sharing in governance of extractive industries

$5 Million Payment to Marange-Zimunya Trust: What We Need To Know

This article was original featured in the business weekly

After a false start, for Marange-Zimunya Community Share Ownership Trust (CSOT), can the $5 million payment received from the Zimbabwe Diamond Consolidated (ZCDC) herald a new beginning for local economic and social development hinged on diamond mining activities? This is particularly so, considering that that revenue from Marange has been a toxic issue- the alleged missing $15 billion and dummy $50 million cheque for Marange Zimunya COST. Compellingly, a thorough examination of this latest development is a necessity to enhance better transparency and accountability in the management of mineral to bring into public limelight emerging opportunities and risks to enhance accountability.

By extending $5 million to Marange-Zimunya CSOT, ZCDC follows the footsteps of other large-scale miners especially in the platinum sector like Zimplats and Unki Mine who gave $10 million to CSOTs in their localities. That said, a year before the 2013 harmonised elections, a $50 million dummy check was handed to Marange-Zimunya CSOT which proved to be fool’s gold in the end. Unless, $5million paid to Marange-Zimunya is reflects in the organisation’s bank account, the past has taught us not to count our chicks before they are hatched.

 It is important to state that the softening of indigenisation laws have resulted in platinum and diamond sectors being the only ones to comply with 51% indigenous equity requirement. Ideally, ZCDC, a government owned entity, should have taken lead to cede 10% shares to Marange-Zimunya CSOT.

 As a player and regulator, government should lead by example on commitment to indigenisation. Perhaps this would have been a good sign that government is keen to compel diamond and platinum mining entities to cede 10% shares to CSOTs in their districts. Without shares, Marange-Zimunya CSOT will not be legally entitled to a share of profit generated by ZCDC. In the end, future payments if any to the CSOT will be voluntary and unpredictable.

Clarity is needed if the $5 million payment to Marange-Zimunya CSOT was an advance dividend, a dividend or donation. The fact that ZCDC’s audited financial statements are not publicly available, is a cause of concern. It is difficult to pick if ZCDC paid the $5 million out of its profits and whether the community received a fair share, 10% of ZCDC’s profits.

It is important for Marange-Zimunya CSOT to complement local development plans for Mutare Rural District Council (RDC). This will create synergies and manage the risk of CSOT expenditure being linked with political campaigns. Also, ZCDC should disclose how much local taxes the entity is paying to Mutare RDC to enhance local economic and social development. There is a risk that ZCDC may not be paying a fair share of local taxes to Mutare RDC and at the same time investing in public relations activities by paying Marange-Zimunya CSOT.  

Beyond the $5 million payment made to Marange-Zimunya CSOT, it is important for ZCDC and government to consider allocating claims for alluvial diamond mining. This is important because alluvial diamond mining is no longer economically viable for large scale mining, it makes sense to follow the African Mining Vision aspiration of promoting coexistence between artisanal and small-scale miners and large-scale miners. Zimbabwe can take a leaf from South Africa which has recently allocated mining claims to artisanal miners, the so called “zama zamas” which were operating illegal. If this is done, conflicts between ZCDC and illegal gold miners which are affecting peace in Marange will managed sustainably.

Marange diamond mining impacts are not limited to Marange and Zimunya areas. There is need to ensure that communities in Chimanimani and Buhera, who bear the brunt of mining impacts like pollution of Save and Odzi rivers should be left out on community benefit schemes from ZCDC.

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