A blog on Parliament’s visit to
the Chiadzwa/Marange diamond fields on 13-15 January 2017.The authors were part
of the widely reported field visit. #ParlyVisit2Marange
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| Zimbabwe legislators in the Marange diamond fields |
Where is the missing $15 billion from Marange diamonds? This is an
eminent question that is likely to be asked in any public discussion on the Marange
diamonds. A state owned enterprise, the Zimbabwe Consolidated Diamond Company
(ZCDC) was created under the guise of promoting greater transparency and
accountability in the management of Marange diamonds. The 8th
Parliament of Zimbabwe through the Portfolio Committee on Mines and Energy
(PCME) is one of the stakeholders that have sought to hold the government and ZCDC
accountable. Public hearings have been conducted at Parliament targeting the ZCDC and
its parent the Ministry of Mines and Mining Development (MMMD). Currently, ZCDC
is mining concessions that were previously held by Marange Resources and Diamond
Mining Company (DMC). ZCDC has not been able to start mining operations in
diamond concessions owned by Mbada diamonds, Anjin and Jinan due to a February
2016 contested consolidation of diamond companies which has since spilled into
the courts.
Arguably, the role of Parliament as a critical stakeholder in the
governance of mineral resources has been a contentious one among civil society
and development partners. Of course, Zimbabwe’s challenging political economy
where the executive has a well-documented history of whipping Parliament into
line is the fodder which many critics use. The PCME has however, been handy in some
instances. The widely acclaimed Chindori Chininga Report (October, 2013) on Marange diamonds is a case in point.
To gain first hand appreciation of what is
happening in Marange after the contentious consolidation of diamond mines, the PCME,
with the support of the Zimbabwe Environmental Law Association (ZELA) visited
Marange and Arda Transau on 13 and 14 January 2017. Parliament had to get
clearance to conduct the field visit. Regrettably, the clearance constrained
the hand of PPCME to interact with the affected community members and the
workers.
The tour commenced with a meeting between the legislators,
journalists and the ZCDC management and staff at the ZCDC Boardroom at
Chiadzwa. The team went through safety and security presentations from the ZCDC
Head of Security.
The ZCDC mining processes are divided into portals.
The first port of call for the parliamentarians was Portal Q, which is the area
that was formerly mined by DMC. There the participants witnessed earth movers
and Lorries extracting the ore for transportations to the mining processing
plants. The plants themselves are not connected to the national power grid,
hence they use diesel powered generators. The ZCDC management indicated that
they were working towards the connection to the national grid. They said they
were using up to 20,000 liters of diesel per day to run generators to power the
mining processes. This is not desirable both for feasibility reasons and for
environmental considerations especially huge carbon imprint of such an
operation. ZCDC indicated that ZESA was stonewalling their efforts to get
connected to the power grid.
Most of the equipment being used by ZCDC is on a
‘for hire’ basis, which is an expensive move for the company. There were
questions raised about the sustainability of depending on hired machinery
instead of purchasing own equipment. Members of the PPC expressed concern that
equipment hiring is prone to corruption, especially if there is no oversight
over procurement procedures and systems.
There were various issue updates that surrounded
the tour. For instance, the acting ZCDC CEO Ridge Nyashanu took the legislators
through the mission, vision and core values of the ZCDC Company. He also
reiterated the challenges facing the company, namely the court proceedings. On
top of that there seemed to be challenges in raising capital, having to hire
expensive equipment, water shortages, high security costs, legacy issues as
well as absence of a reliable skills base.
He also indicated those mines that had not been
secured by ZCDC due to court challenges were being protected by the Zimbabwe
Republic police (ZRP) Support Unit under an operation code named “Operation
Chengetedzai Upfumi”. Procurement contracting is needed to prevent corruption,
inefficiencies and leakages of resources which have impacted on the
profitability of ZCDC’s operations. Ultimately, accruable benefits to the state
such as corporate income tax and dividends will be hurt by corrupt procurement
practices.
In terms of geological challenges, the company was
yet to identify the kimberlite pipeswhich would be the actual source of the
diamonds. At the moment there is only alluvial mining taking place at the
Chiadzwa/Marange diamond fields.
Prof Gudyanga who is both the Permanent Secretary
to the Ministry of Mines and Mining Development and an ex-officio Chair of the
ZCDC gave an update on the status of ZCDC before the tour. He highlighted some
of the challenges that were being faced by the company.
Among the challenges were the legal challenges
faced by the company were as follows:
v
Legal Challenges
ZCDC faced legal challenges from companies who were
operating the mines before their licenses failed to be renewed by the Minister
of Mines, Hon. Walter Chidhakwa in February 2016. ZCDC had already won court
cases against DMC and Mbada Diamonds. However, there was still an outstanding
challenge from Anjin and Jinan. Through bilateral discussions held between the
Zimbabwean and Chinese governments, Anjin and Jinan are expected to drop their
court challenge.
It is remarkable to note that government has sought
the alternative dispute resolution route aside from litigation to resolve the
disputes around diamond mining claims. The court process by nature is long,
costly and can rapture relationships with investors in this case. This is the
route that should have been pursed diligently from the outset. Notably, the
protracted legal disputes have caused a sharp drop in diamond production which
has a telling effect on foreign currency shortages. Diamond export earnings
could have eased the foreign currency crises that is hurting socio-economic
development. Already, the Zimbabwe Medical Association (ZMA) has issued a stress call on low stock levels for
essential drugs caused by foreign currency shortages.
v
Relocations of Villagers from mining areas
ZCDC announced the intention of completing the
relocations of people from the mining areas. However, this was said to be hampered
by lack of financial resources as the company was just operating two mine
portals.
However, a relocation plan must be put in place, an
open plan with clear targets to allow communities to monitors the relocation
exercise. The ideal scenario is that relocations under Free Prior Informed
Consent (FPIC) should precede mining activities. However, it looks like ZCDC is
looking to raise funds for relocation from the proceeds of mining activities.
Potentially, this might escalate community rights violation if cash flow
challenges are experienced and from other competition priorities like
capitalization.
v
Employees
There were plans for former employees of the previous
diamond mining companies to be absorbed into ZCDC. This was pending the outcome
of the ongoing legal proceedings.
There is need for disclosure of the numbers of
employees that were affected by the consolidation and the total debt ZCDC has
accrued as a result. It will be interesting for CSOs to carry out a study
focusing on socio-economic impact of consolidation focusing on affected workers
to show the human cost often overshadowed by economic considerations
v
Diamond Exploration
The mining taking place was mainly for alluvial diamonds.
A huge investment is being made by ZCDC towards geological surveys and mapping
underground pipes.
It is clear that ZCDC is facing capitalization
challenges. Given the high costs associated with exploration, it is hard to see
a situation where meaningful diamond exploration of diamonds can be undertaken
by ZCDC. Therefore, ZCDC must prioritise the engagement of a sound technical
and financial partner to explore and exploit diamonds in Marange.
v
Consolidation and ZCDC’s legal status
The permanent secretary explained that there is a
misconception that ZCDC is an initiative to consolidate the diamond companies
that were operating in Marange. Rather, the consolidation process refers to the
mines. It was also explained that ZCDC was registered under the Companies Act
(Cap 24:03).
On the denial by Prof Gudyanga that ZCDC was
neither a successor company to neither the previous diamond miners nor a
consolidation of their business, there arises many questions about the real
status of the company. The absence of an act of parliament makes it
questionable as to what sort of a parastatal it is. Furthermore, if it is a
private company, then there will be questions over the way it got the license
over the diamond, which are supposed to be strategic for the economic
development of the nation.
v
Production statistics
ZCDC’s annual diamond production for 2016 stood at
963,000 carats against the targeted production of 1.3 million carats. In 2015,
diamond in Marange stood at 2.3 million carats. This was caused by ZCDC’s failure to mine
diamond concession owned by Mbada, Anjin and Jinan due to the legal disputes.
2016, diamond production in Marange fell by 59%,
from 2.3 million carats in 2015 to 953 000 carats in 2016. Considering the peak
diamond production of more than 12 million carats in 2012, the Marange diamond
wealth now ominously looks like a squandered opportunity. ZCDC is not living up
to its promise on improving transparency and accountability. As an example,
diamond production statistics are not disaggregated to show gem, semi-precious
and industrial diamonds. Disclosure of disaggregated diamond production data is
very important as high valued gem quality diamonds are highly susceptible to
theft, smuggling and undervaluation.
v
ZCDC’s expansion plans
The company was trying to optimize production at
the mines sites which it currently operates. Then there were plans to start mining
at the Mbada and DTZ claims. In terms of capitalization, the company was
working towards purchasing equipment, refurbishments as well as getting
connected to the national power grid instead of using diesel fueled generators
for power.
v
Security of diamonds
Another key issue shared concerned security of the
diamonds. ZCDC was developing a product tracing system that will track the diamonds
from the mine to the sorting house. There was also remote monitoring of
production processes with different security teams expected to produce occasional
reports separately from each other. There were also plans for the use of drones
to monitor the mining and production processes.
v
CSR and Community Enterprise Development
ZCDC indicated that as part of their Corporate
Social Responsibility (CSR) programmes, the company is buying vegetables and
chickens from the community for its canteen. In addition, ZCDC would want to
build a university a hospital among other community social investments the
company is making.
ZCDC must however have a clear and open CSR policy
which can be monitored by the communities and Civil Society Organisations
(CSOs). Whilst the act of buying vegetables and chickens from the host
community is good, ZCDC can do more to help with community enterprise
development. For instance, all the goods and services that are not complex and
technical should be given to the local communities
v Employment
Currently, ZCDC is employing 440 workers comprising
of 401 males and 39 females.
In sectors such as Finance there was just one
female to 12 men, in engineering there was 1 woman to 78 men. The percentage of
locals employed by ZCDC is 49.7%.
The gender disparities in terms of employment
opportunities are quite glaring and most likely widen inequality gap between
men and women. Women labour constitutes roughly 9% of the total employees at
ZCDC. Whilst it has been generally alleged that women to lack the technical
skills needed in the mining sector, it is shocking to note that even the
finance department has huge gender disparity, 1 female and 12 men. It is
difficult to argue that there is shortage of skilled women in the market
ARDA TRANSAU VISIT
On the 14th of January which was Day 2
of the tour, the PPC visited Arda Transau. This is an area where the villagers
from the Chiadzwa/Marange area were relocated to. ARDA Transau is situated
about 20 kilometers from Mutare, the Manicaland provincial capital.
The parliamentary team managed to meet and hear the
concerns of the relocated villagers. The major concerns included the following:
v Overcrowding. Most of the families reported being
settled in one-family quarters together with elder children and their families
as well. This led to lack of privacy and outbreak of water-borne diseases.
Recently communities bury one person every week.
v Inadequate health and school facilities. The
villagers indicated that there was just a single doctor and a single nurse at
the Arda Transau clinic. These were supposed to cater for a community of over
5000 people.
v Inadequate land for cultivation. The team observed
that each family was allocated a mere 1 hectare for housing, livestock kraals
and cultivation.
v Unfulfilled promises. These mainly centered on an
irrigation project which has not been developed since the relocation began around
2009. Even when it will be completed each family will only be allocated half a
hectare. This is hardly adequate for just subsistence agriculture, not to mention
commercial.
The concerns from the villagers were gathered by parliament
for future redress. The team also managed to visit the places where ZCDC itself
settled 23 families in December 29016. The area’s roads have not been serviced
and the health facilities were situated about 10 kilometers away, which was hardly
adequate for the community. ZCDC indicated 18 of the 23 families had received
disturbance allowances but the relocated families indicated they were still
awaiting receipt of the said funds. The PPC asked questions on whether ZCDC had
a relocation plan and had standardized amenities before relocating communities.
ZCDC indicated that they had no resources and once
resources become available they will work on a relocation plan. ZCDC was asked
how many more families needed to be relocated and indicated that approximately
400 families. The families relocated in 2011 indicated that in fact ZCDC must
halt any plans to bring more people to Arda Transau because their married
children who had been promised housing never received any and decided to occupy
some houses that remained unallocated. In fact, the families claim that the
Mutare District Administrator now claims that their children are illegal
occupiers from Mutare who unlawfully much to their shock. The lack of a relocation policy left Arda Transau
communities in sad situation.
AND IN
CONCLUSION...
Mineral resource governance challenges are still
festering in Marange. Zimbabwe’s diamond mining industry is well known for an
executive-reported missing US$15 billion. Transparency and accountability is
still a great challenge as the public is in dark with regards to the quality
footprint of diamond production. Alluvial diamond mining boon is gone judging
by the production which has plummeted to 953 000 carats from the pick
production of 12 million carats in 2012. A stern remainder that minerals are a
finite asset and the opportunity must never be squandered. Clearly, ZCDC’s
capacity to undertake much needed exploration, mining of conglomerate and
kimberlites is questionable. The state enterprise is in need of a sound
financial and technical partner to turn around the rot in Marange. Community
engagement and local development initiatives being undertaken by ZCDC are a
mockery especially when compared with the likes of Zimplats. It now remains to
be seen how the Portfolio Committee on Mines and Energy will use the knowledge
and experience gained through the field visit to further its oversight role in
the management of Marange diamond resources and reverse the curse.
[Mukasiri Sibanda (@mukasiri) is an economic governance officer. He is
interested in mineral resource governance. He blogs at www.mukasirisibanda.wordpress.com .Lenin Tinashe Chisaira (@LeninChisaira) is a lawyer and activist. He
writes on economic and environmental justice, human rights and leftist
democracy. He blogs on www.cdetinashe.blogspot.com . Mukasiri and Lenin work with the Zimbabwe Environmental law
Association]
