Seven diamond bosses face axe

12 Apr, 2015 - 00:04 0 Views
Seven diamond bosses face axe

The Sunday Mail

THE Chiadzwa diamond fields will be temporarily closed and seven chief executive officers and 60 board members of mining companies will lose their jobs within the next three weeks as Government collapses the entities into one firm.

Government is already in the process of merging Mbada Diamonds, Anjin, Marange Resources, Gye Nyame, Kusena, Jinan and Diamond Mining Company into the Zimbabwe Consolidated Diamond Company (ZCDC).

Mines and Mining Development Permanent Secretary Professor Francis Gudyanga told The Sunday Mail that Government would control the 150 000ha Chiadzwa diamond fields.

This, he explained, would improve accountability and transparency in diamond mining amid continued suspicion that the sector is haemorrhaging the economy instead of being a driver of growth.

Prof Gudyanga said: “The initial plan to consolidate Marange Resources with Kusena and Gye Nyame was subsumed in the broader consolidation of all the seven mining companies in Marange diamond fields together with Murowa diamonds and DTZ-OZGEO. So there was never a plan to have other groupings for consolidation.

“The emerging company after consolidation, ZCDC, will assume all the assets and liabilities of all the companies that are being merged. The shareholding of these small companies will be determined by their equipment assets plus what they financially inject into ZCDC for its capitalisation and exploration.

“The process is expected to be completed by end of April or early May 2015 bar the unforeseen. There is a committee working on the arrangements that will be made after consolidation including business plan of the ZCDC.

“The chief executive officers and boards of the current companies will be dissolved but the workforce will essentially be retained subject to conditions that may be set.”

Government resolved to take charge of Chiadzwa after companies failed to satisfactorily declare royalties and taxes. Some of the entities misrepresented to Government that they were dysfunctional despite operating for over four years.

In January 2014, Gye Nyame Resources said it was moribund and was looking for investors to help it resume operations. This was after a Ghanaian investor was accused of being involved in underhand dealings. Gye Nyame was also accused of wantonly violating environmental laws.

On the other hand, Marange Resources — owned by Government through its mining arm, the Zimbabwe Mining Development Corporation — was implicated in a fraud scam by a 2014 forensic audit.

The audit revealed that management siphoned money from the firm by inflating the value of equipment purchases.

Kusena Diamonds failed to declare royalties despite digging up precious stones.

DTZ-OZGEO is a 60/40 percent joint venture between Econendra of Russia and the Development Trust of Zimbabwe.

While the other operations are 50-50 joint ventures between ZMDC and foreign investors. Prof Gudyanga said earlier plans to cancel licences of under-performing companies were shelved.

“The question of cancelling licences for under-performing companies is now not going to arise. All the current entities will no longer exist or transact as they do now. There will be one CEO, one board, and the Government will have 50 percent shareholding.

“Government had no participation in Murowa diamonds and DTZ-OZGEO. However, like other companies in the country, they were being approached so that they comply with indigenisation laws of the country.

“The consolidation process is now causing these companies to be compliant with the indigenisation,” he said.

Rio Tinto Plc has a 78 percent stake in Murowa Diamonds with the remaining 22 percent owned by RioZim Limited — a Zimbabwean-listed entity.

Murowa Diamonds communications and external relations manager Mr Lovemore Chimuka said the company had already submitted its indigenisation plan.

“While the ownership and control of Murowa Diamonds remains unchanged, Rio Tinto’s intention is to engage fully with the Government to understand its position on the future of diamond mining in Zimbabwe.

“In 2014, Rio Tinto paid the Zimbabwean Government a total of US $14 million in taxes and royalties.

“We intend to continue to work in this spirit even though we are concerned about a number of steps recently taken by the Government with regards to the tax and regulatory environment. We will continue to discuss these issues with the Government in a constructive manner as they are threatening the viability of Murowa diamonds as a going concern.

“Murowa diamonds has duly submitted its indigenisation plan and is awaiting a formal response from the Government,” he said.


Share This: