[miningmx.com] – LISTED as one of South Africa’s wealthiest businessmen in 2010, with a net worth of R1.4bn, Lazarus Zim has now virtually fallen off the investment radar – a judgement confirmed by the closure of his company, Afripalm Resources (Afripalm), earlier this month.
Employees at Afripalm’s Sandton offices were in November told to expect retrenchment notices. Two of seven employees were released at the beginning of December, and the balance at year-end. “The staff are gone from top to bottom,’ a market source tells Miningmx.
Afripalm’s website doesn’t exist any more and Unipalm Group, the Cape-headquartered investment house that helped back Afripalm, doesn’t list Zim’s company among its businesses. An inquiry to Unipalm’s Ragavan Moonsamy was not returned.
In a brief telephonic interview, however, Zim said: “Afripalm exists but I’m on vacation at the moment. Leave me alone, give me a break. We can talk in the new year.”
Zim told Afripalm employees the company was “not doing well’ owing to its exposure to the platinum market. The reference was to Afripalm’s indirect stake in Northam Platinum which it held through Mvelaphanda Resources (Mvela Resources) and that for various reasons had been diluted through the years to a 13% stake in Northam.
Amid poor market conditions, which had hurt cash flow and also placed strain on Northam’s share price, Afripalm Resources was unable to meet its finance obligations. Under terms of guarantee agreed with Nedbank, Afripalm relinquished its Northam shares which were subsequently bought by Government’s Public Investment Corporation (PIC).
The PIC bought the Northam stake for R25/share comparing favourably to Afripalm’s initial R30/share entry price. Analysts estimate, however, that in order to have repaid interest as well as the original capital to Nedbank, which helped finance the empowerment in Northam, the price should have been closer to R50/share.
Nedbank told Miningmx in September that it was able to recoup its full investment in Northam Platinum, and made no losses.
In any event, the severing of Afripalm’s interest in Northam capped two bad years for Zim who, a former business associate said: “Constantly made the wrong decisions and relationships’.
One bad decision was his investment in Pinnacle Point, the luxury resort development firm which had businesses in South Africa and Nigeria, but which subsequently collapsed amid accusations of fraud and double-dealing.
According to a Mail & Guardian article, dated February 17, Zim lost big in the Altx-listed business.
Around the same time the article was published, Zim was extricating himself from the influence of the Guptas, the wealthy Indian family and owner of Sahara computers, a business in which Zim had also invested. Zim seems to have achieved little associating himself with the Guptas who had ingratiated themselves with President Jacob Zuma.
Instead, he muddied his investment profile and came away with little except a memorable tete-a-tete with Business Day editor, Peter Bruce, on the newspaper’s observation that Zim, along with the Guptas, was a Zuma crony (n. pl cronies. A close companion; chum. Dictionary.com).
In April, Zim removed Atul Gupta as his alternate director at Northam Platinum by which time he had already publicly stated he had reversed out of the Gupta family investment in The New Age. “I am out of The New Age and other [Gupta] businesses,’ he told City Press.
By September 2012, the Sunday Times had Zim ranked 68th on its annual rich list with an estimated net worth of R419.6m which was just before the “sale’ of the Northam shares. Weeks later, he stepped away as chairperson of Telkom after only 20 months in the post, although he had indicated previously, he might only hold the position until 2013 in any event.
It’s hard to connect Zim’s sudden dip in fortunes by December 2012 with the swashbuckling pronouncement, reported in the Financial Times in February 2011, that Zim was seeking to bring a R21bn steel factory investment to South Africa with backer, Steel Authority of India (Sail).
But that was in the midst of ambitious plans by the Guptas to establish an entire steel chain industry in South Africa which included the iron ore from Sishen Iron Ore Company in which Imperial Crown Trading (ICT) appeared to have a mining permit, since stripped from it by the High Court, although that judgement is under appeal.
More difficult, still, is to suppose that Zim’s career might be at an end. According to Bloomberg, Zim was once associated to 47 boards in five different organisations across 13 different industries. At a point he was probably one of the more connected businesspersons in South Africa. Today, Zim’s remaining presence on a major board is restricted to Northam Platinum, Sanlam and Mondi. Given his divestment from Northam, he’s not likely to survive the company’s next annual general meeting.
Voted the African business leader of the year in 2005, Zim has led some of the country’s blueist of blue chips including Anglo American SA, where he was CEO, MTN International where he was MD, and M-Net and MIH, the Naspers’ businesses where Zim was CEO at both.
One way to look at his career so far is that Zim is a high-profile ‘victim’ of the coming storm in South African mining: when the mines ministry sets about counting the extent and quality of empowerment in mining in 2014 and discovers the legislative engineering that is the Minerals and Petroleum Resources Development Act has, from a sheer ownership perspective, failed to deliver.
But people who knew Zim in business also believe his current troubles are self-inflicted. “I’d say his ego has got him into trouble. There was once a proposal for Mvelaphanda Resources to buy Optimum Coal Holdings, but Zim wanted to revive an earlier Impala Platinum merger deal instead as that’s where his ambitions lay,” a source says.
As it turned out, Mvela’s bid for Impala Platinum was foiled. Like Zim’s Afripalm Resources, Mvela Resources couldn’t live up to the billing afforded it by South Africa’s empowerment legislation although unlike Afripalm it did recover some value for shareholders by selling on the massive Booysendal platinum prospect to Northam.
