BSGR admits it was interested in Marange diamonds


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BSG Resources, which is at the centre of a controversy between Core Mining and the government over the Marange diamonds, has admitted that it was indeed interested in the Marange diamonds and intended “to fully support Core in all aspects of its obligations in the Marange diamond project”, but pulled out when the stringent conditions it set were not met.

The five conditions were:

  • that the Core diligence report indicates to BSGR that the Marange Diamond Project can be economically mined in accordance with all BSGR’s internal investment criteria;
  • that all legal tenure matters relating to the Marange Diamond Project area have been resolved (or suitable comfort has been provided to BSGR for the resolution of such tenure matters);
  • that final agreements in respect of the Marange Diamond Project are concluded between the ZMDC and Core that are acceptable to BSGR;
  • that all diamonds to be produced from the Marange Diamond Project continue to be certified in terms of the Kimberley Process Certification Scheme; and
  • that all parties to the Marange Diamond Project Joint Venture will adhere to the principles of good corporate governance. “The parties will ensure that the operations are conducted in a way that is consistent with the rule of law and protects all stakeholders and shareholders’ rights. All stakeholders must have the opportunity to obtain effective redress for any violation of their rights. The parties shall ensure that there will be adherence to all anti-corruption laws. The parties shall adhere to international norms in this regard and shall ensure that no corruption practices take place”.

These conditions and the undertaking to support Core are contained in a letter written by Marc Struik, a director of BSGR. The letter is dated 5 May 2009 and is addressed to the Chief Executive Officer of the Zimbabwe Mining Development Corporation.

At the time ownership of the Marange deposits was in dispute. London-listed African Consolidated Resources had taken the government to court for taking over the claims which it acquired in 2006. Diamonds from Marange were also not certified by the Kimberley Process because of alleged human rights violations in the area.

Struik’s letter clearly states that BSGR was aware of the discussions between Core Mining and Mineral Resources and the ZMDC.

Struik even attached a profile of BSG Resources setting out its technical, financial and marketing expertise and that it was capable of financing, managing and operating the Marange diamonds.

In its profile, BSGR said that investments in the skills development and job creation of local communities and social upliftment and development of rural areas in Zimbabwe will form a key objective of its strategy to build a world class operation.

“Furthermore, the government of Zimbabwe will receive revenue in the form of taxation and royalties generated by this project,” the profile says.

“With BSGR’s diverse global portfolio of mining, engineering and energy services, it has the necessary expertise available to successfully manage and operate a diamond mine in Zimbabwe. Not only does it have in-house availability of mining engineers, process engineers and geologists, it also has all necessary expertise required to managing, financial, legal and marketing aspects.”

BSG Resources is a diversified natural resource company active since 1998 with a global presence, mainly active in Africa and Commonwealth of Independent States (CIS), a regional organisation of former Soviet Republics.

It is wholly owned by BSG- the Benny Steinmetz Group- a privately owned holding company with global interests in natural resources, real estate, capital markets and diamonds.

BSGR is at the centre of a controversy between Core Mining and the Zimbabwe government. The government is accusing Core of fraud and claims Core fraudulently entered into a joint-venture with Marange Resources a company wholly owned by the ZMDC to form Canadile Miners which was given a concession to mine diamonds in Marange after duping the government to think it was a special purpose vehicle for BSGR.

BSGR has denied any relationship with Core Mining. In a letter to the ZMDC chairman dated 30 September 2010, after the government had already levelled fraud charges against Core and some directors of the ZMDC, Struik said:

  • BSGR does not hold any shares in Core Mining, nor does it hold any shares in Canadile Miners (Pvt) Ltd;
  • BSGR does not have any dealings with Core Mining
  • There is no current relationship between BSGR and Core Mining.

Asked why BSGR was denying any links with Core when it had stated in 2009 that it intended to fully support Core in the Marange Project, Struik admitted that his company had indeed held initial discussions with Core Mining but ceased these discussions when its stringent conditions were not met.

“From the two letters you refer to in your email, and of which you have copies, it is clear that BSGR intended to invest in the Zimbabwe mining industry in 2009 under certain stringent conditions. These conditions were there for a reason, namely: to ensure that all BSGR’s investments were transparent, protected and in compliance with local as well as international law and guidelines. As these conditions were not met, BSGR declined to invest in the Marange operations. BSGR is currently looking to invest in other resources and mining projects in Zimbabwe and will only do so if similar stringent conditions are met,” Struik wrote in his response to The Insider.

“As part of its search for potential resources and/or mining opportunities, BSGR was looking for investment opportunities in, inter alia, Zimbabwe at the time. This resulted in initial discussions with Core Mining and the subsequent writing of our letter in which BSGR insisted that certain stringent conditions were met before it would consider any investment in Marange. Since these conditions were not met, BSGR had no further involvement in Core Mining or any of its operations and dealings. As BSGR is well respected, it is of utmost importance to us that our integrity and accountability is not jeopardised by non-adherence to these and other stringent conditions. Hence, BSGR ceased all communications with Core Mining at the time.”

First page of Struik’s letter to ZMDC

Second page of Struik’s letter to ZMDC

First page of BSGR’s profile

Second page of BSGR’s profile

Third page of BSGR’s profile

(55 VIEWS)

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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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