Caledonia Mining Corporation plc


About Zimbabwe

Zimbabwe had an excellent infrastructure system comprising good roads, railways and electricity generation. Lack of investment over the last 10 to 15 years means that much of the general infrastructure in Zimbabwe has deteriorated and substantial investment will be required to rectify and remediate it.


Notwithstanding the general deterioration in Zimbabwe’s infrastructure, Blanket has adequate access to the specific infrastructure it requires in order to operate efficiently:

Zimbabwe’s national highway system remains serviceable and most of Blanket’s consumable and equipment supplies are transported to the mine by road from Johannesburg, in South Africa. Blanket has funded the maintenance of the minor road that connects the mine to the national highway and heavy goods vehicle can easily access the mine without impediment throughout the year.

Zimbabwe produces approximately 50% of Zimbabwe’s total electricity demand and in 2010 this resulted in considerable interruptions to power supplies at Blanket. To address this situation, Blanket installed four, 2.5 MW diesel generators which allow the mine and all of the metallurgical operations to run normally during any interruption to the main electricity supply. In addition, Blanket has entered into an un-interruptible power supply agreement with the state-owned electricity supplier. Although the power supplied in terms of this agreement is more expensive than previously, it is substantially cheaper than the electricity generated by the stand-by diesel generators. Following the conclusion of the un-interruptible power supply agreement, the frequency of power interruptions has diminished to an acceptable level.

Much of Zimbabwe’s social infrastructure (e.g. water treatment and healthcare) has deteriorated and there have been outbreaks of illness such as cholera and typhoid amongst the general population. The majority of Blanket’s employees live with their dependants on the Blanket Mine village where they are provided with potable water (treated at blanket’s on-site treatment facility) and healthcare facilities.
Zimbabwe has historically had a strong and highly effective educational system. Notwithstanding a chronic shortage of funding in recent years, the general levels of education in the Zimbabwean workforce are very high and this is reflected in Blanket’s well-educated and highly skilled workforce.

Caledonia in Johannesburg, South Africa provides procurement services to Blanket. This means that Blanket has ready access to consumables and specialist technical services at highly competitive prices.


Zimbabwe has a long history of mining and there are known occurrences of over 40 minerals in Zimbabwe, mainly gold, nickel and copper but also including coal, diamonds, PGE’s and chromite. The Zimbabwean mining industry has operated for over 100 years and prior to the collapse of the economy from 2005 onwards, there was a well-established base of mining skills, expertise and local suppliers.

Zimbabwe has been a gold producer for over 100 years. Gold production in Zimbabwe reached a peak of 29.7 tonnes in 1999, at which time it was ranked as the 16th largest gold producer in the world. Gold production fell to only 3.5 tonnes in 2008 and by the end of 2008 all the gold mines in Zimbabwe had been forced to close due to the failure of the Reserve Bank of Zimbabwe (“RBZ”) to pay for gold which, under the prevailing regulations prior to February 2009, required all gold producers to sell gold to the RBZ. Most of the Zimbabwean gold mines re-opened in the course of 2009 following the liberalisation of the commercial environment for gold producers. Gold production in 2009 was approximately 5 tonnes and is estimated to have increased to approximately 10 tonnes in 2012 and 13 tonnes in 2013.

In the period from October 2008 until Blanket resumed operations in April 2009, Blanket continued to pay and provide food and basic necessities to all of its over 500 employees, thereby successfully retaining the majority of the skills embedded in its work force.

The Zimbabwean Government recognises that the mining industry and particularly the gold mining industry is crucial to the growth and re-construction of the Zimbabwean economy. Accordingly in February 2009, the Zimbabwean Government relaxed on restrictions over foreign payments, which means that it is now relatively easy to make payments of less than $5million to foreign suppliers, lenders and investors without the requirement for Central Bank approvals. Caledonia receives remittances from Blanket in the form of payments for goods and services procured by Caledonia on behalf of Blanket; a management fee payable by Blanket to Caledonia; payments of dividends from Blanket to Caledonia and the repayment of facilitation loans which were extended by Caledonia to the Indigenous Zimbabweans who acquired shareholdings in Blanket.

On January 28, 2014 Caledonia announced that as a result of new regulations introduced by the Zimbabwe Ministry of Finance, all gold produced in Zimbabwe must now be sold to Fidelity Printers and Refiners Limited (“Fidelity”), a company which is controlled by the Zimbabwean authorities and which is now responsible for the final refining and marketing of all gold produced in Zimbabwe. Accordingly, all of Blanket’s production has subsequently been sold to Fidelity. Blanket receives 98.5% of the value of the gold within a maximum of 7 days of a sale to Fidelity. Blanket has received all payments due from Fidelity under these new arrangements in-full and on-time.

Safety Health and Environment

During October 2011 Blanket received two prestigious safety awards. Blanket’s Occupational, Safety and Health (“OSH”) policy and procedures have been audited by the National Social Security Authority (the “NSSA”). The NSSA is a public institution in Zimbabwe and was established as an initiative of the Government of Zimbabwe with the objective of introducing social protection to Zimbabwean workers and their families. The NSSA audit covered inter alia, Blanket’s OSH policies, procedures, training and management systems. As a result of this audit, Blanket was awarded the gold medal in the Mining and Quarrying sector in Matabeleland and also the bronze medal across all industrial sectors in Zimbabwe.


The prevailing taxation regime for mining companies in Zimbabwe includes the following provisions:

  • Corporate Income tax at 25,75%
  • Exploration, development and capital costs can be expensed against profit in the year incurred or carried forward to be expensed against the first year of production
  • Royalty at 7% of turnover with effect from 1 January 2012 to September 30, 2014. With effect from 1 January 2014, the royatly was no longe deductable for the purposes of calculating profit that is chargeable to Zimbabwean Income Tax. Wwith effect from 1 October 2014, the royalty rate was reduced from 7% to 5%.
  • Exemptions on customs duty and import taxes on capital items during exploration and development phases
  • Withholding tax on dividend payments to non-Zimbabweans and on services provided by foreign suppliers at a rate of 5% to 15% depending on the location of the payee.

Indigenisation & Local Ownership

Under the National Indigenisation and Economic Empowerment Act of 2007, 51% of the equity of all commercial enterprises in Zimbabwe was required to be owned by Indigenous Zimbabweans.

Effective from September 5, 2012 Caledonia was fully compliant with this legislation as a result of the following transactions:

  • 16% was sold to the National Indigenisation and Economic Empowerment Fund;
  • 10% was sold to Blanket Employee Trust Services (Private) Limited, for the benefit of the present and future managers and employees of Blanket;
  • 15% was sold to identified Indigenous Zimbabweans; and
  • 10% was donated to the Gwanda Community Share Ownership Trust. Blanket also made a non-refundable donation of US$1.0 million to the Trust as soon as it was established and paid advance dividends of US$4million before the end of April 2013. The Trust will receive no further dividends from Blanket until the advance dividends have been repaid by the offset of future dividends arising on the Blanket shares that are owned by the Trust.

Caledonia facilitated the vendor funding of these transactions: i.e. Indigenous Zimbabweans who have purchased their interest in Blanket will repay their outstanding facilitation loan by sacrificing 80% of their future entitlement to Blanket dividends. Outstanding balances on the facilitation loans attracted interest at LIBOR plus 10% up to December 31, 2016, subject to moratoria on interest accrual during periods when Blanket did not pay dividends. From January 1, 2017, the interest rate was reduced to the lower of a fixed rate of 7.25% per annum, payable quarterly, or 80% of the dividend that is attributable to Blanket’s indigenous shareholders paid in a quarter by Blanket. The reduction in the interest rate reflects the general lowering of interest rates in Zimbabwe.

Following the repeal of the National Indigenisation and Economic Empowerment Act in 2018, Caledonia agreed a transaction to purchase 15% of Blanket from the indigenous Zimbabwean shareholders in January 2020. Following the completion of this transaction in January 2020 the shareholding of Blanket is as follows:

  • 64% owned by by Caledonia and wholly-owned subsidiaries of Caledonia
  • 16% owned by the National Indigenisation and Economic Empowerment Fund
  • 10% owned by Blanket Employee Trust Services (Private) Limited
  • 10% owned by the Gwanda Community Share Ownership Trust