Tuesday, February 23, 2016

Diamond Firms Get 90 Days to Wind Up in Zimbabwe
February 23, 2016
Lloyd Gumbo Senior Reporter

Government has given diamond mining companies in Chiadzwa and Chimanimani 90 days to remove their equipment and other valuables from the mines after it stopped their operations yesterday.The firms whose mining special grants expired and were not renewed will, however, be expected to hand over all diamond products to Government personnel who have been deployed there.

Mines and Mining Development Minister Walter Chidhakwa announced this development during a Press conference in Harare yesterday.

Representatives of the mining firms attended the Press conference after the decision had been announced to them earlier in the day.

Special grants in the two areas were issued to Anjin, Diamond Mining Corporation, Jinan, Mbada Diamonds, DTZ Ozgeo, Rera, Gye-Nyame, Kusena and Marange Resources

“Since they no longer hold any titles, these companies were notified this morning to cease all mining activities with immediate effect and to vacate the mining areas covered by special grants for diamonds,” said Minister Chidhakwa.

“They have been given 90 days within which to remove their equipment and other valuables. During this period, access into the premises will be by request, which will be considered by the Ministry of Mines and Mining Development.”

Minister Chidhakwa said Government decided to consolidate all diamond mining in Zimbabwe into one company — Zimbabwe Consolidated Diamond Company to improve efficiency and accountability.

He said this was the trend in other diamond producing countries in the region such as Botswana, Namibia and Angola.

He said the consolidated company’s mandate was carrying out exploitation, mining, marketing and value-addition programmes for the diamond resource in Zimbabwe.

Minister Chidhakwa said it was therefore important for Government to consult all stakeholders in order to come up with an inclusive and mutually beneficial consolidation process.

“Consultation with the existent diamond companies which took over seven months to allow for extraordinary shareholder general meetings achieved no consensus between Government and the companies on the consolidation issue.

“There was evidence of the desire by the companies to extend the process of negotiation for undeterminable periods at a time when the industry is in decline and definitely in trouble. This was not and remains an unpalatable choice for the Government.

“Marange Resources, DMC and Jinan held EGMs. Marange Resources accepted the proposals. DMC and Jinan decided against the consolidation proposals. Mbada and Anjin have been dragging their feet and have up to now not formally made their decision.

However, the investors in the JV companies, Grandwell and AFECC, respectively made unilateral submissions to the Government opposing the consolidation proposals,” said Minister Chidhakwa.

He said Government had shut its doors for further negotiations with the firms since they did not show interest in consolidation for the past seven months.

Minister Chidhakwa said the consolidated firm was meant to benefit both the companies and Zimbabwe.

He said the consolidated firm would own concessions in Chiadzwa, Zvishavane diamond kimberlites currently under Murowa and Beitbridge diamond kimberlites under River Ranch Diamonds as well as those to be discovered in future.

“For seven months, we opened our doors. For seven months, my teams tried to talk to the companies. For seven months, we did not get a positive response. Surely what more opening of doors would one ask for? No, we will not reconsider. This is the final position of Government.

“I want to say this is in one way a sad day and in another way a good day. A sad day because we have to part ways in this manner. We extended a hand of friendship to the companies. We said we wanted to work with you in one big happy family.

“We said we wanted you to pool your resources — financial as well as technical and technological. And we said we would make available to all of you as one big family, as one big company, we said we would make available to you all the diamond deposits from Zambezi to Limpopo,” said Minister Chidhakwa.

He said, however, all the companies still refused, in the process leaving Government with no choice but not to renew their licences.

The minister, who was flanked by Home Affairs Minister Ignatius Chombo and Mines permanent secretary Professor Francis Gudyanga, said it was now incumbent upon the consolidated company to deliver and contribute to the economy.

Government owned 50 percent shareholding in all the companies except Marange Resources it wholly owned.

Minister Chidhakwa said it was therefore inevitable that the companies came up with mechanisms to share their assets and liabilities such as statutory obligations and salaries.

A Chinese national who probably represented Jinan or Anjin Investments queried if Government was not breaching an investment agreement between the Zimbabwean Government and the Chinese government where the two countries were expected to protect investments by their countries.

He added that Government had not invited them to renew their licence.

But Minister Chidhakwa said the agreement did not allow companies investing in either countries to defy the law.

Zimbabwe orders diamond miners to halt operations

Companies have been told to leave behind equipment and vacate their premises

Cecilia Jamasmie

Zimbabwe’s Minister of Mines has ordered all diamond producers operating in the diamond-rich Marange area to halt mining effectively immediately, after the government didn’t renew their licenses.

The firms are meant to leave behind equipment and vacate their premises and a newly created state-owned company, Zimbabwe Consolidated Diamond Co., is expected to take over, The Independent reports.

The move follows a refusal by six mining companies to accept the nationalization of their assets.
The government’s decision follows a refusal by six mining companies, including Anjin Investments, Diamond Mining Co., Jinan Mining Ltd., Kusena Diamonds, Marange Resources Ltd. and Mbada Diamonds to accept the nationalization of their assets.

Minister Walter Chidhakwa said private firms affected, which include Chinese and Russian firms, may negotiate joint ventures with the state mining company. He also said they had 90 days to vacate the area.

Most of the companies in Zimbabwe, one of the world’s top diamond-producing nations, concentrate on alluvial diamond mining, which requires less capital as they are easily extractable through open cast mining.

But the country has practically run out of alluvial gems deposits and existing local miners had argued they had neither the expertise nor the resources to search for new deposits underground.

Last year, Chidhakwa said the decision to merge all diamond miners aimed to bring more transparency and accountability in the sector. It is also supposed to enable small and medium-scale miners to extract kimberlite diamonds, which are capital intensive.

Zimbabwe: Surrounded By Diamonds, Villagers Go Hungry in Drought-Hit Zimbabwe

By Andrew Mambondiyani
Thomson Reuters Foundation

Mutare — Shylet Mutsago, a 63-year-old who lives near the diamond fields of Marange, cannot hide her anger over how mining in this gem-rich part of eastern Zimbabwe has failed to improve the lives of local people.

From a distance she watches as companies turn the ground over in search of the alluvial diamonds, releasing clouds of red dust into the sky.

"Our hopes of benefiting from the diamonds are gone," she said. "And with this severe drought we are now placing our lives in the hands of God. We are living close to these diamond mines, yet we are starving."

As crops fail due to a lack of rain, some villagers can no longer afford even one proper meal a day, and are surviving on wild fruits like baobab, Mutsago said.

Amid frequent drought, people in Marange had hoped the diamond industry would invest in reviving irrigation schemes. National law requires mining companies to help local communities develop.

Though prone to dry spells, the situation in Marange has been exacerbated by the current El NiƱo weather phenomenon, which has brought drought to large swathes of Zimbabwe.

The government has declared a state of disaster in most rural parts of the country, saying that 2.44 million people - around a quarter of the population - need food aid.

Irrigation schemes in and around Marange, most constructed decades ago, are no longer operating properly as small-scale farmers cannot pay to maintain or replace aging equipment.

"Just a few diamond stones could have helped change our lives, but no one seems to care," said Mutsago.

Her frustration is shared by many in Marange, an area home to over 80,000 people.

Malvern Mudiwa said the drought was so serious that villagers had no idea how they would survive through the year.

"But imagine - we are surrounded by diamonds!" said Mudiwa, who also heads a local advocacy group, the Marange Development Trust. "The government must order these mining companies to feed the starving people in Marange."


Marange was regarded as one of the world's richest alluvial diamond deposits, but its resources are depleting, experts say.

It was estimated to have produced around 17 million carats in 2013, 13 percent of the global rough diamond supply, according to the Zimbabwe Mining Development Corporation.

Marange produced 12 million carats in both 2012 and 2014, while production figures for 2015 are not yet available.

When the Zimunya-Marange Community Share Ownership Trust was set up by President Robert Mugabe in 2012, the five diamond companies operating there promised to put in $10 million each to support local villagers over the coming five years.

Four years on, they have deposited only $400,000 in the trust.

The basis for such schemes was established under the economic empowerment regulations of 2010, which say communities whose natural resources are exploited by a business must be guaranteed a share of the profits.

In Marange, diamonds are being extracted by Anjin Investments, Diamond Mining Corporation, Jinan Mining, Marange Resources and Mbada Diamonds.

The ownership of these companies is opaque, according to a 2012 report by investigative campaign group Global Witness.

Several directors of Anjin were drawn from the Zimbabwean military and police, while a stake in Mbada was given to a company linked with a man reported to be Mugabe's former personal pilot, Global Witness said.

Marange grabbed international headlines in 2008 when the government launched police crackdowns on illegal diamond miners and smugglers, resulting in as many as 200 deaths. Even when formal mining began in 2009, reports of abuses against illegal miners caught sneaking into the mining fields continued.

In 2014, the government announced that all diamond companies in Zimbabwe would merge into one entity, the Zimbabwe Consolidated Diamond Company, in an effort to improve transparency and accountability in the sector. The merger is expected to be finalised this year.

The government has a 50 percent shareholding in the new company, while the other half will be split among the private diamond companies.

Anjin director Munyaradzi Machacha told the Thomson Reuters Foundation that issues regarding the Zimunya-Marange trust were being handled by Zimbabwe's mining minister, Walter Chidhakwa.

"We appeared before parliament, and as diamond companies, we clarified the issue," Machacha said.

At a parliamentary committee last year, the companies said they had never made a binding pledge to put $50 million between them into the Zimunya-Marange trust. The agreement was verbal and there was no written contract, they said.


Diamond expert James Mupfumi said the mining companies were taking advantage of a loophole in the Indigenisation and Economic Empowerment Act.

"Companies are not forced to put money into the community share ownership trusts. They may choose not to," said Mupfumi, who heads the independent Mutare-based Centre for Research and Development. The rules are unclear, and it is up to the companies to decide how much to contribute, he added.

However, in parliamentary question and answer sessions, broadcast on state television, Chidhakwa has said the merger of the diamond companies would not impinge on the rights of community trusts.

The new entity must inherit the assets and liabilities of the companies, and honour their promises, he explained.

"I want to assure our communities out there that the process of consolidation itself does not do away with the commitment of community share ownership trusts that are in place," he said.

Mupfumi called for the suspension of mining operations in Marange, to allow for independent auditing of the companies working there, and full disclosure of their ownership.

"No clear polices have been enacted so far in the diamond industry to warrant transparency and accountability practices that will eventually lead to trusts like Zimunya-Marange deriving benefits," he said.

- Reporting by Andrew Mambondiyani; editing by Megan Rowling

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