Barloworld steps up investment in Zimbabwe unit, taking Caterpillar straight to market after exiting Zimplow partnership

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South Africa’s Barloworld, the distributor of Caterpillar construction equipment, says it is stepping up its presence in Zimbabwe after exiting a 70-year partnership with Zimplow unit Barzem.

Barloworld said it took the “strategic decision to remove itself” from the joint venture, meaning Barloworld Zimbabwe is now the sole distributor of Caterpillar equipment in the country. 

All Barzem employees servicing Caterpillar customers were offered the opportunity to join Barloworld Zimbabwe, with more than 95% accepting the offer, said Andronicca Masemola, Barloworld Equipment’s Southern Africa CEO. “Barloworld has made significant investments in its wholly owned subsidiary, Barloworld Zimbabwe, in the form of new facilities and people.”

Barloworld’s termination of the distributorship has left Zimplow in a big financial loss, despite the expected recovery of the two sectors in the country. Zimplow is buying out Barloworld’s 49% stake in Barzem, and is now negotiating with other suppliers to sustain supplies to local miners and construction companies.

Zimplow announced that it will “protect shareholder value by acquiring Barloworld’s 49% shareholding in Barzem at a discount in line with the remedies provided” in Barzem’s shareholder agreement.

Godfrey Manhambara, the board chairman for Zimplow said: “The full year to end December 2022 had been projected to be a strong year before the termination of the Caterpillar distributorship by Barloworld given the strong metal and mineral prices.”

Zimplow is now transitioning the Barzem subsidiary to a new company, after securing “affiliations and accreditations with key suppliers to be able to continue looking after our major customers’ huge fleet from an earth moving equipment” perspective.

“This has assisted the business unit to secure service level agreements, repair and maintenance contracts with some of the huge fleet operators – amassing the scale in short space of time, required to provide effective supply chain solutions and cost effective maintenance strategies,” said Manhambara.

For Zimplow, 2022 started on a positive note, with strong demand being experienced across all segments. The current year appears to be better on the back of a better rainy season and ramping up of mining output across key minerals such as gold, lithium, coal and platinum among others.

“The operating environment remains unpredictable. However, with the growth being experienced in the mining and agricultural sectors, our anchor segments, augmented by the team’s new look, there is belief that the Group will continue to deliver strong performances,” noted the company.

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Business Report/News24