- The acquisition is expected to positively impact the performance of Zimplow's business unit, Tractive Power Solutions
- This allows Zimplow to expand its capabilities and broaden its service offerings in the construction, mining, and infrastructure industry
- Barzem is involved in the earthmoving and heavy equipment industry
Harare- Zimplow, a company listed on the Victoria Falls Stock Exchange (VFEX), is making significant progress towards acquiring the 49% equity ownership of Barzem, a company currently under the ownership of Barloworld Equipment UK. According to the Group, having 100% access to Barzem presents limitless opportuniuties which this article seeks to unpack. This data is according to the Group's latest trading update.
Zimplow specializes in the manufacturing and distribution of agricultural equipment, mining supplies, and diverse engineering solutions. It then boasts a comprehensive range of products in its portfolio, encompassing agricultural implements, irrigation equipment, generators, pumps, and mining machinery.
Given the economic environment in Zimbabwe anchored by mining and agriculture, infrastructure development especially under the leadership of President Emmerson Mnangagwa, access to Bazerm will be a veteran move by Zimplow.
Barzem is involved in the earthmoving and heavy equipment industry. By integrating Barzem into its operations, Zimplow will expand its footprint in the construction, mining and infrastructure industry.
This will positively affect the performance of the company's new business unit, Tractive Power Solutions (TPS). TPS was established in late 2022 to offer earthmoving and heavy equipment solutions to customers, and it has been actively expanding its presence in strategic locations such as Bulawayo, Mutare, Hwange, and Chiredzi. The business unit has been experiencing notable growth, with a 53% increase in performance from the first quarter to the second quarter of 2023. In the latest third quarter, TPS achieved a remarkable 82% growth compared to the previous quarter.
Closing this transaction is expected to provide the group with the necessary momentum to finalize the acquisition of an original equipment manufacturer (OEM). Once the Barzem transaction is completed, the group plans to make the necessary announcements regarding the OEM acquisition. The successful conclusion of these transactions will be significant for the group's strategic growth and expansion.
Zimbabwe is actively involved in mining projects centered around gold, platinum group metals (PGMs), and lithium. In terms of lithium production, Zimbabwe holds the position as the largest producer in Africa and ranks sixth globally. The country is one of the major producers of PGMs, specifically platinum, securing the second position globally. Lithium and PGMs, particularly platinum, play a crucial role in the production of electric vehicles (EVs) and battery electric vehicles (BEVs). While BEVs and EVs primarily rely on lithium-ion batteries for energy storage, PGMs have a significant presence in various aspects of the technology. For instance, PGMs are utilized in electric contacts and charging infrastructure, contributing to the efficient operation of these vehicles.
The combination of lithium-ion batteries and PGMs in the automotive sector underscores the importance of these resources in driving the development and adoption of electric vehicles. Zimbabwe's significant presence in lithium and PGM production positions the country to contribute to the global shift towards cleaner and more sustainable transportation solutions. With the flourishing mining industry in the country, there is a projected upswing in the demand for earthmoving and heavy mining machinery. This trend presents a favorable opportunity for Zimplow, as the majority owner of Barzem, a well-regarded supplier in the industry.
The key to capitalizing on this situation lies in securing substantial contracts with construction companies and the government, both for the rental and purchase of these machines, while maintaining a competitive pricing strategy.
It is worth noting that the mining sector is anticipated to experience substantial growth and contribute significantly to Zimbabwe's gross domestic product (GDP). The government's economic growth strategy under the Second Republic, places a strong emphasis on the mining industry as a fundamental driver of economic development.
The acquisition of Barzem holds significant importance due to the construction sector's current boom. The government has numerous infrastructure projects that were promised during the 2018 elections, many of which are still ongoing. There is a growing demand for road rehabilitation and construction projects, as the majority of Zimbabwe's roads are in a deteriorated state. Furthermore, the government's focus on boosting agriculture through irrigation techniques is driving the construction of dams.
In addition to government initiatives, there has been a surge in housing construction led by private companies like Mashonaland and FBC Holdings, among others. All of these construction projects require earthmoving machinery, creating an opportunity for Zimplow as a reputable supplier to meet this demand. There has been a shortage of cement in the third quarter of 2023, resulting in government proposing free imports of the commodity. This highlights the ongoing construction activity and the potential for increased demand for construction machinery and equipment.
With the complete takeover of the Bazerm unit, Zimplow's revenue is expected to experience growth, thereby adding substantial weight to its bottom line. This acquisition will strengthen
Through the acquisition, Zimplow will be able to broaden its product portfolio and solidify its market position. Barzem's inclusion will grant Zimplow access to a wider array of equipment and technologies, empowering the company to provide enhanced services to its clientele in the agricultural, mining, and construction sectors. This expanded range of offerings will enable Zimplow to meet the diverse needs of its customers and reinforce its presence in the market.
Therefore, the acquisition of Barzem strengthens the company's position in the earthmoving and heavy equipment sector, aligning with the surge in mining investments and infrastructure projects in Zimbabwe.
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