Minister linked to Diamond mining company

The deal between Reclam and the government-owned ZMDC has been shrouded in controversy ever since Mpofu sanctioned it on behalf of the government last year without going to tender.

The imbroglio has also sucked in Canadile, another mining concern that received government green light to mine diamonds in Marange along with Reclam. Documents indicate that Reclam is involved in the recycling of scrap metal, glass, rubber, plastic and is a major processor of non ferrous and ferrous metals in South Africa.

Reclam and Canadile are said to be mining in a concession area currently held by ACR, a London-listed resources company still battling to regain control of its claims measuring 2 000 hectares, which the government “irregularly” transferred to ZMDC. ACR chief executive officer, Andrew Cranswick, alleged yesterday that Mpofu’s association with Reclam, the majority shareholder in Grandwell Holdings Limited of Mauritius, dates back some nine years ago to a deal with the Zimbabwe Iron and Steel Company (ZISCO).

“It’s of great interest to the private sector that former Minister of Mines (Amos) Midzi had great difficulty in resolving the Marange dilemma for several years without any final outcome whereas the new Minister of Mines has openly declared that he has approved the JV (joint venture) agreement between ZMDC and a scrap metal dealer within a couple of months of coming into office,” said Cranswick.

“It is also interesting to note that the same scrap metals dealer secured a contract to process slag dump at ZISCO during the tenure of the same Minister but in a different portfolio.”

The scrap metal company continues to procure scrap metal from ZISCO. Under the auspices of its subsidiary, Grandwell, Reclamation signed an agreement with ZMDC’s Marange Resources (Private) Limited on July 21 2009 leading to the formation of Mbada Diamonds (Private) Limited, in a 50-50 partnership arrangement, reportedly approved by Mpofu.

The joint operation, chaired by retired Air Vice Marshal Robert Mhlanga after being seconded by ZMDC, has already committed over US$50 million into the first phase of mine development.

After three years of controversy over the Chiadzwa diamond mines 300 000 carats of the precious stones will go under the hammer today in Harare.

This may result in a festering legal dispute, which started in 2007, boiling over as ACR has taken the matter to the South African courts.

The rough cut diamonds, airlifted from Marange since December last year, will be auctioned at Mbada Diamond’s recently established diamond processing facility at the Harare International Airport.

Immediately after the first auction, scheduled to end on Saturday, Mbada is expected to declare a dividend that will see the cash-strapped Zimbabwe government earning 80 percent of total sales revenue through a 50 percent bonus, a 10 percent royalty fee, 15 percent taxation and a five percent resource depletion fee. Mbada diamonds will get 20 percent of the earnings.

“We saw it fit to give government the money instead of an individual benefitting as we strive to make sure that the diamonds benefit the country as a whole,” said Mhlanga just before a press conference in Harare yesterday afternoon.
Four international buyers, expected to make bulk purchases of the stones, will be tussling over the consignment as Mbada offload some US$100 million worth of the product every week.

“To ensure maximum and timeous revenue collection, the Zimbabwe Revenue Authority personnel are also expected to be available at point of sale,” said Mhlanga at yesterday’s press conference.

“The entire process from mining, transportation to marketing is being done in compliance to the requirements of the Kimberly Process. The sales and marketing offices are jointly manned and controlled by teams from both government and Mbada Diamonds.”

Mbada’s two diamond processing plants at Marange have a total capacity of processing 150 tonnes of ore per hour.
Mpofu refused to comment on allegations by ACR saying he was on leave.

“I am on leave in Victoria Falls and I don’t want to talk about any business,” he said.

The alleged irregularities of the joint venture’s mining rights came to light when Zimbabwe’s High Court in September ruled that the granting of a special grant to ZMDC and the Minerals Marketing Corporation of Zimbabwe (MMCZ) in a concession area owned by ACR was irregular.

ZMDC and MMCZ had secured the special grant after the Mining Commissioner declared Marange diamond fields a reserved area in 2006.

According to the judgment, the revoking of ACR’s claims had not been done in line with the procedures and requirements laid out in the Mines and Minerals Act.

Justice Charles Hungwe’s ruling upheld the Attorney-General’s earlier legal opinion on the matter that the ground covered by ACR’s claims was open to exploration at the time the De Beers EPOs expired in March 2006.

Mpofu’s ministry has, however, lodged an appeal with the Supreme Court against an order driving ZMDC out of ACR’s claims on one hand and giving the dispossessed company the right to establish its operations, on the other.