Succession rocks diamond mining

via Succession rocks diamond mining – The Zimbabwe Independent March 18, 2016

GOVERNMENT’S recent arbitrary closure of diamond mining companies operating in Chiadzwa, which has thrown the sector into turmoil and sent shockwaves among investors, is in fact part of President Robert Mugabe’s succession battle as Zanu PF’s G40 faction pushes to weaken Vice-President Emmerson Mnangagwa camp, the Zimbabwe Independent has learnt.

Owen Gagare/Herbert Moyo

Government officials told the Independent this week Mugabe, who has come out in support of his wife Grace — the ace up the sleeve for the G40 faction — was targeting Anjin Investments (Pvt) Limited, a joint venture between the Chinese and the Zimbabwe National Army.

The officials say Anjin was helping to fund state activities, security covert operations and the Mnangagwa faction.
Most military bosses, including commander of the Zimbabwe Defence Forces General Constantine Chiwenga, reportedly support Mnangagwa’s presidential bid.

Mnangagwa, who was Defence minister when Anjin was given a license to operate in Chiadzwa, played a pivotal role in structuring the deal between the army and the Chinese, ensuring the company got the nod to operate.

By closing Anjin, the G40 faction calculates that it would have cut off one of Mnangagwa’s major funding sources.

ZNA, through Glass Finish Investments Pvt Ltd acquired a 40% stake in Anjin in 2010, and by 2014 had received a total of US$78 million from the company. Anjin started trading diamonds in 2011.

Government sources say although Mines and Mining Development Minister Walter Chidhakwa cites the companies’ rejection of a government proposal to amalgamate the mines and the expiry of their mining licences as reasons for closing the operations, cutting off Mnangagwa’s funding was the major reason for the move. He also wants to remove the military from mining activities and create a legacy project for himself.

Anjin allegedly helped to fund Zanu PF’s 2013 election campaign where it romped to a comprehensive, albeit controversial victory with the opposition MDC alleging military interference and vote-rigging. Anjin also allegedly funded other clandestine activities including the extravagant lifestyles of Zanu PF fat cats.

“Mugabe has always been aware of these activities, but at this point in time he does not want the company to continue its clandestine and shady operations given its close relations with the military and also Mnangagwa who was Defence Minister when the military acquired its stake in Anjin. He does not want Mnangagwa to have access to unaccounted for funds which could be used as a war chest in the succession fight,” said a senior government official.

As part of the strategy to take the war to the diamond mining companies, in an interview aired as part of his 92nd birthday celebrations, Mugabe claimed that diamond mining companies operating in Chiadzwa had made more than US$15 billion, but had only accounted for US$2 billion.

He said there was massive looting in Chiadzwa, which had robbed the nation of development funds.

Anjin has taken the government to court, arguing that its forced eviction constitutes a breach of shareholders’ rights that are protected in terms of the agreement on the encouragement and reciprocal protection of investments between the governments of Zimbabwe and China.

Another company which was operating in Chiadzwa Mbada Diamonds has also taken government to court.

Anjin, Mbada and other companies operating in Chiadzwa such as Jinan, Kusena, Diamond Mining Company and Marange Resources were ordered to stop operating by Chidhakwa last month after they resisted his controversial consolidation plans.

Chidhakwa gave the firms a 90-day ultimatum to remove equipment after ordering them to halt operations with immediate effect.

“Since they no longer hold any titles, these companies were notified this morning to cease all mining activities with immediate effect and to vacate the mining areas covered by Special Grants for diamonds,” Chidhakwa told reporters and executives from the affected mines during a press conference on February 22.

“They have been given 90 days within which to remove their equipment and other valuables. During this period, access into the premises will be by request which will be considered by the ministry of Mines and Mining Development.”

Sources, however, said Chidhakwa was part of the G40 faction and was acting to cut funding to the Mnangagwa faction, apart from removing the military from mining activities and creating his own legacy project.

For a long time, government ignored several reports alleging massive looting in Marange. One such report was in November 2012 when the Toronto based pressure group Partnership Africa Canada released a report titled Reap what you sow: Greed and corruption in Zimbabwe Marange Diamond Fields. The report alleged that diamonds worth US$2 billion had been looted up to that point since 2008.

However, according to sources, Mugabe and the G40 can no longer continue to ignore the events in Marange as the opacity of the mining operations could allow the Mnangagwa faction to build a war chest to fund their succession bid.

“As such the latest moves by Chidhakwa as well as recent remarks by Mugabe about looting should be seen in the context of G40 manoeuvres to block sources of funding for their opponents,” one source said.

“The Ministry of Defence was under the stewardship of the Vice-President (Mnangagwa) when it started managing part of the Chiadzwa diamond fields. Mnangagwa was also instrumental in structuring deals between the military and the Chinese firms,” said one source.

Sources said Mugabe has always been aware and looked the other way as the military established its own economic unit which has been spearheading its business ventures across various sectors of the economy, especially in mining. The military has interests in coal mining, the extraction of methane gas and power generation in the Lupane district of Matabeleland North province. It also partnered with the Russians to start a US$4 billion platinum project in Darwendale area which has thus far met with resistance from Chidhakwa who has reportedly been reluctant to facilitate the issuing of a special grant for the land needed to kick-start the venture.

The project is a joint venture between the military through Pen East Mining Company and Russian investors including VI Holdings, Rostec and Vnesheconom bank. Chidhakwa though, prefers that the Russians partner the Zimbabwe Mining Development Corporation (ZMDC) to ensure accountability. He also wants benefits of the project to accrue to Zimbabweans rather than the army.

“The president is uneasy with all these deals as he is with the Marange diamond operations,” said another source, adding, “he wants all these to be re-examined because he does not want the army and by extension Mnangagwa to have access to accountable funds which could be used to serve his succession agenda.”

Mnangagwa on Wednesday, however, said he supported the consolidation process because it is the “best practice the world over.”