Treasury has received only $260 million in diamond dividends over nine years – Chidhakwa


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Zimbabwe’s Treasury has so far received nearly $260 million in dividends over nine years from diamond companies operating in Marange, eastern Zimbabwe in which it has shareholding, mines minister Walter Chidhakwa has said.

President Robert Mugabe’s government has stakes of varying degrees in all firms operating in the Marange fields on the eastern border with Mozambique and has tabled a proposal to nationalise diamond mining which would also bring the RioZim-owned Murowa Diamonds, which operates in south-central Zimbabwe under government control.

Chidhakwa told Parliament yesterday that the government has been receiving annual dividends from the Marange miners since 2006 when the gems were discovered.

“With regard to dividends which are declared by the companies, I want to advise this House that since the discovery of diamonds in Marange except in the case of Murowa, the dividends that were declared to Treasury amount to $259 452 422. This is the dividend that has been declared out of companies operating in Marange,” he said.

He added that the amounts have declined in recent times in line with falling production and low sales.

Finance Minister Patrick Chinamasa in April this year told a parliamentary portfolio committee that Treasury has not received royalties — a levy based on production — from the diamond sector, especially Marange firms.

Diamond firms are also required by law to remit 15 percent royalties to government and 2.5 percent depletion fees to the Zimbabwe Mining Development Corporation (ZMDC).

Government early this year introduced a new tax payment system whereby government automatically deducts royalties once payment for diamond sales has been made.

Meanwhile, Chidhakwa said the merger of diamond miners – aimed at promoting accountability and transparency in the sector – will not affect communities share ownership trusts.

“Let me advise this House that the model that we have created for merging the companies must of necessity assume that the successor company must inherit both the assets and liabilities of the companies that are being merged. What that means is that if a company comes into the consolidated company, that company has assets and liabilities and has commitments that it has made.

“All these will be consolidated and brought into this one company. This one company must therefore, honour the commitments that were made by the successor companies,” he said.

Chidhakwa noted that the merged entity, comprising of Mbada Diamonds, Marange Resources, Anjin, Kusena, Diamond Mining Company and Murowa, would be subject to the laws of Zimbabwe in so far as the laws relate to Community Share Ownership Trusts.

“This company must, after being established, take care of communities in the same way if not better than what the individual companies were going to do,” he said.- The Source

 

Q & A in Parliament:

CORPORATE TAX AND DIVIDENDS FROM MARANGE DIAMOND PROCEEDS

 

HON. MARIDADI asked the Minister of Mines and Mining Development

  1. how much money Treasury has received ever since diamonds were discovered in Marange in terms of corporate tax and dividend;
  2. to explain the merits of merging companies before they have met their obligations to local communities;
  3. if the companies have finally complied with their obligations to Community Share Ownership Schemes

THE MINISTER OF MINES AND MINING DEVELOPMENT (HON. W. CHIDHAKWA): Thank you Madam Speaker and I would like to thank Hon. Maridadi for the question. The question as it relates to matters of collection of corporate tax and other taxes are matters that reside on the Ministry of Finance and Economic Development. They would ordinarily tell us how much they have collected in the Budget and in the Finance Act. I am not able to deal with that one.

With regard to dividends which are declared by the companies, I want to advise this House that since the discovery of diamonds in Marange except in the case of Murowa, the dividends that were declared to Treasury amount to $259 452 422. This is the dividend that has been declared out of companies operating in Marange.

The second question Madam Speaker, related to the merger of companies in so far as it impinges on the rights of the Community Share Ownership Trusts. Let me advise this House that the model that we have created for merging the companies must of necessity assume that the successor company must inherit both the assets and liabilities of the companies that are being merged. What that means is that if a company comes into the consolidated company, that company has assets and liabilities and has commitments that it has made. All these will be consolidated and brought into this one company. This one company must therefore, honour the commitments that were made by the successor companies.

I want to assure our communities out there that the process of consolidation itself does not do away with the commitment of Community Share Ownership Trusts that are in place. This company will also be subject to the laws of Zimbabwe in so far as the laws relate to Community Share Ownership Trusts. This company must, after being established, take care of communities in the same way if not better than what the individual companies were going to do.

The third part of the question, Madam Speaker, is a question that I think does not lie within my purview. It is a question that lies within the purview of the Minister Ministry of Youth Development, Indigenisation and Empowerment. I would be more comfortable if the Hon. Member referred the question to the respective Minister.

(30 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.