News / National
Chinamasa hunts diamond conmen
04 May 2014 at 01:49hrs | Views
A company, commissioned to organise diamond sales in Dubai on behalf of Zimbabwe - Dubai Diamond Exchange is illegally holding on to US$30 million realised from the sale.
Senior Government officials are concerned the money is being used for speculative purposes.
The situation has severely affected Government and exporting mining firms which had earmarked the proceeds for key projects and operations.
Last month, almost 400 000 carats were exported to the Dubai Diamond Exchange (DDE) under a market-testing exercise. Government roped in a facilitator, Global Diamond Tenders, to link them with buyers.
The diamonds were then sold at an average price of US$76 per carat, marking a 5, 4 percent improvement from the second Antwerp sale which attracted US$72 per carat.
Of the US$30 million realised, US$4, 39 million was destined for Treasury while the Zimbabwe Revenue Authority (Zimra) and Minerals Marketing Corporation of Zimbabwe (MMCZ) were also entitled to a percentage.
The remainder was to be shared between the Zimbabwe Mining Development Corporation (ZMDC) and the mining firms. In addition, the facilitator was entitled to four percent of total proceeds.
Under normal circumstances, transactions should not take more than three days.
However, over a month has lapsed.
Experts say the delay goes against international law which compels a winning auction bidder to transfer money soon after closing a deal.
It is understood some of the mining companies are grappling with sustaining daily operations due to the payment delays. Government projects earmarked to benefit are also now being stalled.
Mbada Diamonds, Marange Resources, Gye Nyame, DMC, Kusena, Anjin and Jinan are the affected firms.
Security guards manning Marange Resource premises besieged company offices last week, demanding their dues. They were then referred to the parent ministry, which, in turn, explained to them the state of affairs.
Finance and Economic Development Minister Patrick Chinamasa told The Sunday Mail last week that the DDE "have failed the test".
Minister Chinamasa said he looked forward to engaging his Mines and Mining Development counterpart, Mr Walter Chidhakwa.
"Obviously, the delay is affecting us. We could have used that money to fund some of the projects awaiting completion. Naturally, the delay is crippling the mining companies that need the money to run operations.
"I am not sure of the reason why it has taken this long for us to receive our money. I haven't found the time to talk to Minister Chidhakwa to find out what is really happening, but I am eager to engage him so that I know what is happening.
"Naturally, they (Dubai Diamond Exchange) have failed the test. Remember, when we went there we were testing the market. Why would we continue selling our diamonds in Dubai under such conditions?"
Jinan managing director Mr Zack Ncube said his company's plans to refocus operations have been adversely affected.
"We are concerned that we have not received that money; we are still waiting. Obviously this has negatively affected our mining operations. Right now, we are refocusing on new areas at the mine. We need inputs such as equipment and diesel.
"We also have creditors who need to be paid. So, we are hoping we will receive the money as soon as possible."
Anjin director Mr Munyaradzi Machacha said his firm awaited a comprehensive explanation from the parent ministry.
He also pointed out that operations have suffered.
Senior officials in the ministries of mines and finance were equally frustrated.
A senior finance official, who preferred anonymity, said international law should guide such important transactions.
"So, what was the point of auctioning the diamonds if it was going to take this long to receive the money? When a person bids, that means they have the money.
"You can't go to an auction without cash; this is a bidding regulation. You can't be funny when it comes to an auction. This is unheard of.
"I think these people had no money and expected to buy and then sell the diamonds to other buyers before giving us our money. It is also possible that they invested it in order to get massive returns."
Mines and Mining Development Deputy Minister Fred Moyo said although Government was equally concerned, it was still premature "to condemn anyone".
He said some of the mining firms received payments directly through their bank accounts on Workers' Day.
"The Secretary (Professor Francis Gudyanga) is pushing hard for the organiser to transfer the money as soon as possible. Every delay is costing us money. The money must be transferred immediately. Service providers also want to be paid.
"What gave us confidence (in the Dubai market) was the price. We cannot condemn anyone at the moment as we are still gathering what is happening. But obviously the delay will raise questions.
"I do not think this has something to do with capacity, but maybe administration issues. We will get to the bottom of the matter, whether the delays were deliberate or not."
Senior Government officials are concerned the money is being used for speculative purposes.
The situation has severely affected Government and exporting mining firms which had earmarked the proceeds for key projects and operations.
Last month, almost 400 000 carats were exported to the Dubai Diamond Exchange (DDE) under a market-testing exercise. Government roped in a facilitator, Global Diamond Tenders, to link them with buyers.
The diamonds were then sold at an average price of US$76 per carat, marking a 5, 4 percent improvement from the second Antwerp sale which attracted US$72 per carat.
Of the US$30 million realised, US$4, 39 million was destined for Treasury while the Zimbabwe Revenue Authority (Zimra) and Minerals Marketing Corporation of Zimbabwe (MMCZ) were also entitled to a percentage.
The remainder was to be shared between the Zimbabwe Mining Development Corporation (ZMDC) and the mining firms. In addition, the facilitator was entitled to four percent of total proceeds.
Under normal circumstances, transactions should not take more than three days.
However, over a month has lapsed.
Experts say the delay goes against international law which compels a winning auction bidder to transfer money soon after closing a deal.
It is understood some of the mining companies are grappling with sustaining daily operations due to the payment delays. Government projects earmarked to benefit are also now being stalled.
Mbada Diamonds, Marange Resources, Gye Nyame, DMC, Kusena, Anjin and Jinan are the affected firms.
Security guards manning Marange Resource premises besieged company offices last week, demanding their dues. They were then referred to the parent ministry, which, in turn, explained to them the state of affairs.
Finance and Economic Development Minister Patrick Chinamasa told The Sunday Mail last week that the DDE "have failed the test".
Minister Chinamasa said he looked forward to engaging his Mines and Mining Development counterpart, Mr Walter Chidhakwa.
"Obviously, the delay is affecting us. We could have used that money to fund some of the projects awaiting completion. Naturally, the delay is crippling the mining companies that need the money to run operations.
"I am not sure of the reason why it has taken this long for us to receive our money. I haven't found the time to talk to Minister Chidhakwa to find out what is really happening, but I am eager to engage him so that I know what is happening.
"Naturally, they (Dubai Diamond Exchange) have failed the test. Remember, when we went there we were testing the market. Why would we continue selling our diamonds in Dubai under such conditions?"
Jinan managing director Mr Zack Ncube said his company's plans to refocus operations have been adversely affected.
"We are concerned that we have not received that money; we are still waiting. Obviously this has negatively affected our mining operations. Right now, we are refocusing on new areas at the mine. We need inputs such as equipment and diesel.
"We also have creditors who need to be paid. So, we are hoping we will receive the money as soon as possible."
Anjin director Mr Munyaradzi Machacha said his firm awaited a comprehensive explanation from the parent ministry.
He also pointed out that operations have suffered.
Senior officials in the ministries of mines and finance were equally frustrated.
A senior finance official, who preferred anonymity, said international law should guide such important transactions.
"So, what was the point of auctioning the diamonds if it was going to take this long to receive the money? When a person bids, that means they have the money.
"You can't go to an auction without cash; this is a bidding regulation. You can't be funny when it comes to an auction. This is unheard of.
"I think these people had no money and expected to buy and then sell the diamonds to other buyers before giving us our money. It is also possible that they invested it in order to get massive returns."
Mines and Mining Development Deputy Minister Fred Moyo said although Government was equally concerned, it was still premature "to condemn anyone".
He said some of the mining firms received payments directly through their bank accounts on Workers' Day.
"The Secretary (Professor Francis Gudyanga) is pushing hard for the organiser to transfer the money as soon as possible. Every delay is costing us money. The money must be transferred immediately. Service providers also want to be paid.
"What gave us confidence (in the Dubai market) was the price. We cannot condemn anyone at the moment as we are still gathering what is happening. But obviously the delay will raise questions.
"I do not think this has something to do with capacity, but maybe administration issues. We will get to the bottom of the matter, whether the delays were deliberate or not."
Source - Sunday Mail
