“HOW the mighty have fallen” is an adage often used to describe how some seemingly invincible and powerful people or institution have suffered a stunning reversal of fortunes.
By Nkululeko Sibanda
This expression applies to River Ranch Mine, located about 25 kilometres south-west of Beitbridge, Zimbabwe’s border town with South Africa.
What was once a big diamond mining operation has now been reduced to a smuggling route as illegal traders use the mine’s environs to transport goods to and from South Africa, across the Limpopo River.
The mine is now hardly protected, save for a barbed security wire which smugglers and human traffickers have brought down in some areas to gain easy access to their illegal crossing routes.
River Ranch was placed under liquidation in 2012 after Rani Investments, the major shareholder in Limpopo Mining Resources (Pvt) Limited (LMR), approached the courts seeking to officially wind up the company due to viability challenges.
Rani Investments holds 80% of LMR while the other 20% is said to belong to former army commander, General Solomon Mujuru, who died in 2011 after an inferno engulfed the house he was sleeping in at his Beatrice farm just outside Harare.
At the time of the High Court application, the company was in the red, owing creditors more than US$20 million.
Records show that the mine’s operations ground to a halt due to under-capitalisation and a huge debt overhang.
A report presented to creditors by the liquidator, Winsley Militala, showed that River Ranch, for the years 2009, 2010 and 2011, registered an accumulated loss of US$6,5 million, attributed to under-capitalisation.
“The main reason for the company’s failure can be attributed to under-capitalisation; it relied solely on shareholder support for its operations. Just to illustrate the company’s dire financial needs, the shareholder support over the years rose to a staggering US$21 million,” reads the report.
“The auditors, Ernst & Young, in their draft audited financial statement for the year ended 2011, showed that the company was no longer a going concern due to its inability to service creditors and its reliance on shareholder support.”
Ironically, according to the audit report, the mine’s operations were halted while it still had ore reserves which are believed to be around 9,8 million tonnes with an estimated value of around US$162 million.
According to the document, River Ranch’s inability to service creditors and the subsequent resolution to liquidate made the company a suitable candidate for liquidation. A visit to the once-thriving mine by the Zimbabwe Independent last week showed that the security gates have been locked for a long time as evidenced by the rust that has accumulated on the locks.
After standing at the mine’s entrance for an hour, not a single member of the security team came to enquire despite claims by the liquidator, Militala, that there was security at the mine.
Apart from the mine, a police post that was erected at the mine is also on the brink of collapse owing to lack of maintenance. This is further evidence that there has been no activity on the mine, because of a decision by the shareholders not to pump new money into the mine’s operations.
The mine is in a sorry state, considering that it used to produce unique blue diamonds which would fetch high prices on the diamond market.
Former finance minister Tendai Biti announced in 2009 that the diamond mine had hit a 75 000 carat mark, which accounted for just 25% return from its expected annual production levels.
Between May 2007 and December 2009, when its production was at its prime, the miner marketed 600 000 carats.
But this is in the past, and the glory associated with the mine has dissipated. The mine is struggling to attract investors.
Through Militala, Rani Investments is asking for a price of US$23 million for the mine.
Having been hit by resistance from potential investors, Rani, sources said, had now revised the purchase price to US$20 million — a figure that is said to be based on the diamond reserves underground.
A prospecting exercise carried out in 2012 showed the mine still had eight years of diamond ore which would have run until 2020, with prospects showing the mining operation would then move to another area still within the mining claim.
Government, through the Zimbabwe Consolidated Diamond Company (ZCDC), has previously reached out to River Ranch with a bid to acquire the mine. The company has offered between US$4 million and US$5 million as a takeover price for the mine — a figure Rani Investments feels is too little. The prolonged closure of the mine has affected many people.
Amuchilani Moyo, who works at a shop close to the mine, said River Ranch Mine had, before its collapse, become the mainstay of their operations.
“We used to make good money when the mine was operational. Our sales would pick up when the mine workers got their salaries. They would come here and shop for basic commodities. After things went down, we are recording low sales and the owners of the shop are even considering closing it down because of low business,” she said.
Clever Dube, who used to earn a living through buying and selling goods from neighbouring South Africa to River Ranch Mine employees, said life has become difficult for him as he was now unable to continue with his business.
“I made a lot of money from selling things that I was procuring from South Africa which include groceries, clothes, and other things. The six years that the mine has not been operating have been hell because we now have to scrounge for a living. We have tried doing piece jobs but they are also not delivering a livelihood the way we were making money from workers at River Ranch,” Dube said.
Anticipate Tshuma, a former employee at River Ranch, disclosed he had resorted to driving commuter taxis, commonly known as mushikashika, to earn a living.
“I have had to take up a job as a pirate taxi driver here in Beitbridge because I cannot sit and wait for the mine to start working again. Even if it is to start working now, there is no guarantee that we will get our jobs back.
“I am able to survive although I am collecting the R20 (US$1,35) per trip. I long for the return to the days at River Ranch. It was just a good place to work at,” he said.
The Independent understands that even if a new investor would come on board, the investor would need to pour more money into the operations of the company as there is virtually no meaningful equipment to talk about.
Insiders say equipment worth millions of dollars belonging to the mine could have been sold for a song on the auction floors in a bid to fund the mine’s liquidation costs and skeletal staff salaries.
This includes earth-moving equipment, vehicles for operations, and workshop equipment.