ZIMBABWE’s government has terminated a US$130 million joint venture (JV) agreement with British investor Boustead Beef, five years after it was signed to revive the Cold Storage Company (CSC), the Zimbabwe Independent can reveal.
The decision means Boustead Beef will exit the massive operation amid growing concerns over its failure to meet the terms of the agreement.
The deal allowed CSC to terminate the transaction if certain conditions were not fulfilled. This shock move follows comments made two months ago by Mutapa Investment Fund (MIF) CEO John Mangudya, who hinted to the Independent that key aspects of the 2019 JV had not been met.
Despite the passage of time, CSC — once one of the region’s largest meat processors — remains in a state of disrepair. Mangudya, who oversees the MIF, a sovereign wealth fund managing high-profile state-owned enterprises, including CSC, was not alone in expressing concern.
At the official reopening of CSC in August 2022, Vice-President Constantino Chiwenga revealed that Boustead Beef had only injected US$24 million into the operation, far short of the commitments made under the Livestock Joint Farming Concession Agreement (LJFCA).
The JV, which led to a rebranding of CSC as Boustead Beef – Cold Storage Company of Zimbabwe, initially reignited hope for thousands of families, who relied on the once-thriving company.
CSC had held lucrative export quotas to European Union markets in the 1990s before collapsing due to extensive mismanagement.
However, sources with knowledge of the developments at CSC had suggested that there was little assurance that the company would ever return to its former glory. A letter dated August 2, 2024, addressed to the Attorney General’s Office and obtained by the Independent, confirms the termination of the agreement.
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The letter, signed by Garise Nheta, the government’s legal advisor in the transaction, states: “This letter serves to inform your office that we confirm that the agreement was duly cancelled".
The legal advisors acted on behalf of the permanent secretary in the Ministry of Lands, Agriculture, Fisheries, Water and Rural Development.
The letter further notes that any additional developments would be communicated in due course. A separate Supreme Court filing, also dated August 2, 2024, confirmed the cancellation.
“Take note that the second respondent (the Ministry of Lands, Agriculture, Fisheries, Water and Rural Development) hereby files the confirmation letter indicating that the agreement between the first respondent (Boustead Company Private Limited) and second respondent was cancelled,” reads the filing.
The CSC was the applicant in the case, with the Master of the High Court listed as the third respondent. During an interview with the Independent in June while on a trip to the Bahamas, Mangudya hinted that the decision to sever ties with Boustead Beef had already been made.
“We have identified that we need to deal with the joint venture, which is not functioning the way it was expected,” Mangudya said, who assumed the role after his term as central bank governor expired in April.
“That joint venture was signed on 19th of January 2019. Five years down the line, nothing much has happened on the ground. It needs to be reviewed.”
The 25-year JV gave Boustead control over CSC’s ranches, meat processing facilities, distribution centres, and residential properties in Harare, Gweru, and Mutare, with the promise to invest about US$130 million to rebuild the firm.
Of this, US$45 million was supposed to be invested in the first year, along with an annual rental payment of US$100 000 during the initial five years.
“We (need to) pay the creditors, which are there, and it needs money to ensure that we spruce up abattoirs in Marondera, Masvingo and Chinhoyi so that we can start slaughtering and then we export. I think Bulawayo is fairly okay,” Mangudya said in June.
“We have engaged the joint venture holder, which is Boustead Beef, and we have advised them of the need for us to review it.
“We have also been discussing with the business rescue practitioner on the same issue. So at the end of the day, we do things in a very amicable manner to ensure that we go forward,” he noted.
CSC’s creditors include the Zimbabwe Electricity Supply Authority, National Social Security Authority, the urban councils of Bulawayo, Harare, and Chinhoyi. The company entered corporate rescue in 2020.
The LJFCA allowed CSC to terminate the agreement if Boustead Beef failed to provide proof of funding totalling US$130 million within four months of signing.
Clause 4.1 of the agreement says Boustead Beef should, upon signing the agreement, show proof of funding to the tune of US$130 million within a period of four months.
CSC’s assets include several ranches, such as Maphaneni Ranch, Dubane Ranch, Darwendale Ranch, Umguza Chomfukwe Dubane Umzingwane-Railway Block Gwanda Ranch, Chivumburu, Mushandike Ranch (Meyers Rust), Zeederberg Belwigwe and Willsgrove Feedlot.
