Mining companies to merge

21 Sep, 2014 - 06:09 0 Views
Mining companies to merge Minister Walter Chidhakwa

The Sunday Mail



Kuda Bwititi – Sunday Mail Reporter

Mining companies at the Chiadzwa diamond fields will merge next month under a two-phased programme that will optimise earnings by cutting the long chain of players extracting stones there.

Seven mining houses operate in Chiadzwa, and Government resolved early this year to ensure only “one or two” remain, in line with progressive practices in other countries.

In Botswana, for instance, the government and global mining giant De Beers operate a 50-50 joint venture —Debswana — which has grown into the world’s largest diamond producer by value.

In Russia, seven companies merged under the banner of Alrosa, now the leading international diamond producer by volume.

Though the Chiadzwa firms all partner Government through the Zimbabwe Mining Development Corporation, there have been concerns that the nation can benefit more from better management of the strategic resource.

Under the new arrangement, Marange Resources, Gye Nyame and Kusena Diamonds — whose single portfolio has already been created — will be the first to be amalgamated.

The second stage will merge Mbada Diamonds, Anjin Investments, Jinan and Diamond Mining Corporation.

Mines and Mining Development Minister Walter Chidhakwa told The Sunday Mail that authorities were wrapping up legal modalities pertaining to mining claims, contractual obligations and liabilities.

He said senior ministry officials recently met diamond mining executives who all supported the new structure.

“The first step, or, should I say, first phase, will see the three companies — Kusena, Gye Nyame and Marange Resources — being merged into one. We have already set up . . . the one entity into which we will put all those companies. It is now at the final stage of creating a framework that looks at the liabilities of all companies.

“We will soon announce it. I can say, probably by next month, we will have completed all the work so that the three companies can operate as one. After that, we will look into the remaining four firms and see how their operations can be consolidated.

“. . . Obviously, the most important part is the legal side. We will not violate their contracts: We want everything to be done to the satisfaction of all parties.”

Amalgamation is expected to increase accountability at the fields, which are estimated to hold the world’s largest diamond concentration.

Experiences in Russia and Botswana prove that engaging fewer diamond mining players refocuses attention to production.

Alrosa comprises different shareholders including the Russian Federation, which holds a 44 percent stake. Municipal districts, individual companies and legal entities are also co-owners.

The company accounts for the highest diamond volumes in the world and produced 33 million carats in 2013.

Apart from mining, it also does exploration and auctions.

In Botswana, Debswana controls all diamond production and operates four mines — Orapa, Letlhakane, Jwaneng and Damtshaa — which can produce up to 30 million carats annually.

Diamond mining contributes a third of Botswana’s GDP, 90 percent of export earnings and 50 percent of government revenue.

Debswana is the largest non-governmental employer in that country, with about 6 300 workers, 93 percent of whom are Batswana.

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