RioZim's major shareholder GEM Raintree Investments Limited (Gril) invested into the local mining company without an indigenous partner, contrary to a widely held view that they had partnered Zimbabwean company, Raintree mining.
Indigenisation minister Saviour Kasukuwere has raised concern that Gril had not fulfilled the indigenisation requirements.
Gril is a 100% subsidiary of The Gem group, which is owned by foreigners and chaired by Harpal Randhawa. The investment company acquired a 24,97% shareholding in RioZim after its US$11,6 million rights issue. A circular said GEM was in partnership with a Zimbabwean company Raintree.
The GEM group has various operations throughout the world but it was GEM Dubai that underwrote the RioZim transaction. Initially, Raintree was roped in as the local partner. As a result, a company GEM Raintree Investments Limited, was incorporated in Mauritius.
The Securities Commission of Zimbabwe early last year sought to get clarity from the rights issue circular which had been published in newspapers. RioZim had just listed GEM as a US$3.4 billion fund and Raintree as a junior mining company focusing on exploration, resource establishment and verification. Its website on the circular was listed as www.raintreemining.com.
At that time some sections of the market questioned the nature of the local consortium saying that it was almost non-existent. This emanated from the fact that relevant details concerning the underwriters were left out in the circular.
Highly-placed sources say initially Raintree wanted to get the shareholding in RioZim but because of the large capital investment required they approached Ukrainians and GEM. The Ukrainians fell by the wayside and GEM and Raintree were supposed to get into a joint venture on the basis that GEM would need an indigenous partner.
However, GEM discovered they could partner Rio directly.
Raintree is said to be a company, which holds considerable mining claims but has no running operations in the country.
The new shareholders went on to appoint a director representing Raintree, John Travlos, on the board. He however resigned from the board sometime mid-year.
The sources say the transaction had been hurriedly done as RioZim was on the verge of collapse. This had resulted in quick board and management changes to make way for the new shareholder.
In a letter to the National Indigenisation and Economic Empowerment Board dated January 30 2013 seen by businessdigest, one of the directors of Raintree Mining wrote clearing the air on the continued confusion over who owns Gril.
The director acknowledged that in February 2012, Gem and Raintree held some discussions about Raintree being Gem's indigenous partner in Zimbabwe. "However, it was brought to the attention of GEM that they were permitted to invest in the country without the requirement of an indigenous partner," says part of the letter. This was because RioZim already had more than 50% indigenous shareholders.
RioZim has been battling work stoppage action at its mining complexes in Renco in Masvingo and at Empress Nickel Refinery in Kadoma.
The workers and the communities are demanding better living conditions and better wages from the new shareholders.