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Chidhakwa: I have no misgivings about diamond mining consolidation in Zim

10 april 2017

walter_chidhakwa_xx2.jpgZimbabwe’s mines minister Walter Chidhakwa stands accused of decimating the country’s diamond industry when he decided early last year to streamline operations of mining companies in Marange and that of partly Russian-owned, DTZ-OZGEO, in Chimanimani.

Zimbabwe Consolidated Diamond Company (ZCDC), the company that he set up to takeover operations in Marange and Chimanimani, only produced 900 000 carats in 2016 from peak figures of 12 million carats annually.

The company has since fired two chief executive officers within the period it had been operational and currently has an acting chief executive officer, Morris Mpofu, who was the head of the exchange control unit at the Reserve Bank of Zimbabwe (RBZ).

However, Chidhakwa was defiant, as he told Rough & Polished’s Mathew Nyaungwa in an exclusive interview when they met in Cape Town that he had no “misgivings” about the decision Harare made to have diamond operations in the country consolidated.

He said the consolidation is yet to be concluded as the government faced lawsuits from the ex-diamond miners.

Chidhakwa also said that ZDC had only accessed grounds previously owned by Marange Resource (a wholly state-owned company) and the Lebanese-owned Diamond Mining Company (DMC) as a result of the lawsuit, a move he said curtailed production.

He also revealed that the country will soon commence exploration work just outside Harare as well as on several kimberlites identified in Marange and the surrounding areas.

Below are the excerpts.

Last year you consolidated diamond mining operations in Marange and I would like to know your assessment of this consolidation, a year on?

When we started the process of consolidation we were keenly aware of the fact that the companies themselves would not take it lying down. So, we were ready for a court battle and you will know that soon after my announcement, we had a situation the companies all went to court and of course I knew that they were going to lose the court battle.

Subsequently, court decisions confirmed that their licences had in fact expired and that they could not continue mining until they regularised their mining titles, but of course in order to buy time some of them went to the constitutional court, particularly the Chinese (Anjin and Janin). We are in the Constitutional Court with them, but we have managed to hammer out an out of court agreement where we have said to them that they will leave and we will take over the area and they will take over all their equipment. So, at the moment, we are in the process of packing their equipment.

Zimbabwe and China have very long and established relations between them and we don’t want to spoil those relationships because of one project or one area of interest so what we decided to amicably part ways. What that meant was that since March 22 last year, we have not been able to access the ground except the ground that we had access to as a result of the discussions that we had with the Lebanese (DMC). We signed an agreement with the Lebanese and we paid for their equipment and took over the ground and equipment.

We also started negotiations with the Russians (DTZ-OZGEO) and I must say that the relationship between Russia and Zimbabwe is a very long-standing relationship and I did say to them that I was very impressed by the fact that as we took national decisions the Russians did not oppose us. They said we will accept but please do take into account that you are the ones who invited us and so we are again finalising an agreement with the Russians were will take over their equipment and will pay them slowly over a period of time. So, the actual consolidation has not yet been finalised because of the legal fights and because of the protracted time it has taken in the case of those we were negotiating with. It has taken much longer than we anticipated reaching agreement on these matters, but I am very happy that we are now finalising the matters.

The Chinese are now moving away and we will now be taking over the ground, but what it means and what we have realised talking to our geologists is that while we still have some alluvial diamonds available in the eastern part of the country we cannot rely purely on alluvial diamonds, we now need to take a step forward and go into conglomerates and so the entire plan that we have worked on now recognises that transition from alluvial diamonds to conglomerates. We will continue to mine the residual alluvial diamonds but at the same time prepare ourselves and our geological teams will be starting work in the next days [interrupted].

That is still in Marange?

Yes, that is still in Marange, but we will also be doing some work around Harare, the Chihota area and we will be doing work in Chimanimani and Penhalonga [as well].

How prospective is the Chihota area?

Well, there are four kimberlites there…we are going to run ground penetrating radar and after that we hope it will give us indications of what we are looking at and after that we can do some drilling and that drilling will tell us where we are and we hope that this can be done in the next three to four months as we move forward.

I need some clarity, minister, on what you said about the Chinese. Did they officially drop their court case against you?

They have not yet officially dropped their case, it’s a company called OFECC and it owns two companies, Anjin and Jinan. We have finalised on the movement of Jinan and we are now starting discussions on how Anjin will also start moving, but at the end of the day I am pretty confident that as they move their equipment it will not be useful for them to continue with the Constitutional Court. All we need to do is to facilitate them through our customs and reserve bank processes to export their equipment.

So, was it only the Chinese that took you to the Constitutional Court?

No, Mbada took us to the court as well.

So, are you also having discussions with them for an out of court settlement?

Mbada went into a situation where the creditors put a lot of pressure on them and equipment was auctioned and we actually as ZCDC bought some of the equipment and some of it was bought by different other players so while they may still have an interest I think they have realised that the opportunity is no longer there.

Your critics had been saying that the streamlining of operations in Marange was misplaced as production had tumbled. What is your reaction to that?

When we started the process and before we started it there was unanimity in the Press [and] everywhere you meet people [they would say] tirikubirwa ma diamonds (our diamonds are being stolen), we are not getting our fair share of diamonds and so on and so forth. This was in the public domain, but we who are involved directly with the goings on in Marange, we who got closer to Marange, got to know what was happening and I have no misgivings about the decision we took. Yes, it took longer, I always say to people Jesus Christ destroyed the [temple] and rebuilt it in three days, we couldn’t have done that. We destroyed the [temple] but I think we will rebuild it in the next 12 months or 24 months, but what we should come up with must ensure that proceeds become available to government and that government is able to deploy these into the various infrastructural development programmes.

So, you are currently mining on which claims?

We are mining on formerly Marange Resources and formerly DMC, which is owned by the Lebanese.

In terms of output, what are your projections this year?

Phew! That’s a difficult one! We have been having discussions since the beginning of January, the desire is to achieve 500 000 carats per month but I think it will start slowly. On the engineering side, we are trying to sort out the equipment, so that equipment availability rises from approximately 30-35 percent to about 80-85 percent. If we can increase equipment availability to that and then we upgrade the resource into a reserve to what we think we can upgrade it to then by the middle of the year, I think June or July we should get to about 300 000 to 400 000 carats and I think 500 000 carats per month will come during the end of the year.

Earlier we spoke about exploration. I understand you are also planning to conduct exploration on several kimberlites in Marange; can you shed more light on this?

There are seven kimberlites on the Mbada concession and so once we sort the legal issues we will start working on that. There are three or four kimberlites on the other side of the road and I spoke already about the Chihota kimberlites and so we will start work on that as well. We will have two teams that will be working, we hope to scale it up and have about three by adding another ground penetrating radar piece of equipment and we hope that enables us now to, in earnest, move from one kimberlite to another and see whether those kimberlites are diamondiferous or they are not.

With output sliding down, what has been the state of beneficiation in the country, I know you and your president were passionate about it?

Not very good! When production came down very significantly, we were now not able to supply our companies with the 10 percent they require, we were also not able to supply the company that we went into agreement with the necessary diamonds for the training of our students. Our students continue to train using diamonds from other countries, which is not desirable because we are training them to deal with Zimbabwean diamonds, but we hope that we can move forward.

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished

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