Marange Diamond output plunges

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Mining executives say the extractive sector faces an uphill task to raise funding to retool.

THE troubled Zimbabwe Consolidated Diamond Company (ZCDC) has been a huge failure, judging by its own targets and the volumes of carats produced since it took over the Chiadzwa mining activities, the Zimbabwe Independent has established.

By Elias Mambo/Obey Manayiti

Documents seen by this paper and presented to the National Assembly’s portfolio committee on Mines and Energy by the ZCDC itself show that the company had projected output of 6 900 184 carats between March to December 2016. However, only 953 818 carats were produced during that period.

Government took over mining concessions which belonged to Marange, Kusena, Diamond Mining Company and Gye Nyame.

Other companies that were forced out of the diamond fields are DTZ-OZGEO, Jinan, Anjin and Mbada Diamonds, although they are resisting forced consolidation. DTZ-OZGEO was a partnership between the Development Trust of Zimbabwe (DTZ) and a Russian-registered company, Econedra.

Before government consolidated the Marange diamond mines between March to December 2015, various companies in Chiadzwa produced a combined production of 2 276 425 carats.

This story is part of our ongoing ground-breaking investigation into the Marange alluvial diamonds discovery and subsequent plunder at various stages by state and non-state actors. The special series is supported by the Investigative Journalism Fund.

While giving oral evidence to the Mines and Energy portfolio committee, Mines minister Walter Chidhakwa revealed that ZCDC had delivered a paltry 924 388 carats of diamonds this year, compared to 3,2 million carats produced by various miners in 2015.

“The 2016 figure is low, but the explanation is that the 924 388 carats came from only two mining places instead of the nine mining places, and so we need to finalise court processes,” he said.

Low production has largely been attributed to managerial incompetence, corruption and cronyism in the diamond mining sector.

Legislators from the committee also grilled Chidhakwa over the composition of the ZCDC board, which they said was appointed without taking into consideration corporate governance issues, resulting in 90% of the board members being from Manicaland, which is where the board chairman Francis Gudyanga comes from.

Chidhakwa defended the decision to let Gudyanga, who was removed this week and re-assigned, single-handedly run the Minerals Marketing Corporation of Zimbabwe (MMCZ) board since 2013, saying he was still waiting for the Minerals Exploration and Marketing Corporation Bill to be passed into law, so that he appoints a proper board.

The lawmakers found that ZCDC was operating as a subsidiary of the Zimbabwe Mining Development Corporation (ZMDC) yet it is clear that the ZMDC board has no control over the company.

There was also a conflict of interest in that ZCDC is chaired by Gudyanga, while the company’s operations are overseen by the ZMDC board, which is, however, answerable to the permanent secretary. The Members of Parliament said this was a clear violation of good corporate governance.

“Nepotism and tribalism were the criteria used in appointing the board of ZCDC. All of them hail from Manicaland and there is no illustration of gender representation. This clearly violates sections 17 and 18 of the Constitution, which promote gender balance and fair regional representation respectively,” the portfolio committee report said.

The report also said there were problems with the manner in which the company was formed, as it was established as a private company under the Companies Act.

Turning to diamond production, the report observed that ZCDC was performing badly to an extent that it only managed to produce just below one million carats in 2016, contrary to the projections set during its formative stages.

According to the report, previous annual projections were six million carats. Diamond mining companies operating in Chiadzwa produced approximately 2,3 million carats before they were ordered to cease operations to pave way for the consolidation process last year.

Apart from poor corporate governance issues, the sharp decline in production is due to court cases brought by mining firms challenging the government decision to arbitrarily merge all the miners.

The mining firms — Mbada Diamonds, Jinan, Anjin Investments, DTZ-Ozgeo, Diamond Mining Company (DMC) and Kusena —went to court following government’s decision to cease operations.

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