Storm brews in mining sector

[G-khan]

Storm brews in mining sector

By Masimba Karikoga


A STORM is brewing within the mining sector following revelations that proprietors of Freda Rebecca Mine, Ashanti Goldfields, have made moves to entirely dispose of their Bindura-based subsidiary to a foreign company without Government approval.

If allowed to proceed, the deal would be a big slap in the face of the indeginisation drive, which stipulates that foreign companies intending to dispose of their businesses should give the first option to Zimbabweans or allow them to enter into partnerships with foreign owners.

Ashanti Goldfields — which is one of the leading mining companies in Africa — is based in Ghana.

Although the Minister of Mines and Mining Development, Mr Edward Chindori-Chininga could not be reached for comment yesterday, mining sources confirmed that Ashanti had already opened discussions with a number of companies to dispose of Freda Rebecca Mine.

It was not immediately clear whether any successful bidder had emerged from the negotiations.

Well-placed sources however, said Ashanti officials have already notified Mr Chindori-Chininga that they had almost concluded negotiations with foreign companies over a possible takeover of the mine.

"Government is particularly concerned that Ashanti opened negotiations without informing the relevant ministry as is the norm.

"The company, only notified the Ministry of Mines and Mining Development after negotiations had started. It is unlikely that the Government will give its blessings to the deal at this stage," said a source.

The general manager for Freda Rebecca Mine, Mr Innocent Munikwa refused to shed any light on the latest developments saying company policy forbade him from doing so.

He said he had dispatched a questionnaire from the Herald Business to Ashanti officials in Ghana who had not provided any response at the time of going to Press.

Efforts to get a comment from Ashanti media relations’ executive Kweku Awoti also proved fruitless.

However, Ashanti Goldfields has already indicated that it would delist from the Zimbabwe Stock Exchange if its intention to merge with other companies was approved by the Ghanaian government, which holds a 16,9 percent stake in the company.

South Africa’s mining giant Anglo Gold and London-based miner Randgold Resources are locked in a bidding battle for Ashanti.

Company officials said once the merger is completed, the group would list on the Johannesburg Stock Exchange, New York Stock Exchange, the Australian Stock Exchange and Euronext Paris and quoted on Euronext Brussels.

The officials also indicated that an application would be made to list the shares and Ghanaian depository shares of the combined group would trade as Ashanti-Anglo Gold.

There was no mention of the new company listing in Zimbabwe thereby fuelling speculation that Freda Rebecca was not on Ashanti's future plans.

Ashanti Goldfields has reported net earnings of US$14,8 million despite an eight percent slip in total gold production in the second quarter ended June 30, 2003.

The figure represents a 300 percent growth over a loss of US$3,7 million recorded during the same period last year.

However, the group dropped US$11 million to US$7,8 million in earnings excluding exceptional gains and related tax representing a 141 percentage decline in the corresponding period last year but up US$1 million on previous quarter.

Gold production at Freda Rebecca Mine also declined in the first quarter of the year to 9, 560 an ounce compared to 27, 214 an ounce in the second quarter of 2002.

However, there has been concern over the management style of top officials, which culminated in the suspension of managing director, Mr Abel Ntini in July.

This followed a visit by a six man delegation from Ghana which had come to assess the mine's operations.

Mr Ntini was accused of failing to motivate staff as well as "weakening the company to reduce its value as part of a strategy to precipitate a take over".

In May, the Zimbabwe Electricity Supply Authority, switched off electricity at the mine over failure to settle power bills.

Ashanti invested in Zimbabwe after acquiring Cluff Resources and proceeded to reverse list on the Zimbabwe Stock Exchange.

The group is primarily engaged in exploration, development and mining gold ores and has interests in processing limestone products, farming and the hotel business.

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