HomeInternationalMbada’s Shady Dealings Dim Chiadzwa’s Sparkle

Does Zimbabwe ‘yearn for the yuan’?

WHEN Mbada Diamonds published an advert in a local newspaper in December showing off the installation of a mechanised plant in Chiadzwa with pictures of impressed government officials looking on, all seemed to be going well in the partnership to exploit precious stones.

And when the company announced a diamond sale last week, it was taken for granted that Mbada and its government partners had agreed on the auction.

The advertisement also unveiled a corporate logo of Mbada, a leopard perched on a big sparkling diamond. (The word mbada is Shona for leopard.)

But the bling was losing its sparkle.  Behind closed doors government officials and other concerned parties were trying to make heads and tails of what Mbada had in mind.

According to Mines secretary Thankful Musukutwa last week, government was not happy with the auction debacle. They had been left out of the loop.

Mbada’s announcement was not without a sweetener –– government was promised a dividend.

Elsewhere, shareholders would have been smiling all the way to the bank considering that the project had only operated for a month. But the lure of the dividend was apparently not that strong for government.

In the advert Mbada said it was committed to lifting Zimbabwe’s economy from the doldrums.

The company cited Botswana where diamonds had spurred economic growth for decades as a case in point.

On the day before the auction, Mhlanga told state daily, the Herald, that the Minerals Marketing Corporation of Zimbabwe (MMCZ), the Zimbabwe Mining Development Corporation (ZMDC) and police were involved in the sale.

Ironically, MMCZ, ZMDC, and the Zimbabwe Republic Police’s Minerals Unit all got a surprise when they learned of the intended sale in a newspaper article and made inquiries.

But the officials were reportedly told to expect a handsome dividend after the sale, so the report goes.
Naturally, teams from concerned institutions ––MMCZ, Mbada and ZMDC –– would need to grade the precious stones and place value on different lots and stones.

The reports get even more scandalous.

Then acting Mines minister Emmerson Mnangagwa is said to have learnt of the diamond sale like the rest of the public –– in a newspaper.

Mines minister Obert Mpofu has also washed his hands of the event and now professes ignorance of the announced auction.

So who authorised the sale?

Mbada chairman Robert Mhlanga danced around the questions during a press conference last week. After the conference, he said: “I cannot comment after the permanent secretary has spoken.”

Essentially he denied jumping the gun and offered no serious defence for his announcement.

Could there have been a secret agreement with the authorities?

Had the auction gone ahead, Mbada’s valuations of the diamonds would have carried the day.

Experts say this could have seen diamonds going for a song –– or opening doors to corruption.

More worryingly, the diamond lot, over 300 000 carats, were flown in to Harare International Airport from Chiadzwa without police supervision, according to Musukutwa. Analysts say this also created room for corruption by having some of the load diverted to other destinations before they reached Harare.

The government official disputed that Mbada Diamonds “involved” MMCZ, the police and ZMDC.

Musukutwa claimed that Mbada’s statement announcing a diamond auction had caused a lot of “anxieties in various stakeholder communities”.

Musukutwa said: “The due process for selling diamonds produced in Zimbabwe involves the MMCZ, ZRP Minerals Unit, Ministry of Mines and Mining Development, and ZMDC where diamonds from Marange are concerned. In the case of Mbada Diamonds, this process is yet to happen.”

Mhlanga had earlier claimed: “The entire process of mining, transportation to marketing is being done in compliance with the requirements of the Kimberley Process Certification Scheme (KPCS). The sales and marketing offices are jointly manned and controlled by teams from both government and Mbada Diamonds.”

But Mbada can be forgiven for thinking that government only needs a dividend and no presence at the mine.

The company was given explicit marketing rights, according to the joint-venture agreement. Mpofu on the other hand did not second ZMDC or MMCZ officials to the Mbada board.

The MMCZ’s job is to certify the sale and ensure that the sale is in compliance with KPCS standards.
The public was left wondering who was telling the truth.

Could Mhlanga have been spinning a yarn to the media or could it be Musukutwa? Assuming that government, keen to pocket a promised dividend from the operation, lied to the public, what ends would this have achieved?

And given that governments around the world are not the greatest purveyors of the truth, the truth in the diamonds case may never be known.

As our investigations got underway, a lot of contrasting information came to light.

It emerged government has no presence at the mine. With no representative on the ground, government has no idea how much Mbada is mining.

The closest representation the government mining group had on the mine was through former Mbada CEO Alex Mukwekweza, a former ZMDC business development executive initially seconded to represent the company in the joint venture.

He is said to have resigned from Mbada under yet unclear circumstances. On paper, Mukwekweza was supposed to be on ZMDC’s side but in practice he answered to a board constituted by New Reclamation Group.

Apart from that, production reports do not come government’s way. So how does government know if its partners are honest or not?

Mpofu did not help the situation. Last year MMCZ and ZMDC officials were not seconded to the board.
Instead, Mhlanga, who is a shareholder in Mbada, was seconded as a government representative, according to our investigations.

Those in the know say MMCZ and ZMDC officials were told off and promised a dividend after poking their noses in the sale.

Mbada says its two plants have a processing capacity of 150 tonnes of ore an hour. According to those in the know, the company should be recovering around 20-30 carats per tonne.

But again no one knows for certain.

Murowa Diamonds, another diamond producer, announces production reports quarterly and has not stirred controversy.  If anything, according to observers Murowa is a sparkling example of how to mine diamonds.

But then New Reclamation, unknown in diamond mining until the Chiadzwa deal, is no stranger to controversy.  Last year the scrap metal company was fined R146 million for its role in a national cartel which allegedly fixed the price of ferrous and non-ferrous scrap metal products.

The administrative penalty, which represents 6% of Reclamation’s annual turnover in the affected markets, is the largest uncontested fine imposed by the Competition Commission of South Africa to date.

They have also been linked to shady scrap metal deals at Zimbabwe Iron and Steel Company.

Until Mbada conforms to the KPCS standards, and a transparent process of mining, transportation and sale of Chiadzwa diamonds the nation will remain sceptical of its intentions.

Chris Muronzi

Recent Posts

Stories you will enjoy

Recommended reading