ZimAlloys scouts for investors despite government threat to seize mining claims

ZimAlloys scouts for investors despite government threat to seize mining claims

HARARE, January 27 (The Source) – Zimbabwe’s second largest ferrochrome producer Zimbabwe Alloys is searching for investors to inject cash in its operations despite the risk of losing half of its mining claims to government.

A former subsidiary of Anglo American, ZimAlloys was sold to a consortium of local businessmen who included banker Farai Rwodzi and Savanna Tobacco founder Adam Molai in 2005. It was placed under final judicial management in 2013 due to poor performance attributed to the closure of its four furnaces, poor commodity prices and escalating costs.

The firm has not engaged in mainstream mining and is only processing chrome from its dumps which were estimated at four million tonnes in 2015.

“Tenders are hereby invited from interested parties to invest in Zimbabwe Alloys Limited,” reads a notice by the Judicial Manager on Friday.

“This invitation is not a prospectus and does not constitute or form part of any solicitation or invitation or any offer to the public to purchase the company or to subscribe to any ordinary shares in ZAL.”

ZimAlloys and Sinosteel’s Zimasco controlled about 80 percent of Zimbabwe’s chrome ore claims. In June last year, Government ordered that both the firms surrender half of their claims.

According to Mines secretary, Francis Gundanga, Zimasco held 2,530 claims covering 68,655 hectares, while ZimAlloys held 1,052 claims covering 39,175 hectares.

The Chinese-owned Zimasco has since ceded half its mining claims to the government. ZimAlloys is yet to comply with the directive and analysts say how the firm deals with the matter will be key in attracting any potential investor.

Mines minister Walter Chidhakwa last week told state-owned media that government was pressing ahead with its plans to repossess up to 40,000 hectares of chrome-rich idle ground from the sector.