Government orders all diamond mining activities in Chiadzwa to stop

Government orders all diamond mining activities in Chiadzwa to stop

Mines Minister Walter Chidhakwa

GOVERNMENT has ordered a stop to all diamond mining activities in Chiadzwa with immediate effect with companies operating in the areas fields given 90 days to remove equipment and other valuables.

Mines Minister Walter Chidhakwa told a press conference this morning that the companies have been operating illegally for the past four to five years after their special grants expired and were not renewed.

The decision comes after the companies have been resisting government’s move to consolidate diamond mining operations under one company called the Zimbabwe Consolidated Diamond Company (ZCDC).

“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.

“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 Mines ministry,” he said.

There are about nine companies that were issued special grants since 2008 under the Joint Venture agreements which Chidhakwa said the JV companies failed to renew the grants some of which expired as far as 2010 and others in 2013. The companies are Anjin, Diamond Mining Company (DMC), Jinan, Mbada, DTZ-OZGEO, RERA , Gye-Nyame, Kusena and Marange Resources.

“We now urge the diamond companies to cooperate with security arrangements that have been put in place for the orderly takeover of the mines by government. Government has since deployed personnel for the process and any diamond products that are not disclosed or found later will become government property,” he said.

Chidhakwa said there was evidence for the past seven months that the companies were not willing to move ahead with the consolidation process. Only Marange Resources, DMC and Jinan held extra-ordinary general meetings as had been requested by Government. However, only Marange Resources accepted the proposals while DMC and Jinan went against the consolidation.

Mbada and Anjin were yet to hold EGMs but their investors Grandwell and OFECC respectively made unilateral submissions to Government opposing the consolidation process.

According to Chidhakwa, most of the companies invested to mining alluvial diamonds while no investment was made on exploring kimberlite deposits which are difficult to mine and process. “Most of these diamond JV companies were cherry picking ease to mine/high grade alluvial deposits and not blending with low grade ore (conglomerate) which is difficult to mine and process.

When diamond production commenced in 2009, individual companies pledged varying amounts of investments into diamond mining sector. Anjin Investments pledged $132 mln, but to date no amounts of their investments is known as they have not submitted any audited accounts to Government.  DMC pledged to invest $50 mln and has sunk $41 mln, Jinan spent $137 mln having pledged to invest $200 mln. Mbada diamonds pledged $100 mln while it invested $48 mln.

Chidhakwa said closer scrunity of the contribution of the diamond sector to fiscus reveals the fragmentation that called for consolidation. The sector’s contribution to fiscus since 2010 to 2015 amounts to $637 335,956, an amount which was at one time projected to be the expected contribution for a single year. 2011 saw the highest contribution at $168.54 mln while 2015 had the lowest at $23.5 mln.

In terms of resuming production Chidhakwa could not give a specific time frame but said under the consolidation, operations would begin with areas with no controversy such as at Kusena and Jinan where operations were mothballed.

He said production this year is targeted at 3 mln carats before increasing to a stabilized production of between 8 to 12 million carats a year.

Chidhakwa assured workers of the diamond companies that, subject to normal recruitment processes by the Zimbabwe Consolidated Diamond Company, no lay-offs are envisaged.

He also said the company has two deep boiling facilities in Harare as its first line value addition as well as a world class tender facility “as we build towards a diamond bourse. FinX

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