Ban on Mbada stays: High Court

Ban on Mbada stays: High Court | The Herald March 17, 2016

Fidelis Munyoro Chief Court Reporter
The High Court yesterday barred Mbada Diamonds from carrying out any mining operations in Chiadzwa without authority, saying allowing the firm to resume extraction of the gems amounted to sanctioning illegality.

Justice Joseph Martin Mafusire, however, condemned the eviction on February 22 of Mbada from its Chiadzwa mining claim without securing its assets.

He allowed Mbada to remain at the mining site for purposes of securing its assets until “such time that the validity of such Special Grants has been regularised in accordance with the law”.

“In casu, to allow Mbada to resume mining operations as before, when the right to do so expired, is to sanction an illegality,” ruled Justice Mafusire. “That, in my view, is contrary to public policy.”

The ruling follows an urgent application by Mauritius-registered Grandwell Holdings, which has a 50 percent controlling stake in Mbada Diamonds (Private) Limited, contesting the eviction.

It sought a spoliation order (status quo).

Mbada is the offspring of a marriage between Grandwell Holdings and Marange Resources.

Marange Resources is wholly owned by Zimbabwe Mining Development Corporation.

Mbada has been extracting diamonds at Chiadzwa over the past seven years.

While Grandwell entered into a number of joint ventures with several foreign investors, the Government was getting little or no remittances.

To rectify this, Government crafted a policy to merge all the diamond mining companies at Chiadzwa into a single entity.

This resulted in the creation of the Zimbabwe Consolidated Diamond Company (ZCDC), a special purpose vehicle for the new venture.

All the diamond companies would share 50 percent of the equity in it while Government took the remaining 50 percent.

But the diamond mining companies have resisted the decision with some some of them taking Government to court in a bid to contest the merger.

Advocate Lewis Uriri and Adv Sylvetser Hashiti, who appeared for Mines and Mining Development Minister Walter Chidhakwa, Marange Resources, ZMDC and ZCDC, argued that it had become illegal for Mbada and Grandwell to remain at the mining site without mining authority.

They said the Special Grants had expired by reason of the firms’ own failure to renew their licences.

They also argued that the that joint venture agreements and shareholders agreements might have provided for certain rights in perpetuity could not override the provisions of an Act of Parliament, which are superior to any provisions of a private agreement.

The minister, they said, was the regulator of all mining rights and the action he took was to restore the law.

Mr Sternford Moyo and Adv Thabnai Mpofu, who argued the matter for Grandwell and Mbada, respectively, slammed the respondents’ attempt to place reliance on the expired Special Grants.

They argued that, among other things, in terms of the agreements, the obligation to renew those Special Grants had been thrust on Marange Resources, the State company.

They said the fact that the Special Grants had not been renewed on expiry was the Government’s own fault.

They requested the court to preclude the respondents from trying to profit from their wrong.

They argued that the issue before the court was about the rights and wrongs of the respective parties.

They said it was not about the validity or otherwise of Mbada’s title to mine.

Justice Mafusire agreed with the two.

“In my view the respondents’ actions were classically an act of spoliation,” said Justice Mafusire. “The purpose of spoliatory relief is to restore at once the possession to the possessor where he has been unlawfully deprived of it. This is so, in order to prevent people, governments included, from taking the law into their own hands.”

The judge also ruled that Grandwell had a substantial interest in the matter hence it was entitled to bring a derivative action against the respondents.

Government last month ordered all diamond mining companies off the Chiadzwa fields after they defied a policy directive for all to merge into under the ZCDC.

Mbada, among other diamond firms, was given 90 days to remove its equipment and other assets from the site. However, Grandwell is seeking the eviction of the Ministry of Mines and Mining Development and representatives of the ZMDC, Marange Resources and the ZCDC from the mining site.

In the High Court, Grandwell was seeking restoration of its full control, peaceful and undisturbed possession of the mining site.

Government accused Mbada of failing to renew the Special Grant, hence the expiration of such grants now requires the company to stop operations and vacate the premises.