No suitor for Shabanie and Mashaba Mines

Source: No suitor for Shabanie and Mashaba Mines | The Financial Gazette June 16, 2016

GOVERNMENT has for several years now been hoping to pull a surprise by securing capital for the revival of the troubled Shabanie and Mashaba Mines (SMM), but its efforts have failed to bear fruits despite the fact that a number of investors had shown interest to bail out the mines.
President Robert Mugabe’s administration has negotiated with several potential foreign investors mainly from Russia and China but it appears all hopes to resuscitate Shabanie Mine in Zvishavane and Gaths Mine in Mashaba which closed in 2008, four years after government took control of the mines from former shareholder Mutumwa Mawere, is lost, worsening the plight of the distressed workers.
The two mines require US$1 billion in fresh capital for successful revival, an amount analysts said was significant for a country that has failed to attract foreign investors due to unfriendly economic policies.
Mines and Mining Development Deputy Minister, Fred Moyo, last week revealed to the Financial Gazette that efforts to lure investors were being hampered by low global demand for asbestos.
“We are not getting investors (for SMM) and it seems to be a big problem largely because the market for asbestos is not looking good,” Moyo said.
At its peak, the asbestos producing giant employed 5 000 workers, with over 100 000 families from surrounding areas depending on the mines.
According to estimates, close to 200 downstream and upstream industries benefitted from full-scale operations at the mine.
Owing to years of inaction, equipment worth millions of dollars at the mines, once the world’s sixth largest asbestos producers with an annual output exceeding 140 000 tonnes, has been trapped underground by rising water levels, making them inoperative.
This has been made worse by the fact that the mines now have antiquated technologies which may require upgrading.
The longer it takes to re-open the mines, the more difficult it will be to restart operations, according to experts.
Government had targeted to first open Gaths Mine, which is still shallow and cheaper to resuscitate.
Shabanie Mine runs for about a kilometre into the ground and requires a much bigger chunk of capital to revive.
Gaths Mine is about 700 metres from the surface.
SMM chief executive officer, Chirandu Ndhlembeu, told this newspaper in November last year that Gaths Mine was sitting on asbestos deposits worth more than US$1 billion.
He said the asbestos deposits lying idle underground had a lifespan of 17 years, but could not be exploited unless the mine got a rescue package.
SMM has been plagued by legacy issues, including a dispute over ownership pitting government and dispossessed former shareholder, Mawere.
Mawere lost control of SMM in 2004 after government accused him of pillaging the company’s coffers to pay for his shares previously held by Turner and Newall plc.
Mawere has denied these allegations, insisting his payment for shares was above board and not prejudicial to any stakeholder.
In fact, the takeover of the company by the State marked the deterioration of the company’s fortunes.
The expropriation of Mawere’s shareholding in SMM was done using a controversial law that allowed the State to take over assets of businesses deemed to be insolvent and incapable of servicing debts owed to State entities.
Government appointed AMG Global Chartered Accountants’ partner, Afaras Gwarazimba, to administer operations until the two mines became viable.
But he failed to turn around the company’s fortunes.