Finance minister Tendai Biti has said government should speedily find solutions to the Shabanie Mashaba Mines (SMM) Holdings issue.
Biti said the impasse at the asbestos conglomerate, which is the sole producer of the chrysolite fibre which makes asbestos, should be resolved as soon as possible because it was affecting other local industries that depended on the product.
He said this while presenting the 2011 National Budget Statement before Parliament last Thursday.
“Mr Speaker Sir, production of asbestors at Shabanie and Mashaba Mines continues to decline, falling significantly from7 800 tonnes realised in 2009 to an estimated 2 000 tonnes in 2010,” said Biti.
“This is against the background of never-ending legal processes that have exacerbated viability challenges associated with severe shortage of working capital, resulting in cessation of mining operations and mine closure.”
When the Parliamentary Portfolio Committee on Mines and Energy led by Edward Chindori-Chininga visited Shabanie Mine last year, the managing director Stephen Nyagura told them that a slump in business at Shabanie started being felt in 2005.
He said between 2008 and 2009 production had fallen to almost zero, due to flooding in the mines. Electricity was cut because the company could not pay its Zesa bills.
The mine also suffered from lack of capital to refurbish the ageing equipment and had serious administrative problems after the firm had been placed under curatorship.
Biti said the “death” of Shabanie was affecting other companies that depended on it for the asbestos.
“The ripple effects of the closure of Shabanie Mine are being felt throughout the construction industry and, surely, leadership is required to resolve the current disastrous impasse,” Biti said.
Zimbabwe was now relying on imported asbestos products after business hit a slump at Shabanie Mines.
In 2010, the SMM Holdings financial director told the Mines and Energy Committee that the mine was capable of producing 70 million tonnes of chrysolite fibre but had been unable to do so due to lack of working capital.
He said an investor had to be found as soon as possible, as failure to solve the mine’s problems was threatening its existence.
The Shabanie community also draws its livelihood from the mine. SMM Holdings owner Mutumwa Mawere appeared before Mines and Energy Committee a fortnight ago and told parliamentarians that the Minister of Justice and Legal Affairs Patrick Chinamasa had initiated the Reconstruction Act to declare SMM Holdings “an Insolvent State-Indebted Company”.
Chinamasa then placed SMM Holdings under a curator, Afaras Gwaradzimba, and thereafter Mawere faced a lot of legal wrangles associated with the mines.
However, in May 2009, Reserve Bank governor Gideon Gono presented an advisory brief to President Robert Mugabe to recommend the way forward on the SMM Holdings case and in contrast to Chinamasa’s assertions said the SMM liabilities at the time the reconstruction order was instituted did not qualify as state loans to SMM.
“The creditor-debtor relationship lay between SMM and the individual entities that were owed money, and not with the State as erroneously advanced,” said Gono in the report.
Chinamasa is expected to appear before the Mines and Energy Committee in a fortnight.