EDITORIAL COMMENT: Time to disband ZMDC

EDITORIAL COMMENT: Time to disband ZMDC
Minister of Mines, Winston Chitando

Minister of Mines, Winston Chitando

STATE mining company, Zimbabwe Mining Development Corporation (ZMDC) is shopping for partners to mine its grossly under-exploited mineral assets.
These assets range from gold, coal-bed methane, lithium, tantalite, emeralds and graphite.
Established in 1982, with its chief mandate being to invest in the mining industry on behalf of the State at a time when government sought near total control of the economy, the ZMDC has precious little to show for it existence. The firm’s tale is one of mothballed mines, management malfeasance and financial abuse.
It has struggled to sweat its considerable mineral assets.
Even more damning is the fact that, after 2009, the ZMDC was central to what became the grand Marange diamond heist.
The company had shareholding in each of the seven major mines that had concessions in the Marange diamond fields.
In good years, between 2011-2012, ZMDC’s annual revenue averaged $300 million, while dividends amounting to $92 million were paid to its 100 percent shareholder, government.
The ZMDC’s latest available financial information, for the 2014 financial year, carried in the Auditor General’s 2016 report, shows a net loss of $10 million (from a $57 million loss in 2013).
In 2012, ZDMC’s net profit was $67 million, while the figure stood at $99 million in 2011.
The Auditor General has raised concerns over corporate governance standards at the ZMDC, as well as fears over its going concern status.
All this points to an ailing company that does not inspire confidence that it can, for once, exploit its vast mineral assets for the nation’s benefit, even after securing the fresh capital it seeks.
There is nothing in ZMDC’s record to justify its continued existence.
It might be time, we suggest, for government to disband the ZMDC and warehouse its assets under the Sovereign Wealth Fund.
All new and existing partners in ZMDC’s projects would have a new partner unencumbered by a chequered history.
In any case, the Sovereign Wealth Fund Act, passed in November 2014, envisages inflows from the ZMDC and other State investments.
As government scraps the indigenisation requirements for all mineral classes save for platinum and diamonds, operationalising the Sovereign Wealth Fund through ZMDC’s assets would be an effective way of protecting the family jewels.

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