CABINET has approved a joint venture between the Cold Storage Company (CSC) and a United Kingdom firm, Boustead Beef (Pvt) Limited, which will see the investor injecting US$130 million into the meat processing firm.
This was said by Information, Publicity and Broadcasting Services Minister Monica Mutsvangwa during a post- Cabinet Press Briefing in Harare on Tuesday.
“Cabinet was informed by Finance and Economic Development Minister Professor Mthuli Ncube that the CSC is to be revitalised through a Concession Agreement under Rehabilitate, Operate and Transfer (ROT) terms,” said Minister Mutsvangwa.
She said under the agreement, Boustead would “raise and invest a minimum of US$130 million into CSC over five years”.
The funds will be for capital expenditures and working capital for the business. It will also pay off CSC’s financial debts totalling US$42 530 597 and pay rentals of US$100 000 per annum during the first five years of the concession agreement.
Boustead will also take over and manage CSC ranches in Maphaneni, Dubane, Umguza, Chivumbuni, Mushandike, Willsgrove and Darwendale for an initial period of 25 years. Minister Mutsvangwa said Boustead will take over and run CSC abattoirs in Bulawayo, Chinhoyi, Masvingo, Marondera and Kadoma for an initial period of 25 years.
It will also take over and manage CSC’s distribution centres and residential properties in Harare, Gweru and Mutare for the same period.
Minister Mutsvangwa said the benefits to accrue to Zimbabwe from the investment agreement include, “increased capacity utilisation at CSC ranches and abattoir plants; increased prospects for restoration of the enterprise’s viability and higher throughput; stemming of further deterioration of equipment which is currently lying idle, and the growth of the local livestock and beef industry”.
Asked if 25 years was not too long while CSC was being operated by the private investor, Prof Ncube said the period was sort of a standard across the world, and can stretch to 35 years, since they are funded by debt.
Prof Ncube said 25 years would allow the investor to recoup their US$130 million and then give the CSC back to Government.
He said there are numerous advantages which include bringing back abattoirs to full functionality, providing raw materials to industry such as fat for soap making, and setting up out-growers.
Boustead Beef also plans to export products to countries like China, Botswana, and Angola, said Prof Ncube.
“So the benefits are incredible for the economy. We are happy with the progress so far and as Government are supporting them to make sure that they can really resuscitate CSC to its former glory,” said Prof Ncube.
He explained that Boustead Beef is “already on the ground” and has audited CSC’s infrastructure.
In the first year, Boustead is expected to invest US$45 million, with US$10 million set to be channelled towards the purchase of cattle to replenish the stock.
The herd had dwindled to 341 animals across the country as of March 2017.
Boustead will invest US$6 million into abattoirs’ refurbishment, canning factory, distribution infrastructure, working capital and IT systems while US$500 000 plant equipment has been ordered and paid for.
The equipment is ready for shipping and would be installed upon arrival. The investor has started paying employee salaries from February this year and is also cleaning its facilities. Boustead has also started buying cattle from South Africa and is also looking at restocking through facilities in Botswana, while some tenants who were occupying CSC ranches without permission have been relocated.
Illegal hunting in CSC ranches is also being stopped.
Willowvale Motor Industries would assemble Boustead’s vehicles, creating backward and forward linkages.
The revival of CSC is in line with the Transitional Stabilisation Programme, which seeks to arrest the rot in most parastatals.