Masimirembwa: Man on a mission


HARARE – Every Thursday, starting today Senior Assistant Editor, Guthrie
Munyuki will bring you in-depth, hard talk interviews with key
decision-makers in society; be it in business, social circles and sport —
in a bid to interrogate and unpack critical issues as well as providing
an interactive platform between eminent personalities and our readers.

GODWILLS Masimirembwa wants to be remembered as the man who got the Zimbabwe Mining Development Corporation (ZMDC) back to its glorious years.

For more than 18 years, the once-all-conquering parastatal has endured a serious decline at its mines — extinguishing any hopes of recovery at some of its mines which employed thousands of workers.

Kamativi, Sabi Gold, Jena, Elvington Mine, Sandawana and Mhangura Copper Mines, are like a roll call of companies in the graveyard.

Yet, the 53-year-old ZMDC chairperson sees revival on the way within the next few years.

He refuses to camouflage the challenges by gloating about the performance of Marange Resources, the ZMDC subsidiary, mining diamonds from Chiadzwa.

Marange Resources is also a partner with Mbada diamonds.

Instead, he says it is time to roll the sleeves to put back struggling mines and some of the closed ones, back to life.

Masimirembwa laid out ZMDC’s plans for strengthening existing mines and reviving dormant entities such as Elvington Mine, Kamativi and Sandawana mines.

“One thing that is very clear to us at ZMDC and we would want to follow that path is that we have Zimbabweans with the expertise to carry out mining operations.

“What we lack is working capital and money to buy equipment so we are now trying to source equipment which we can buy on credit and then simply retool and re-equip these mines.

“The expertise is in the country and for Zimbabweans who are in the Diaspora, if the opportunities are opened they might want to come back once the mines are operating.

“We are just about to seal a deal with respect to Elvington Mine. We are very confident that in the coming weeks, we will conclude a deal with our joint venture partner to revive the mine.

“At the time of its collapse, Elvington was producing 60 kilogrammes (kg) of gold per month. We are looking forward to reviving that mine within the next 180 days,” Masimirembwa told the Daily News.

Before its closure in 1994, Elvington Mine was the source of livelihood for mainly Chegutu residents. “We want it to go back to that level of being top performer before its closure in 1994”.

The ZMDC chairperson revealed plans for Sandawana Mine, a bygone emerald giant which once contributed to the performance of the mining industry in Zimbabwe before reaching a plateau.

“We have Sandawana for the emeralds but emeralds are not doing well. We are carrying out exploration for iron ore. We have huge deposits of iron ore at Sandawana. We have 21 kilometres of the Buchwa mountain range so we are carrying out exploration with a view to go into iron ore mining.

“Also we are carrying out exploration for gold and tantalite at Sandawana. So that work is in progress. We should be able to start mining gold in the first quarter of 2018,” said the 53-year-old lawyer by training.

“At Kamativi, where we have huge deposits of tin, tantalite and lithium, we have engaged investors and we are looking forward to concluding a joint venture partnership there.”

While Masimirembwa did not reveal the partner, a group of South African investors is heavily linked with Kamativi’s revival and is said to be keen on stumping $100 million for a stake in the mine.

The ZMDC has been scouring for partners to conjoin efforts to revive the tin mine which closed in 1994 due to plummeting world market prices.

Whether these are the best laid plans or audacious moves by the ZMDC under the stewardship of Masimirembwa, one thing that is certain is, there is a breeze sweeping across the parastatal.

The ZMDC chairperson revealed plans to reignite the copper belt of Mhangura following the closure of the mine in 1996.

“We are also carrying out studies at Mhangura where it is still commercially-viable to re-open the mine but we are satisfied that we can commercially reprocess the dump.

“We have 50 million tonnes of copper dump at Mhangura and we are looking for a joint partner to reprocess that dump whilst we continue exploring for the possibility of continuing mining.

“But we have deposits at Copper King and Copper Queen where again we would want to carry out geological work to establish whether there is commercially-viable resources,” said Masimirembwa.

Sabi Gold and Jena mines, according to Masimirembwa are in good stead and contributing to the market.
He said Sabi Gold produces 25 kg per month while Jena weighs in with 30kg. Marange Resources which is mining diamonds in Manicaland could be the one oiling ZMDC and giving the parastatal hopes of reviving its mines.”

But, Masimirembwa instead, said there were many inaccuracies concerning diamond revenue and what companies, including the ZMDC, were contributing to government.

“First of all, we need to get the record straight. The government deducts from the gross revenue of all diamond sales, 15 percent, as royalties. So that money is deducted every time a sale is concluded and it goes straight to Zimra.

“So that’s a contribution from the diamond industry to the fiscus, of 15 percent of gross sales. Zimra is involved, at every sale and knows every sale as it occurs and they get their pound of flesh,” said
Masimirembwa in opposing claims by Finance minister Tendai Biti that there is opaque trading in diamonds and revenue remittances from their sales.

“Then after the sales, after those deductions, we have to provide for, of course, the working capital from the gross sales then there is a 0,875 percent which goes to the MMCZ because MMCZ is responsible for marketing these diamonds.

“It is the surplus that remains after various deductions that a dividend can then be declared. And we all know that dividends are never declared on a monthly basis.

A company trades for the entire year and then if there are profits then dividends are declared.

“But because the government was having serious cash flow problems, particularly last year, we committed (as ZMDC) having consulted with our joint venture partners, to make a monthly contribution to government of about $25 million.

“And this was on the basis of simply saying let’s make a contribution and if this contribution exceeds the dividend that is due to government, adjustments would be made at a later date,” he told the Daily News.
Masimirembwa said the costs of producing diamonds had gone up from 20 percent of gross to about 38 percent of gross.

“But you seem to get this impression from minister Biti that if you simply sell diamonds worth $20 million, $10 million must come to government. It doesn’t work like that and there is no business which works like that because you have to meet the costs of production and they must be deducted from gross sales.

“And also the price of diamonds has tumbled. Now for us in Zimbabwe, there are facts which you cannot deny. The ZMDC and its subsidiaries and its joint venture partners are all under sanctions and for us sanctions are real.”

He said the United Sates’ Office of Foreign Assets Control (Ofac) has red-flagged ZMDC, its subsidiaries and joint venture partners as entities under sanctions.

“So they will block any transfer of any money due to us from the sale of diamonds. It means if you are to have a successful sale, you have to avoid those sanctions.

“It makes it difficult to have customers. Not only are we under sanctions, America has gone further to say if they know any of our customers dealing with us they will blacklist them.

“They have gone further in the value chain and threatened India (biggest consumer of rough diamonds), to say if your companies buy diamonds from Zimbabwe, American companies are going to be told not to buy the cut and polished diamonds from India.

“The totality of it all is that our customer base shrunk. We certainly don’t have America and Europe as our customers.

“The few who remain are not willing to pay maximum price for our diamonds because they cut corners somewhere in order to avoid being detected by Americans. It impacted negatively on the prices we get for our diamonds.

“But we must survive as companies and as government. We end up selling at low prices. Average cost of producing diamonds is $38 and the average price of diamonds is between $51-$55 per carat.

“You can see the stress that is there and yet 15 percent is deducted from the gross and goes to treasury as royalties. It simply is not correct that diamonds are not benefitting the economy.

“Minister Biti at one point indicated that diamonds were fetching $1 500 per carat. With respect to honourable minister Biti, if he has such customers we are here to accept them; let him bring them here to ZMDC or take them to his counterpart, the minister of Mines and say I have customers here who are prepared to pay $1 500 for diamonds per carat.

“We will sell all the diamonds to those customers brought by honourable minister Biti. He should not take an armchair approach, peruse a magazine, and talk to some people out there.

“He must bring them onto the table and let them buy our diamonds and we will all be happy,” Masimirembwa said with sarcasm.

Biti has maintained his claims that the diamond industry is not contributing much to the fiscus to the extent that his 2012 budget went off rails after missing targets anchored on $600 million, he had hoped would come from diamond sales.

He has accused Chinese firm, Anjin, as being the chief defaulter.

The Chinese firm is in partnership with the military which has shares through the Zimbabwe Defence Industries.

Biti, among other critics, accuses the military and the Chinese of being involved in opaque diamond trading whose remittances to treasury are a far cry from what is expected.

Comments are closed.