MDC-T legislators grill Mines Minister over mega Russian deals and diamond revenues

Mines Minister Walter Chidhakwa was on Wednesday grilled by Movement for Democratic Change legislators about lack of transparency on mega deals entered into with Russians and where the diamond revenues were going.

Magwegwe legislator Anele Ndebele asked why mining deals were shrouded in so much secrecy as the last he had heard about the Russian deals was in The Herald.

Chidhakwa said there was no secrecy at all as he was guided by the provisions of the Mines and Minerals Act which any legislator could go through.

“What happens is that, a project is submitted to the Permanent Secretary in the Ministry. The Permanent Secretary takes it to what we call the Mining Affairs Board. The Mining Affairs Board is a board that is represented by the private sector and the government officials who constitute this board,” the minister said.

“So, the private sector is actually sitting on this Board. They make recommendations on any major project to the Minister. The Minister then takes that project for approval by His Excellency the President, who may take it to Cabinet depending on whether that project does have competition. Here I am referring to the allocation of a concession. So, if you apply for a concession for platinum, your application comes and it is considered in this process.

“When you say why are these projects not being brought here for scrutiny? I think that the Ministry of Mines and Mining Development makes a report to the Auditor-General. So, all issues in relation to the Ministry of Mines and Mineral Development are reflected in the Auditor-General’s documents.   So, there is nothing that you would call shrouded because the process is clear. Projects come and when they are approved, we make it very clear that projects are approved. If they are rejected, we also advise that the projects are rejected.”

Non-constituency MP, Ruth Labode asked the minister why Zimbabwe was getting less than $100 million from its diamonds when Botswana, which had less diamonds than Zimbabwe, got $8.4 billion a year from diamonds?

Chidhakwa said when one talked about minerals one was talking about something in the ground.

“Somebody must explore for those minerals and must be able to demonstrate that there is a presence of a mineral in this concession which justifies a business entity to be established on the back of that mineralisation. We were able to establish the presence of a mineral in Marange and we took a decision or made decisions to allocate concessions to a number of companies in partnership with ZMDC. Now, the country is estimated depending on the figures that you are looking at, having between 105 and 159 kimberlites. These are pedantic until and unless you spend time exploring each and every one of those kimberlite, because not all …”

Mabvuku-Tafara legislator James Maridadi could, however, not take this and interrupted:  “The Minister is giving us a lecture on the diamonds which is not necessary. The question is where is the diamond money given that Zimbabwe owns 25% of the world’s diamonds? That is simple. Where is the money Minister? That is what we want to know. If you want to give a lecture, can you please prepare a ministerial statement?”

Q & A:

HON. NDEBELE: Thank you Hon. Speaker for recognising me. I have a question for the Minister of Mines and Mining Development. What is Government policy with regards to transparency in the extraction of natural resources for the benefit of all citizens? Why are mining deals shrouded in so much secrecy? The last I heard of mega Russian deals was in the Herald. Why are they not coming here for scrutiny? Thank you Hon. Speaker.

THE MINISTER OF MINES AND MINING DEVELOPMENT (HON. W. CHIDHAKWA): Thank you Mr. Speaker Sir, and I want to thank the Hon. Member for the question. I think that we are all aware of the fact that, the President and Government have taken a position against corruption, to ensure that things are done transparently. It is important to know that the process by which projects are approved is a process that is contained in the Mines and Minerals Act. Therefore, when you want to understand how a project is approved from the beginning to its approval, you only need to look at the Mines and Minerals Act which is up for sale at the Government Printers.

What happens is that, a project is submitted to the Permanent Secretary in the Ministry. The Permanent Secretary takes it to what we call the Mining Affairs Board. The Mining Affairs Board is a board that is represented by the private sector and the government officials who constitute this board. So, the private sector is actually sitting on this Board. They make recommendations on any major project to the Minister. The Minister then takes that project for approval by His Excellency the President, who may take it to Cabinet depending on whether that project does have competition. Here I am referring to the allocation of a concession. So, if you apply for a concession for platinum, your application comes and it is considered in this process.

When you say why are these projects not being brought here for scrutiny? I think that the Ministry of Mines and Mining Development makes a report to the Auditor-General. So, all issues in relation to the Ministry of Mines and Mineral Development are reflected in the Auditor-General’s documents.   So, there is nothing that you would call shrouded because the process is clear. Projects come and when they are approved, we make it very clear that projects are approved. If they are rejected, we also advise that the projects are rejected. Thank you Mr. Speaker.

HON. DR. LABODE: Hon. Minister, you have just described a beautiful process which should generate money for Zimbabwe. We have 25% of the world’s diamonds.

THE HON. SPEAKER: Please address the Chair.

HON. DR. LABODE: Sorry. Mr. Speaker Sir, the Minister has just described a very transparent process. Zimbabwe has 25% of the world’s diamonds. We have more diamonds than Botswana, yet Botswana gets $8.4 billion per annum and we get less that $100 million. Can you tell us what is happening to our diamonds?

HON. W. CHIDHAKWA: Thank you Mr. Speaker Sir and I want to thank the Hon. Member for the question. When you talk about minerals, you talk about minerals as minerals embedded in the soil. Somebody must explore for those minerals and must be able to demonstrate that there is a presence of a mineral in this concession which justifies a business entity to be established on the back of that mineralisation. We were able to establish the presence of a mineral in Marange and we took a decision or made decisions to allocate concessions to a number of companies in partnership with ZMDC. Now, the country is estimated depending on the figures that you are looking at, having between 105 and 159 kimberlites. These are pedantic until and unless you spend time exploring each and every one of those kimberlite, because not all …

HON. MARIDADI: On a point of order Mr. Speaker. The Minister is giving us a lecture on the diamonds which is not necessary. The question is where is the diamond money given that Zimbabwe owns 25% of the world’s diamonds? That is simple. Where is the money Minister? That is what we want to know. If you want to give a lecture, can you please prepare a ministerial statement?

HON. W. CHIDHAKWA: Thank you Mr. Speaker. The Hon. Member is refusing to accept a rationale that is very straightforward and allowing his emotions to get the better of him. The truth of the matter is that we are mining diamonds right now and the money is going into Government depending on how much it is -[HON. MEMBERS: Where is the money, where, where?]- well ask the Minister of Finance and Economic Development.

HON. SPEAKER: Order! Order!

HON. MARIDADI: Hon. Speaker, the Auditor General’s report –

HON. SPEAKER: Order, please can we be heard.

HON. MARIDADI: The Auditor General’s report from last year indicated that Government did not receive a dime from the diamond companies last year. The Minister comes here and says money is getting into Government, which Government is he talking about? If it is the Government of Zimbabwe, it is not true, there is no money coming.

HON. W. CHIDHAKWA: The Finance Act talks of money going into Government as a royalty, 2% depletion fee and 0.85% going into MMCZ. This money has been going to Government. The question is, how much as a percentage. That is the question but the fact of the money going to Government through royalties is unquestionable and not debatable – [HON. MEMBERS: Inaudible interjections.]-

HON. MUTSEYAMI: The Minister, when he did his presentation, spoke to the dictates of an Act to justify transparency with reference to an auditor having done an auditing system. My supplementary question to the Hon. Minister is, what are you doing as a Ministry to make sure that today’s world moves with current developments that are taking place within the mining companies with reference to the Mines and Minerals Act, in order for us as a country to achieve equity in terms of the money which comes from diamonds. When we refer to an Act which was done by colonialists with an agenda for them to achieve something, what is it that you are doing today for these minerals to help us as a country regardless of the Act?

HON. W. CHIDHAKWA: I cannot work outside the Act. I work within the confines of the Act, but having said that, even as you have an Act that is outdated, that Act of 1961 has been amended on many occasions to date. The issue about equity and benefitting Zimbabwe is not only an issue of the Act, it is an issue of our Indigenisation Programme and how you negotiate a deal, what you put in the deal. The deals in the diamond sector are all 50\50 between the Government of Zimbabwe and the foreign partners – [HON. MEMBERS: That is not true.] – Well, I state a fact and it is up to individuals to check the facts. The Government of Zimbabwe has 50%. Now, that is what should enable us to get 50% of the proceeds after paying royalty, depletion fee and what goes to MMCZ. We are then supposed to have a profit sharing arrangement and a dividend declaration policy.

I want to take this and link it to our desire to consolidate. Our desire to consolidate comes out of the fact that we do not believe that the companies invested insufficient money to drive a profitable business, which is sufficiently explored by way of exploration. Therefore, we know that the structure that is in place will give us the results but we need to implement that structure on the companies and push them to deliver the results.

On the Mines and Minerals Act, if I may take this opportunity, the Cabinet Committee on Legislation approved amendments to the Mines and Minerals Act and recommended to Cabinet. Cabinet is now in the process of looking at the amendments so that they can recommend those amendments to Parliament. So in the next two or three weeks, we will start the process of debating that here in this Parliament.

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