SA tycoon sues ‘corrupt’ Reserve Bank of Zimbabwe for $132 Million

May 20, 2019
| Report Focus News

Metallon Corporation, the Zimbabwean gold producing company owned by South African business mogul Mzi Khumalo, has announced that it is suing the Reserve Bank of Zimbabwe for failing to pay $132 million for gold delivered to Fidelity Printers and Refiners, a subsidiary of the Reserve Bank.

Zimbabwean gold miners are required by law to sell their output to Fidelity Printers and Refiners, which buys the gold in US Dollars and then exports the gold. Eversince 2016, a severe dollar crunch has rendered the Reserve Bank incapable of fulfilling its obligations and as a result, RBZ and Fidelity Printers and Refiners has paid for the gold in in electronic dollars known locally as RTGS or “Zollars.”

Zollars originally traded at par with the U.S. dollar but their value has since collapsed on the black market. In a press release Metallon published on its website, it said the discrepancy had led to a shortfall of $132,748,521.

Metallon said the currency issue had put the company in financial distress, stifled output from Metallon’s mines in Zimbabwe and led to job losses. Metallon plans to take legal action, possibly in a jurisdiction outside Zimbabwe, if it does not receive a satisfactory response from the Reserve Bank within 60 days.

The Central Bank has denied it was in arrears with the company.

In April, Metallon Corporation, a gold mining group owned by Mzi Khumalo, one of South Africa’s most prominent mining entrepreneurs, filed for business rescue for two of its subsidiaries, Goldfields of Mazowe Limited and Goldfields of Shamva Limited, in order to protect the companies’ assets from being seized by creditors.

Metallon is Zimbabwe’s largest gold mining company, operating four gold mines throughout the country. The company, which is headquartered in London, was founded in 2002 when Mzi Khumalo acquired Lonmin’s Zimbabwean gold assets for $15.5 million. Khumalo, 63, is one of South Africa’s most recognizable businessmen and a former anti-apartheid activist. Apart from Metallon, Khumalo owns extensive business interests in the financial services and infrastructure industries.