THE Zimbabwe Consolidated Diamond Corporation’s plan to produce two million carats (400kg) by year-end seemed to be in jeopardy after it emerged last week that the State-owned entity might have to wait 60 days to regularise its mining operations with the Environment Management Authority.
But it is believed that the two parties intend to fast track the process so that production resumes this week.
The two-month hiatus could cost between US$21,6 million and US$40 million in potential revenue, as output by the miner, buoyed by investment in new equipment, had peaked to 200 000 carats (40kg) per month when operations were halted by the High Court on August 1.
ZCDC says while it used to sell its stones at US$54 per carat, plans to clean the current stockpiles before marketing them could increase their value by 85 percent to US$100 per carat.
High Court Judge Justice David Mangota ruled in favour of community lobby group Marange Development Trust which sought to halt of ZCDC’s operations on the basis that the firm did not have an environmental impact assessment certificate in line with Section 97 of the Environmental Management Act. It emerged last week that ZCDC could have paid more than US$1 million to have its papers processed.
Last week, ZCDC chief executive officer Dr Morris Mpofu struck a defiant note, saying they had paid all their dues to EMA and submitted an EIA application and they would likely meet set production targets.
The EIA application papers were submitted to EMA on Monday, August 7.
Information gathered by The Sunday Mail Business indicates that barring an emergency or special arrangement between the two parties, ZCDC could go two months at zero production.
“I can confirm that we received ZCDC’s EIA application on 7 August,” EMA spokesperson Mr Steady Kangata told this publication.
“I can’t really say when exactly are they going to get their response or whether it is going to be positive or not, but what I can tell you is in our provisions, we have a time frame to reply them within 60 days.
“But we are alive to the ease of doing business drive and would certainly make an effort to get back to them in the shortest possible time.
“The process leading to the issuance of the certificate, however, is complex because as an agency we want the business to clearly show us how they are going to conserve the environment in their operations.
“Unlike some businesses like tourism, which are not that hazardous to the environment, in this case I am sure you will agree with me that there is no cosmetic mining — it’s destruction, so what is required of a mining adventure is complex compared to what we require for a business in tourism for example,” he said.
Mr Kangata however declined to reveal how much the corporation was levied for the certificate. With EMA charging anything between 1,2 percent and two percent of the project’s total cost as EIA fees, ZCDC could have spent between US$600 000 and US$1 million as the project cost stands at around US$50 million, according to Government sources.
In May this year, the company took delivery of mining equipment worth US$32 million, which was bought under a Reserve Bank of Zimbabwe facility.
It has in total invested an estimated US$50 million in new equipment.
The certificate application fee is in addition to the costs incurred in drafting the environment impact assessment report. According to Dr Mpofu, its report was compiled by a “reputable consultant”.
Despite prospects of mothballing operations for the next two months, Dr Mpofu remains bullish that the annual targets will be met, especially as the transition from alluvial to conglomerate is largely expected to increase production.
“In line with its business model, ZCDC is in the process of transitioning from an alluvial to a conglomerate-based mining model, and is currently focusing on the necessary civil and mechanical/electrical construction works in preparation for conglomerate mining and processing,” he said.
“In view of this … there is minimal disruption to production, and therefore the effects on annual targets will be non-consequential.
“ZCDC will, however, ensure that mitigatory measures are put in place to minimise the impact of the disruption to the operations while the EIA certificate is being finalised,” said Dr Mpofu.
Government, which already had a presence in the mining area through Marange Resources, decided to takeover mining operations from private companies after allegations of smuggling and misinvoicing.
Companies that were affected as a result include Diamond Mining Company, Gyn Nyame Resources, Jinan, Anjin, Kusena Diamonds, Mbada Diamonds and DTZ-Ozgeo.
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