HomeBusinessZim nationalises diamond mining

Zim nationalises diamond mining


HARARE — Zimbabwe will bring all diamond mining operations in the country under one firm in which the state will have a 50% shareholding, mines minister Walter Chidhakwa announced on Thursday, adding that the miners have until Monday to accept the proposal.

President Robert Mugabe’s government has stakes of varying degrees in all firms operating in the Marange fields on the eastern border with Mozambique, but the new proposal could see Rio Tinto Plc’s Murowa Diamonds, which operates in south-central Zimbabwe, coming under government control.

Murowa, 78% owned by Rio, with the balance owned by Zimbabwean-listed spin-off RioZim, produced 344 000 carats of predominantly gem-quality diamonds in 2014.

Chidhakwa told a parliamentary portfolio committee on youth indigenisation and economic empowerment that the state would own 50% of the new entity, which would include seven miners in Marange.

“At some point we started by saying we will first merge Gye Nyame and Kusena concession into Marange. But we have realised that it is actually better just to bring everybody together in the first instance,” Chidhakwa said.

Gye Nyame Resources, a joint venture between the state-owned Zimbabwe Mining Development Corporation (ZMDC) and Bill Minerals, represented by Ghanaian businessman William Ato Essien, had its licence revoked last year due to insolvency and failure to adhere to environmental requirements.

The company, which was granted mining concessions in Marange in 2011, was placed under final judicial management last June.

Other miners in the Chiadzwa area include Marange Resources, Diamond Mining Company (DMC), Anjin, Jinan and Mbada Diamonds.

“The new structure was given to them on Monday to consult their boards of directors. They will be coming back on Monday to tell us the outcome of their discussions with their boards. But we are very clear, this is a regulatory matter and we have said to them the only way you can participate in diamond mining in Zimbabwe is by being in this company,” Chidhakwa said.

He added that government was ready to buy out mining companies that are not willing to be part of the consolidated unit.

“If you do not want to be in this company, we might have to work out ways, methods of parting ways, the kind of compensation that we need to give to those who may not want to participate in this company,” he said.

“I expect that on Monday, we will be meeting with the companies so that we hear the positions of their shareholders and we know who will be proceeding into the future and who will not be with us as we go into the future.”

He said while some mining companies have run out of alluvial diamonds deposits at some concessions allocated to them, Zimbabwe still has viable reserves of the precious stones.

“Because government already owned 50% in each and every one of these companies except in the case of Murowa, but Murowa was also expected to comply with the indigenisation and economic empowerment act,” he said.

The mining sector had been the most dynamic sector of Zimbabwe’s economy over the last five years, with an average annualised growth of 35%.

“We are not cancelling their mining licences but that would be ultra vires the law but we are saying let us together form one big company and you own a lesser percentage of a bigger company. Getting all this to be agreed upon and getting all the shareholders to buy in is a process that you must go through so that as you forward, you move forward with everybody,” Chidhakwa said.
—The Source

Recent Posts

Stories you will enjoy

Recommended reading