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Mines and Mining Development Minister Walter Chidhakwa (right) shares notes with his deputy Fred Moyo at the Zimbabwe Mining Indaba yesterday

Business Reporter
DIAMOND mining companies in Marange are resisting the push by Government to consolidate their operations to improve transparency because they misrepresented their investment plans to the State.

Mines and Mining Development Minister Walter Chidhakwa said the mining companies did not invest the amount of capital they agreed on with Government when the parties signed the joint ventures.

Lack of investment in exploration to extend life of mines through discovering new deposits to sustain operations has seen surface gems mining out. This has caused revenue from their mining activities, in which Government has 50 percent interest, to plunge drastically.

The firms also misrepresented that they had invested significantly into mining equipment and machinery, yet they leased the equipment and had little value of their own on their balance sheets.

The companies mining diamonds in Marange under a 50-50 partnership with the Government include Anjin, Marange Resources, Mbada Diamonds, Diamond Mining Company and Jinan.

By May this year, the total diamond exports from the companies had dropped to 5,9 million carats from 8,9 million carats a year earlier.

“The questions the mining companies should ask are: ‘What is the life of a mine; how do we extend it?’ That should be a consistent thought not just for diamonds miners, but for all mining companies.

“This did not happen with the diamond mines. That is why we are in the situation we are in. Little, in fact no work has gone into exploration. If we do not do it then we will continue to boast about diamonds sitting in the ground. The companies did not bring enough money as per the agreements signed,” the minister said.

As such, little is presently accruing to the fiscus from the Marange diamond mining activities after alluvial gems found on the surface ran out, leaving deep-seated kimberlitic diamonds that are expensive to mine.

Minister Chidhakwa, presenting his key note address to officially open the 7th edition of the Zimbabwe Mining Indaba in Harare yesterday, said he continues to receive a lot of information he cannot verify from diamond mining companies in the Marange area.

“The fall in diamond revenue has been so dramatic and when you try to find the reason, you find out that there has been little or no been mineral exploration. They mined alluvial diamonds and got satisfied with the amount they were getting,” he said.

The cryptic state of affairs involving diamond mining in Marange, where Government is a 50 percent partner in virtually all the mines, has forced Government to push for consolidation of the mines.

But the Government is facing resistance from the companies, which Minister Chidhakwa attributed to the fact that they know the extent to which they have misled authorities about their activities, including leasing equipment and assets they pretended to own.

The minister said Government’s proposal was that the companies would be consolidated into one with each firm getting shareholding in the new entity equal to the value of its balance sheet assets.

A lot was expected from the diamond mining activities in Marange a few years ago, giving hope that revenue from the precious metal would support many Government obligations, but the inflows abruptly dropped when alluvial diamonds mined out leaving Treasury in a quandary.

This is despite widespread belief that Zimbabwe holds expansive reserves of diamonds, especially in the Marange fields, that it had potential to supply 25 percent of diamonds traded on global markets.

“This is why there is the decision to say let us consolidate. If there is a sector from where I get a lot of information and I cannot verify it, it is diamond mining. So we are moving ahead with consolidation, it is Government policy. Right now we are simply trying to ensure that they abide by the Companies Act,” the minister said.

But even then, he said, the firms resist holding annual general meetings and the publishing of their financial accounts.