$ $ 1089.27.The LSM company would get an amount equivalent to US$9.90 assuming it wants to converts the ZW$ 1089.27 into US dollars (Using an exchange rate of US$1=ZW$110). Adding US$9.90 to US$39.91 gives US$49.81 as a final effective price that the Large Scale Mining (LSM) company would receive from the sale of its 1 gramme of gold to Fidelity Printers and Refiners (FPR).

The same results are obtained if we alternatively carry out the following calculations;

If a Large Scale Miner retains 70%  from a sale of one gramme at  price of US$ 57.01 which was  the prevailing market price on the 30of June, 2020 and the 30% is liquidated at an exchange rate of US$1=ZW$63.7 ( exchange rate based on the RBZ’s 30th June Foreign Currency Auction system)   instead of  US$1=ZW$110( black market price), this effectively means that the miner is getting 17.3 % of the amount liquidated in real terms ( 63.7/110 x 30%). In this case, 87.3 % is the final retention in real terms. The company will get US$49.80 ( 887.3% of US$56.6) as the effective rate by  selling 1 gramme of gold at an international  market price to FRP. This means 12 % is a tax which is effectively an extra royalty since it is taken from company’ revenue. A Large Scale gold producer may actually get an effective price which is less (70% of US$ 57.01 which is approximately US$ 40 per gramme) than what the ASmers are getting if we disregard completely the amount that is liquidated into ZW$. The ZW$ amount would have significantly lost its value by the time the company accesses it. As such its contribution to a LSM company’s revenue in real terms is very minimal.  

Based on the above scenario, it seems the new gold framework still does not favour big gold producers although the situation could be better than what is was before. Previously, mining companies were getting a foreign currency retention of 55%.  Being a big gold miner, Freda Rebecca might want to insulate itself from these challenges and generate some economic rents through funnelling part of gold it produces to the batch that it will be selling to FPR at the price of US$45 per gramme. The company can take advantage of these economic rents if no systems or mechanisms are put in place to guarantee transparency and accountability on the quantities of gold that the company will purchase from the ASM sector and the quantities that will be delivered to FPR. The US$ 45 per each gramme can be even more appealing to a Large Scale Gold producer if mining production costs are factored in.

Another critical question to ask is; Will the Landela Investments going to be a responsible investor in the sector after having been implicated in looting of  the government’s Command Agriculture Programme funds in 2017.  What guarantee does the FPR have that Freda Rebecca will sell all gold acquired to FPR?  Much as the country needs more investment in the mining sector to support the US$ 12 Billion mining strategy, there is need protect the country’s vast mineral wealth from potential looters.There is a risk that the part of the 12 tonnes of gold that is intended to be purchased from ASM sector per year might be  taken outside the country through illicit means and sold at higher prices resulting in the company benefiting more at the expense of government. Gold has been highly vulnerable to money laundering and illicit financial flows in the country and this has been a source of conflicts.  It is important for Freda Rebecca to disclose information on how much gold will it buy from sellers, the areas where it will buy gold from, how much gold will be delivered to FPR. Given that Freda Rebecca will buy gold from ASM sector, there is an expectation that it will apply Organisation for Economic Co-operation and Development (OECD) Due Diligence Standards on responsible sourcing in the gold sector.     


  • Freda Rebecca must disclose its interests in buying gold at $45 per gramme outside CSR. Specifically, it must disclose information on how much gold it is buying, the areas where the gold will be coming from and the quantities of gold it will be delivering to FPR to make the process of reporting and gold  tracing easier and transparency
  • FPR must institute strong mechanisms to monitor and report gold purchases and deliveries to government  by Freda Rebecca
  • Freda Rebecca must fully adopt OECD Due Diligence standards on responsible sourcing. It must put  in place mechanisms to detect any potential sources of conflicts from its mineral supply chains and adequately respond to them when they arise
  • A holistic approach to formalise the ASM is needed. There is need for a comprehensive legal framework to regulate the ASGM sector. The Ministry of Mines and Mining Development ( MMMD)  must expedite the finalisation of the Mines and Minerals Amendment Bill (MMAB) and issues of ASGM must be prioritised
  • Government must expedite the finalisation of the mining cadastral system which will clear out disputes on acquisition of claims
  • FPR must seize the opportunity to align its gold trading practice in line with OECD’s Due Diligence Guidelines on Responsible Mineral Supply Chains or other international best practices on responsible sourcing.
  • The representatives of small scale miners (ZMF) should protect miners from losing their claims or bearing a huge burden of the risks if the deal is implemented
  • CSOs organisations must closely monitor any cases of abuse of both the Freda’s Gold buying and provide legal assistance to protect the interest of ASMers in the gold buying framework where necessary

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