Source: RioZim loses Sengwa coal concession. . . this comes after 30-year investment deadlock – herald
Martin Kadzere
DIVERSIFIED resource group RioZim Limited has lost its mining special grant for the Sengwa coalfields after failing to secure the investment required to develop the multi-billion-dollar project.
The Zimbabwe Stock Exchange (ZSE)-listed company, which jointly owned the concessions with multinational mining giant Rio Tinto plc on a 50/50 percent shareholding basis, had been scouting for financiers for the thermal power project since the early 1990s, but was unable to reach a final investment closure.
This marks a significant setback for the firm, which had planned to establish a 2 800-megawatt power station in the Midlands province to alleviate the national electricity deficit.
The Sengwa project has seen numerous high-profile suitors over three decades.
Nigerian billionaire Mr Aliko Dangote previously expressed strong interest and submitted a firm bid for the project, but, like many before and after him, the deal failed to materialise.
The list of other international investors that explored the project without success includes GE Power Systems (United States), SinoHydro, China Power, State Power Investment Corp and the State Nuclear Power Research Institute of China.
The project’s collapse was accelerated in recent years by a global shift away from fossil fuel financing.
While the Industrial and Commercial Bank of China had initially issued a non-binding expression of interest, the lender reportedly withdrew in 2021 following China’s pledge to stop funding overseas coal-fired plants.
RioZim attempted to make the project more attractive by proposing a phased development model, breaking the US$3 billion project into four 700MW stages, but undercapitalisation and the lack of a bankable power purchase agreement remained insurmountable barriers.
The Sengwa coalfields hold an estimated 1,3 billion tonnes of coal reserves and the Government’s decision to revoke the grant indicates an intention to reallocate the resource to other investors.
This move aligns with the Government’s “use it or lose it” policy, which mandates the repossession of unutilised concessions to prevent entities from holding onto resources for speculative purposes.
In a letter addressed to RioZim director Mr Wilson Gwatiringa, the Permanent Secretary in the Ministry of Mines and Mining Development, Mr Pfungwa Kunaka, advised on the revocation of the company’s coal mining rights.
“Following the cancellation of your coal mining special grant number 849 (Sengwa Colliery) and your subsequent appeal against the proposed cancellation, please be advised that the appeal was unsuccessful,” he said.
“By notice of this letter, Special Grant Number 849 is hereby cancelled with immediate effect in terms of the provisions of the Mines and Minerals Act [Chapter 21:05].”
Following the directive, Midlands provincial mining director Mr Khumbulani Mlangeni informed the Minerals, Fauna and Flora Unit in Gweru that the effect of the cancellation was that there was no longer any current mining title in the area, rendering the 1,3 billion-tonne resource open for reallocation.
“Any mining after the date of the memo is now illegal,” said Mr Mlangeni.
“Your good office is requested to ensure no mining activities are taking place in that area.”
In a direct response to the Government’s decision, RioZim has since filed a court challenge against the cancellation of its mining title rights, Mr Gwatiringa told this publication.
“I will not comment. The Sengwa case is in court,” he said.
It has since been established that RioZim is yet to publish a cautionary statement regarding the revocation of its Sengwa coal concession, raising concerns over a potential breach of ZSE listing rules.
Under the exchange’s continuous disclosure requirements, listed companies are mandated to issue a cautionary statement to the investing public regarding any price-sensitive information or material changes to the group’s asset base.
According to the ZSE Listing Requirements (Statutory Instrument 134 of 2019), a listed company must issue a cautionary statement upon becoming aware of any price-sensitive developments or negotiations likely to materially affect its share price, such as mergers, acquisitions and disposals.
Market analysts noted that the loss of a strategic resource of this magnitude — the 1,3 billion-tonne Sengwa coalfield — constitutes a material development that could significantly impact RioZim’s valuation.
“By failing to timeously disclose the unsuccessful appeal and the subsequent cancellation of Special Grant Number 849, the company may be in violation of transparency protocols designed to protect shareholder interests and ensure an informed market,” observed one market analyst.
Grappling with significant financial and operational headwinds, RioZim is seeking a massive US$200 million capital injection to revive its struggling gold, diamond and base metal portfolios.
The group’s majority shareholders, who control a combined 83 percent stake, have reportedly offered to sell their interest for US$30 million to facilitate a total corporate revival.
The controlling block is held by three entities — EM RioZim Investments (44,01 percent), RZM Murowa (34,36 percent) and RioZim Foundation (4,92 percent) — all of which are under one umbrella entity.
Under the proposed transaction, the majority owners would receive a cash payout while potentially retaining a 10 percent legacy shareholding. The acquisition would trigger a mandatory offer to minority shareholders, in line with ZSE listing rules.
The proposed turnaround strategy involves delisting the company from the ZSE to implement restructuring measures away from public scrutiny, with the potential for a future relisting on the Victoria Falls Stock Exchange (VFEX).
Additional plans include raising debt capital and securing technical partners for various subsidiaries in exchange for equity.
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