Govt wins diamond proceeds’ war with firms

via Govt wins diamond proceeds’ war with firms | The Herald August 5, 2014 by Lloyd Gumbo

Government has started collecting its share of revenue from the Chiadzwa diamond proceeds at sale level rather than waiting for yearly dividends, amid indications that the State could have been prejudiced of millions of dollars from previous sales.The Zimbabwe Mining Development Corporation, Government’s mining arm holds a 50 percent shareholding stake in each of the five companies at Chiadzwa — Mbada Diamonds, Anjin Investments, Diamond Mining Company, Jinan and Kusena.

The other miner, Marange Resources, is wholly owned by Government.

Appearing before the Parliamentary Portfolio Committee on Mines and Energy yesterday, Mines and Mining Development Minister Walter Chidhakwa said Government and the investors now shared profits soon after the sales.

He said they agreed with the Ministry of Finance and Economic Development that payment of royalties and depletion fees as well as sharing of profits be done immediately after the sales.

Fifteen percent in royalties is paid to Zimra, while two percent depletion fees is paid to the ZMDC.

“We have now worked out a way of saying let’s not wait to share our dividend at the end of the year,” said Minister Chidhakwa.

“Let’s not wait to declare a dividend. Let’s say we have taken away the depletion fee and the royalty, we now remain with the cost of running the company, exploration and new development. We agree on how much we will set aside for that.

“The rest we share 50-50: this one goes into a Government account and this one goes straight into the partner’s account. That is the system basis which we are working on now.”

Minister Chidhakwa said the Minerals Marketing Corporation of Zimbabwe Act would be amended to ensure that levies are paid to the Mining Promotion Corporation. He said MMCZ was no longer relevant in marketing the country’s minerals as firms did their own marketing.

There are fears that Government could have been fleeced from its previous sales as lack of transparency and accountability reigned supreme.

A recent research report by Equity Communications indicates that Zimbabwe’s diamond revenue was expected to rise by more than 47 percent compared to last year.

Diamond revenues were lower in 2013 as leakages persisted in rough diamond sales.

The country’s diamond revenues reached US$466,9 million last year, a 38,4 percent drop from 2012.

President Mugabe has on several occasions expressed dissatisfaction at the way the diamond mining firms operated.

According to the Equity Communications research, dealers could have been buying Zimbabwe’s diamonds at a discount of up to 40 percent.