“Struggling” diamond miners refute $50mln community trust pledges

via “Struggling” diamond miners refute $50mln community trust pledges | The Source March 7, 2014 by Bernard Mpofu

Diamond mines operating in Marange diamond fields have raised less than 10 percent of the $50 million they allegedly pledged to the Marange/Zimunya Community Ownership Trust two years ago citing confusion and viability problems, Parliament heard on Friday.

The five companies—Marange Resources, Diamond Mining Company (DMC), Anjin, Janin and Mbada Diamonds separately told the parliamentary portfolio committee on Youth, Indigenisation and Economic Empowerment that there is lack of clarity on how the trust would be run and how much the miners should pay into its coffers.

The miners however said they had assisted communities through their own social corporate responsibility programmes, adding that they were facing viability constraints due to a depletion of alluvial diamonds, making their commitments to the trust secondary.

Marange Resources acting chief executive officer Mark Mabudu said the company does not have a good working relationship with the trust.

“We have not worked together that well,” Mabudu said.

The company, however, paid $200,000 to the trust account, he said.

DMC chairman Ezekiel Mzabanyana said the company had not paid any money to the trust due to a breakdown in communication. But he said former mines permanent secretary, Prince Mupazviriho had instructed them to contribute $10 million to the trust, which they agreed to do. At the same meeting, the companies were asked to pay $1,5 million upfront.

“We clearly highlighted the fact that $1,5 million is a heavy enough burden and paying it in one lump sum was not achievable. The expectations placed on us were very high and the company was already struggling to sustain (operations) in the face of the high taxes we paid to the Zimbabwe Revenue Authority, coupled with low production against the higher cost of production,” Mzabanyana said.

DMC has 750 workers and is a 50/50 joint venture between government’s investment arm, Zimbabwe Mining Development Corporation and the Dubai-based Pure Diamonds.

Committee chairperson Justice Mayor Wadyajena asked Mzabanyana why diamond companies had misled President Robert Mugabe by pledging $50 million to the community trust in 2012.

“You are a (retired) general right? How do you mislead the head of state, the President, and commander in chief of Zimbabwe Defence Forces to present a cheque to the multitudes of poor villagers when you knew you had no capacity to honour the pledge?” Wadyajena queried.

Appearing before the same committee, Anjin board member Munyaradzi Machacha said the company had not paid anything to the Marange Trust despite pledging $1,5 million.

“At the time the pledge was made, we were made to understand by the then Minister of youth that the payment of the pledge could be done over time in tranches over a period of five years. We were not bound to make the 100 percent payment upfront and he indicated that those are the arrangements that he was making with other mining entities elsewhere, not just in Marange,” Machacha said.

“At the time we made the pledge, things were looking good but we then ran into cash flow problems, our productivity declined and our sales revenues were not coming as before. Last year we only made about two major sales.

“I personally spoke to minister Kasukuwere at the event and told him that I have only brought a dummy cheque and did not have the actual cheque. He said we could settle later. We were not fooling the President, we were making a pledge we shall meet.”

He said the company has not held any meeting with the Marange trust but met with Manicaland provincial Minister Chris Mushohwe who acted as the contact person for the trust.

Another mining firm, Mbada Diamonds, told the committee that the company had not made any pledge to the trust but donated $200,000 to the trust of its own accord.

“There was no formal or informal communication soliciting for a pledge from Mbada,” company chairman Robert Mhlanga told the committee.

He said the company had invested $39 million through its social corporate responsibility programmes over the last five years.