SMM loses mining claims

SMM Holdings administrator Afaras Gwaradzimba allegedly sold land under the company's mining leases, with the land set to be converted into residential stands.

SMM, formerly owned by businessman Mr Mutumwa Mawere owns asbestos mines—Shabanie in Zvisvavane and Gaths in Mashava. Both mines ceased operations one and half decades ago due to lack of funding and corporate conflicts.

It was placed under reconstruction in terms of Presidential Powers (Temporary Measures) (Reconstruction of State-Indebted Insolvent Companies) Act on September 16, 2004 and confirmed by the High Court on December 15 a year later.

Last week, SMM employees, who are seeking the removal of Mr Gwaradzimba lodged an application to the Minister of Justice, Legal and Parliamentary Affairs Ziyambi Ziyambi expressing concern over the disposal of vast tracts of SMM land "which runs contrary to the entire purpose of the reconstruction order given in 2004".

The workers lodged the application through the Zimbabwe Diamond and Allied Minerals Workers Union. Mr Gwaradzimba, who is being cited as first respondent, is said to have revealed the land deals in a meeting with employees a month ago. SMM is cited as the second respondent.

"At the meeting in question, first respondent revealed to us that he had decided to create a very sizeable and substantial real estate portfolio within the proximity of the mining location," read part of the application.

"Additionally, he divulged that he is converting mining leases belonging to the second respondent into residential stands.

"The obvious and natural consequence is that this undermines the viability of the second respondent as a going concern. Effectively, first respondent has abdicated and abandoned his primary duty of securing investors to resuscitate second respondent and then service the company debts," the workers added.

Further, the workers argued that SMM, once sixth largest producer of the chrysolite in the world, is being moved from its core business of mineral extraction. In the application, the workers say the Government should remove Mr Gwaradzimba whom they claim continues holding the office illegally.

In terms of the Reconstruction of State-Indebted Insolvent Companies Act, the Minister of Justice, Legal and Parliamentary Affairs is empowered to vary the reconstruction order by removing Mr Gwaradzimba and any other person appointed to assist him.

The workers claim Mr Gwaradzimba intimated in a meeting that his continued stay in office was illegal as he was relieved of his administrative duties after the management of the company was transferred from Ministry of Justice to Zimbabwe Mining Development Company under Mines and Mining Development Ministry, only to be re-appointed informally by a Cabinet Committee.

Mr Gwaradzimba is said to have claimed that he was relegated to only deal with litigation brought against SMM by Mr Mawere.

According to workers, Gwaradzimba has "neglected or refused" to pay current workers about US$19,2 million between January 2012 and November 2017. Salary arrears from December 2017 to date are yet to be computed. Nearly 1000 ex-employees are owed US$17,6 million.  

The company is also said to have outstanding obligations amounting to about US$3,4 million to the Mining Industry and Pension Funds and US$2,7 million to National Social Security Authority.