ZELA Statement on Government’s move to unbundle Fidelity Printers and Refiners (FPR)


18 August 2021

During the presentation of the Mid Term Budget Review on the 29th of July, Minister of Finance and Economic Development, Professor Mthuli Ncube noted that the Government of Zimbabwe is moving ahead with its plans to cede a controlling stake in the country’s sole gold buyer and refiner, Fidelity Printers and Refiners (FPR) in an effort to boost compliance levels in the trading of gold. The Government intends to offer a 60% stake in the FPR’s gold refinery and marketing arm to large-scale gold producers, major gold buying agents and small-scale producers through their associations. According to the Government, a three-year average delivery of gold to Fidelity will be used by the Reserve Bank of Zimbabwe (RBZ) to determine its offer to the various players. Recently, the Reserve Bank Governor clarified that changing of the shareholder structure in FPR will not remove FPR’s monopoly on the sale and exportation of gold.

The move by Government to unbundle FPR can be a game changer in the country’s gold sector, it has the potential to improve local beneficiation, investments in the gold sector and producers’ compliance with gold trading rules. Furthermore, by allowing private companies to be part of the gold refinery process, the country stands a good chance to comply with the London Bullion Market Association (LBMA) on responsible sourcing. The LBMA established the Responsible Gold Guidance for Good Delivery Refiners to combat systematic or widespread abuses of human rights, to avoid contributing to conflict, comply with high standards of anti – money laundering and combating terrorist financing practices.  Being an LBMA accredited refiner provides an assurance that the country’s practices and processes in gold refineries are aligned to the requirements of the Organisation of Economic Cooperation and Development (OECD)’s guidelines on Responsible gold sourcing. Compliance with OECD requirements on responsible sourcing and LBMA accreditation will ensure that our gold exports fetch the highest return on the international market. The unbundling of FPR could release resources needed for the government to comply with the LBMA’s requirements on responsible sourcing if adequate legislation is put in place for the private companies to comply with. The privatisation of the gold refinery process should therefore be linked to mechanisms to enhance responsible sourcing activities such as gold traceability initiatives.

The country lost its LBMA membership in 2008 after it failed to meet the prerequisite gold production levels. For the country to be re-admitted into the LBMA, it needs to be producing 10 tonnes of gold per year. Officially, FPR sells its gold to international markets mainly through South Africa and Dubai refineries. The value that the country acquires from selling its gold to Rand Refineries in South Africa is lower than the value that it would get if the gold export stocks were to be sold directly to LBMA and one of the major reasons is that these refiners charge for the refinery process which they do on the country’s gold exports.   Basing on FPR’s gold production and deliveries for the past few years, it is now very easy for the country to re-join the LBMA. The Government should be persuaded to get re- admitted into the LBMA as this will attract international investments and possibly remove the ‘Pariah State tag.’

The unbundling of FPR must be accompanied by comprehensive due diligence processes on the potential shareholders so that this opportunity to foster good management of gold revenue in line with section 298 of the Constitution is not lost. Using a three-year average delivery of gold to FPR as a key factor to be considered in choosing the companies to take up equity in FPR is not enough, given that the Government is incorporating the private sector in the management of gold.  Shareholders should be able to demonstrate that they are in position to comply with the best international standards on promotion of human rights including proposals to eliminate Illicit Financial Flows (IFFs) or adopt OECD guidelines on responsible sourcing. The Government might also consider including a condition that the shareholders should have a clean tax clearance certificate or evidence of a good human rights promotion record as part of its application to acquire shares in FPR. Such due diligence processes would enable the government to attract responsible investments into the gold sector and reduce risks of the government losing revenue from investors who may have a bad history of evading tax and being involved in illicit gold trade.

Moreso, the Government should consider making it mandatory for all shareholders who are going to take up equity in FPR to list on the Zimbabwe Stock Exchange (ZSE) or the Victoria Falls Stock Exchange (VFS). This will open a window for citizens to hold the companies to account on mineral revenue transparency since companies will be expected to publicly disclose their Environmental, Social and Governance (ESG) information in line with international best practices.  

During the Mid Term Budget Review presentation, Minister Mthuli indicated that 10 shareholders have offered to take up shareholding in FPR. However, names of these shareholders were not disclosed. There is an expectation from citizens that Government will share the names of the companies and their ultimate beneficiaries. This is necessary to remove suspicions that citizens always have that such mining deals are targeted to benefit the investors at the expense of the country’s development efforts. Currently, there are speculations that Freda Rebecca (now under Kuvimba Mining House) is likely to be one of the companies that will be considered to take up equity in FPR since it is one of the biggest gold producing companies in Zimbabwe. According to information that has been shared in the media, Government has a controlling stake (65%) in Kuvimba Mining House. However, this information cannot be verified by the public as there is no public disclosure of beneficial registry. Commendably, in January last year, Zimbabwe included beneficial ownership disclosure requirements in the new Companies and Other Business Entities Act [Chapter 24:31]. Under the new Company’s Act, companies are obligated to keep an up-to-date list of their beneficial owners and must frequently update the Registrar of Companies if there are any changes to the beneficial owners. However, the major challenge is that there is no public disclosure of the beneficial registry, a situation that may still cause corruption in the management of mineral revenue and money laundering to thrive.  As part of efforts to adopt international best practices on curbing corruption and improve extractive sector transparency, countries such as Nigeria and Zambia, for example, have embraced a public beneficial ownership registry in their laws.

More importantly, the Government should expedite its steps to adopt and implement international standards such as Extractive Industry Transparency Initiative (EITI) to address the transparency and accountability deficits in the mining sector. Adoption of EITI will help the country to fight the scourge of corruption by Government officials in the mining sector, improve rule of law, accelerate economic reforms, protect businesses’ investments, attract the much-needed Foreign Direct Investment and possibly trigger removal of restrictions.  


 Zimbabwe Environmental Law Association

“Celebrating two decades of promoting environmental justice through sustainable and equitable utilisation of natural resources and environmental protection.”

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Zimbabwe Environmental Law Association

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