Zimbabwe Mining Development Corporation (ZMDC) is teetering on the brink of collapse as it emerged last week that the state-owned company only has two mines that are operational, businessdigest has established.
By Chris Muronzi
Investigations show that out of its 10 subsidiaries, only Elvington and Jena mines are operational. While Elvington is operational, it is under the control of a judicial manager.
Until two weeks ago, Marange Resources, a diamond mining company in Chiadzwa, was also operational.
Mines minister Walter Chidhakwa two weeks ago ordered all diamond mining companies operating in Marange to stop operations as he battles to consolidate all of them into one. The companies are resisting saying his approach is arbitrary and impractical. Chidhakwa has been dragged to the courts over the dispute.
Informed sources told businessdigest this week that while Jena was currently producing bullion, it is also facing viability challenges owing to declining gold prices on the international market.
“Jena is on the verge of collapse. Again, if there are efforts being made by the board and top management to save it, only they know. But things are not looking good,” a source said.
Jena is said to have produced 11kg in December from 16kg in November. Gold output in October stood at 17kg.
“The previous month had not been any better with a figure of 16kg against 17kg in October. This obviously is painting a picture of an entity that is rapidly failing, unless of course urgent action is taken,” the source added.
ZMDC is in the process of retrenching 25 head office staff, the source added. This was necessitated by an August 2015 board resolution to have a leaner structure amid concerns the corporation did not have the necessary finances to maintain the full staff complement.
“How can an entity which is entrusted with a vast array of mineral resources be technically insolvent? Moreover the so called structure was not crafted in a transparent manner as no consultation with staff was ever carried out,” a source added.
The corporation has several companies that need to be resuscitated.
Although ZMDC has a stake in Great Dyke Investments, a platinum venture with Russian investors, a shareholder agreement is yet to be finalised and the siting of work plans as well as the mining licences are outstanding.
E-mailed enquiries to ZMDC boss Sydney Simango last week had not been responded to at the time of going to press.
Simango referred questions to Charity Tambandini, who also had not responded to businessdigest’s enquiries by yesterday.
Sanyati Mines was closed in 1999 due to metallurgical challenges. Sources at ZMDC say this mine could be reopened if an investor is secured. Sabi Gold Mine is currently under judicial management and could be resuscitated in the wake of reports an investor has been found.
At the turn of the millennium, the state-controlled company closed Mhangura Copper Mines owing to weak prices on the international market.
Sandawana Mine, an emerald mine, was closed in 2012 owing to depressed emerald prices at the time. However, its Kamativi Tin mine, ZMDC seems to have secured an investor. The investor is reportedly bringing US$1 million with the move expected to see the creation of 2 300 jobs.
ZMDC’s Elvington Mine was closed in 2003 after a shaft collapsed.
“In 2014, by recommendation of the ZMDC board, a company was contracted to commence a dump treatment project. This however has not gone well. When this company took over the workers at Elvington were producing 8kg from the dumps.
When the said company came into the picture production was going up and down between 3kg and 5,9kg.
In December the figure stood at 3kg, all this despite the company having promised to produce 15kg a month,” a source said. “These are just a few of the entities which the corporation can work on initially to bring ZMDC back to its feet.”
It has also emerged that the corporation is struggling to pay wages with salary arrears at its various mines as far behind as 11 months. Head office staff are said to be owed salaries going back two months.
ZMDC owns 100% shareholding in Marange Resources which was engaged in diamond mining in Chiadzwa. Since 2005, ZMDC has entered into joint-venture agreements with international companies to form Anjin Investment, Diamond Mining Corporation, Jinan Mining, Rera, Gye Nyame, Kusena Diamonds and Mbada Resources.
The diamond mines have now been closed over the raging consolidation dispute.
Sabi Gold Mine in Zvishavane, Jena Gold Mines in Silobela and Elvington Gold Mine in Chegutu are struggling.
ZMDC holds approximately 26 000 hectares of platinum claims in the Hartley and Shurugwi areas of the Great Dyke. It has entered into joint-venture agreements with international companies for exploration and resource estimations, but nothing much has materialised.
Its other ventures like the joint-venture with Graphitwerk Kropffmuhs to form Zimbabwe German Graphite Mine (ZGGM) (Pvt) Ltd, which mines graphite in Karoi and Sandawana emerald mines are also struggling. ZMDC joint-ventures and subsidiaries (struggling, under judicial management or closed):
Mbada Diamonds Diamond
Diamond Mining Corporation Diamond
Jinan Mining Diamond
GyeNyame Resources Diamond
Kusena Diamonds Diamond
Anjin Mining Investments Diamond
Rera Diamonds Diamond
Todal Mining Platinum
Shin Zim Platinum Platinum
Global Platinum Resources Platinum
Afri –Sino Mining Resources Uranium
ZiGGM t/a Lynx Mine Graphite
Marange Resources Diamond
Kimberworth Investments t/a Sabi Gold Gold
Jena Mines Gold
Mineral Development t/a Elvington Gold Gold
Sandawana Mines Emerald
Kamativi Tin Mines Tin
Mhangura Copper Mines Copper
SMM Holdings (Pvt) Asbestos
Sanyati Copper Mines Copper
Lomagundi Smelting Copper