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Zimplats in a fix over US$100m deal

by Staff reporter
03 Dec 2022 at 09:10hrs | Views
Giant mining conglomerate, Zimplats (Private) Limited could cough out over US$100 million to the community in Chegutu, Mhondoro-Ngezi and Zvimba after it allegedly reneged on its 2011 commitment to allot 10% shares under the community share ownership scheme.

The platinum miners entered into a Deed of Trust with at least 12 chiefs representing the communities that were expected to benefit from the share ownership scheme.

Documents seen by Business Times show that communities were set to get US$10 million and Zimplats (Private) Limited was supposed "to allot to the Trust ordinary shares in the share capital of Zimplats constituting 10% of the issued share capital of Zimplats."

It emerged that Zimplats may have declared dividends in excess of US$100 million a year since 2011 translating to at least US$1bn through mining activities.

Instead of allotting the shares to the community, the company has over the years been involved in corporate social responsibility activities which the communities feel are not enough.

Traditional leaders, whose communities were supposed to benefit, were being given groceries and fuel coupons while their communities continue to be prejudiced by the mining firm through its failure to allot the 10% community shareholding.

Peeved by the mining firm's failure to meet its side of the bargain, the community members, represented by Chegutu Rural District Council chairperson Tatenda Gwinji, approached the courts and the High Court's Commercial Division is now expected to announce dates when the matter will be heard.

Gwinji is seeking a court order that compels Zimplats (Private) Limited to give the community its shareholding arguing failure to comply with a legally binding agreement was ultra vires the constitution together with local, regional and international statutes.

Zimplats, Mhondoro-Ngezi, Chegutu, Zvimba Community Share Ownership Trust are the First Defendants while Zimplats Platinum Mines (Private) Limited is listed as the Second Defendant. The Minister of Industry, Commerce and Enterprises Development is the Third Defendant.

"Despite demand by the Plaintiff and other community members, the 2nd Defendant has either failed and or neglected to allot to the Trust ordinary shares in the capital of 2nd Defendant constituting 10% of the issued share capital of 2nd Defendant as provided for Clause 3.3 above," the court papers read in part.

"The conduct amounts to an infringement of the plaintiff's right to development in terms of the Constitution of Zimbabwe, 2023 and regional and international human rights law. The second Defendant has not paid the 1st Defendant at least US$100 million in dividends over the past decade."

The lawyer representing Gwinji, Tafadzwa Mugabe said the failure by the mining firm to cede the 10% shareholding was against local, regional and international statutes."

"In terms of the deed of trust, Zimbabwe was supposed to give US$10 million to communities and cede 10% of its operations to its own trust and conclude a share ownership agreement. They have only given US$10 million but not the 10% shareholding," Mugabe said.

Chiefs are up in arms with the platinum mining company claiming they were taking them for granted.

They said their counterparts working for Implats in South Africa were immensely benefitting.

The South Africa based Implats is the majority shareholder in Zimplats Private) Limited.

In a letter dated September 9, 2021 and addressed to the Zimplats (Private) Limited CEO Alex Mhembere, Chief Ngezi, who is the chairperson of the Trust, questioned why the platinum mining company was reneging on its commitment.

The letter is part of the court papers.

"What is most saddening for us as Chiefs is that Zimplats has for so long been failing to honour its commitment and yet chiefs in South Africa Royal Bafokeng province have seen their communities empowered directly by their 13% ownership of Implats.

"Are the Chiefs in Zimbabwe less deserving to have their communities also participate directly in the wealth that Zimplats is extracting from our local communities?" queried Chief Ngezi.

It also emerged that the South African Royal Bafokeng has over the past five years invested US$475 million worth of projects.

According to reports, Zimplats deposits have contributed immensely to its majority shareholder Impala, accounting for more than 22 % of the South African based firm's market value.

Zimplats extracts the lion's share of Zimbabwe's platinum resources which are thought to be the world's third largest after Russia and South Africa.

Source - businesstimes
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