Vulture capitalists circle resurgent RioZim

Itai Mazire

A fresh corporate raid is underway on RioZim, with a shareholder filing an application last week at the High Court’s Commercial Division to force the diversified miner into corporate rescue, alleging the group is “technically insolvent” and “financially distressed”.

The move comes barely four months after the High Court of Zimbabwe dismissed a similar bid by the Zimbabwe Diamond and Allied Minerals Workers Union and former employees.

In that earlier ruling, Justice Mandaza rejected the applicants’ technical objections, ruling that the board resolution met “the basic threshold and is valid”.

He also dismissed claims that RioZim had acted inconsistently by invoking corporate rescue protections in another matter while opposing the current application, saying “the first respondent cannot be said to have approbated and reprobated.”

But the latest legal salvo, filed just last week, seeks to place the listed entity under the supervision of a corporate rescue practitioner to prevent it from being liquidated.

The same shareholder has also petitioned the Zimbabwe Stock Exchange and the Securities and Exchange Commission of Zimbabwe to intervene and stop the board meeting that aimed at clearing the company’s debts through strategic disinvestment.

Corporate raiders, often called “vulture capitalists” are investors who stalk distressed, failing or undervalued companies to acquire them at a discount and sell for profit.

However, analysts argue this latest move is a bizarre attempt to target a company that weathered an earlier downturn and has managed to recover from a lean patch, marching its way to becoming a flourishing business that contributes positively to Zimbabwe’s economy.

“This is a predatory move targeting a company that has moved from survival to strategic growth,” one Harare-based analyst said.

Since the first rescue attempt failed, RioZim’s operations have dramatically improved.

Following a landmark capital-raising exercise that provided much-needed funding to restart and stabilise operations, Renco Mine reopened and has since produced over 190 kilograms of gold, with plans to improve production underway that will soon result in increased output.

The group is also focusing on restarting the Cam and Motor mine in Kadoma, which was undergoing care and maintenance due to transitional ores and production line challenges.

The mine is now on course for a startup process involving a major overhaul of the processing plant.

Mining activities are already underway after a detailed analysis by geologists targeting rich ores that would bring much-needed revenue to sustain and improve productivity.

RioZim has demonstrated strong resilience, significantly raising production capacity at Renco and confirming the viability of its renewed operations.

The restart has safeguarded over 1 200 jobs, ensuring continued livelihood for families and communities that depend on the mine.

Contrary to the new applicant’s distress claims, the company says it is now in a position to settle creditor obligations and ensure consistent payment of employee salaries.

Operational gains have been supported by a favourable international gold market, with sustained high gold prices strengthening profitability prospects as global demand for precious metals remains robust.

RioZim’s revival, the company states, is not accidental.

It is a deliberate, well-orchestrated process anchored on a clear vision, restoring operational reliability, rebuilding financial credibility and leveraging Zimbabwe’s strong mining fundamentals to unlock the country’s wealth and contribute to the nation’s economy.

The group’s asset portfolio remains substantial, comprising the Renco, Cam Motor, and Dalny gold mines, together with a growing presence in base metals spanning gold, coal, nickel, copper and chrome.

That asset base continues to underpin its valuation, making it an attractive target for corporate blackmail by investors seeking exposure to distressed or recovering mining assets.

The reopening of Renco and Cam and Motor is not only symbolic as a precursor to RioZim rising back to greatness, but also a harbinger of financial stability and growth.

It marks the end of a difficult phase where constrained liquidity, power outages and operational interruptions forced the company into a holding pattern.

While it remains unclear who is behind the machinations to take over the company, it is clear as day that the group has become a lucrative target.