Freda Rebecca gold ore is shipped to China

THE new owners of Freda Rebecca Mine - led by Mr Yat Hoi Ning, the group CEO and executive director of Asa Resources - are on a collision course with workers, suppliers and the Bindura community, amid allegations of asset stripping and externalisation of funds. China International Mining Group, in which Mr Ning is also a director, holds 16,3 percent of Asa while the businessman directly owns 6,3 percent of Freda Rebecca.

The new shareholders wrestled control of Freda Rebecca from its founder, Mr Kaala Mpinga. Asa's other local assets, such as Shangani and Trojan nickel mines, are under care and maintenance, and it is Freda Rebecca that is literally their golden egg.

Centralising control

Workers are displeased with the new mine owners whom they accuse of asset stripping and mismanagement.

They say an elaborate plan, which has centralised control of the mining asset through expatriate employees like Mr Roy Shum, Mr Edmund Zhang and Mr Eugene Chen has allowed the new shareholders to see through their designs largely unopposed. It is alleged that the trio holds sway over the mine's payment processes, procurement and cash flows. Another claim is that Mr Shum together with Messrs Ning, Yim Kwan and Jan Lampen are now the only signatories for Freda Rebecca's bank accounts.

The allegations are contained in a 10-page document compiled by the Freda Rebecca workers' committee on March 6, 2017 and forwarded to the group's human resources department and legal and corporate services manager, the Labour and Mines ministries, and Mashonaland Central Minister of State Advocate Martin Dinha.

"The employees are concerned about contraventions by the shareholder with respect to the national laws and Government blueprints . . . (there is) perceived externalisation of foreign currency and possible corruption in the payment of shareholder loans and management fees in contravention of the Finance Act. "We are also advocating for the immediate suspension of shareholder loan and management fees payments until the company has cleared all outstanding arrears with critical suppliers and contractors as these are not primarily critical for the sustenance of this business.

"Furthermore, we cannot be spectators whilst our foreign currency is being siphoned out of the country through these bogus means. We are also requesting that no purchase orders be given to (foreign) companies with immediate effect, as this is delaying operations; killing our local industries and it is also another way of externalising our foreign currency," reads part of the document.

There are allegations that many workers have been retrenched, while others have had their salaries cut.

'Asset stripping'

But the most damaging allegation relates to a pattern of mismanagement and asset stripping. The employees say as three of company's milling plants are malfunctioning, gold ore is being shipped to China for processing, a development that might potentially prejudice the mine.

"They are now shipping raw ore to China after stopping the concentrator at BNC. The work on the smelter has been stopped. Mill 1, Mill 2 and Mill 4 are down at FRGM (Freda Rebecca Gold Mine). This is unprecedented," said the workers.

And as gold ore is shipped out of the country, there are claims that the shareholders are being paid about US$500 000 per week in management fees.

The employees further want the new management to be investigated about the suspicious sale of two of the company's properties - Number 21 Selous Avenue and Number 2 Denmark Avenue in Harare.

Unhappy Contractors

Local contractors under the banner of the Mashonaland Central Contractors are also unhappy. The grouping, which represents 25 firms offering services such as engineering and consumables, wrote to Freda Rebecca on March 7, 2017 complaining that since the new investors took over, local suppliers were struggling to get payments on time.

"We are now feeling that every penalty charged by Zimra on us, we must charge back to Freda Rebecca. We feel our presence on the mine is under threat," the said.

While Asa's non-executive director Mr Niall Henry last week conceded that the group is presently engaging restive workers, he however described allegations of shipping gold ore to China for processing as "completely wrong information".

He also dismissed talk of the alleged management fees as "wholly inaccurate".

"The matter (of restive workers) has conclusively been handled at the in house Works Council level and we believe that we have a robust employee engagement system that is capable to address such issues and as of now the worker leadership have called off the intended strike and matters are being handled internally," he said.

Share fight

In addition to containing raising tensions within its own backyard, including demand for a 10 percent stake by employees as per empowerment regulations, Asa also has to contend with a potential legal fight from a local consortium which is demanding 26 percent shareholding in the gold miner. Zindico Corporation claims it is entitled to the stake under an empowerment deal negotiated in 2011 with former shareholders and directors of Mwana Africa.

So far, only Suncraft Enterprises is understood to have benefited via a 15 percent stake in Freda Rebecca under Zimbabwe's indigenisation laws. Asa has interests in Angola, South Africa and Ghana where it mines diamonds and gold.