Yet Again, Opacity rears its Ugly Head in Zimbabwe’s Mining Sector                                 By Gilbert Makore and A...
2012, the organization commissioned a research into the establishment of Community Share OwnershipTrusts in Zimbabwe’s Min...
these agreements and what exactly they mean for the nation. As both parties to the deal allege thateverything is above boa...
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Yet again, opacity raises its ugly head in zimbabwe's mining sector

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Yet again, opacity raises its ugly head in zimbabwe's mining sector

  1. 1. Yet Again, Opacity rears its Ugly Head in Zimbabwe’s Mining Sector By Gilbert Makore and Allan Chaumba 1 March 2013Zimbabwe has not been able to leverage its sub-surface mineral wealth into financing broad baseddevelopment. One of the critical factors why the country has failed to parlay its mineral resources intoeconomic growth and development is the pervasive opacity in the extractive industries. There is limitedpublic knowledge on the granting of claims, contract negotiation; production level data, marketing ofminerals, revenue generation and revenue use. The cloak of secrecy in the mining sector effectivelysidelines the vast majority of the population from participating in the governance and decision makingprocesses related to the sector.Worryingly, mining related deals are consummated away from the public eye only for details to emergethat the country may have been prejudiced. The Deputy Prime Minister, Arthur Mutambara, hasconceded that negotiators of Zimbabwe’s mining deals come to the table deaf, dumb and blind. There isevidence to support his claim. There have been allegations that the ZISCO-ESSAR deal was negotiatedwithout the participation of key Ministries and ended skewed in favor of the private company. To date,despite the various government heads trading barbs through the media, there has been no publicationof the said deal or at the very least, its outcomes. There is still no clarity as to whether or not the dealhas been given consent by the two parties involved.Currently, the country is seized with emerging details regarding the Zimplats indigenization deal. Thedeal is part of Zimplats’ compliance with the Indigenization and Economic Empowerment Act. The Actcompels companies to sell off 51% of their shares to indigenous Zimbabweans. As far back as October2011 it was reported that Zimplats had given 10% of its shareholding to the local community as a steptowards compliance with the law. The act of disposing 10% to the local community presupposed generalagreement on a deal. However, in May 2012 the Minister of Youth Development, Indigenization andEmpowerment and the Zimplats Chairperson appeared at a joint press conference at which it was saidthat the company had submitted a plan that complied with the law. It then becomes mind boggling thatprior to the conclusion of the deal, Zimplats had proceeded to dispose 10% shareholding to the localcommunity only to publicly reappear and say the deal had not been finalized.There was much celebration by government and community representatives when the community trustwas established. The government was lauded as pioneering a ground-breaking model for communitydevelopment. Yet the finer details of the deal were not made public. The documents establishing theagreement remained hidden from the general public. There was no transparent process around thefinalization of the deal. The communities were not consulted but were told what the deal meant forthem.As far back 2011, the Zimbabwe Environmental Law Association (ZELA) had warned that the absence oftransparency and accountability in the implementation of the indigenization program would be aharbinger for deals that prejudice the nation and ensuing public discontent around the program. In late 1
  2. 2. 2012, the organization commissioned a research into the establishment of Community Share OwnershipTrusts in Zimbabwe’s Mining Sector. The results of this research were shared with some legislators and alaunch of the research paper was done in January 2013. The research clearly enunciated the challengesrelated to the implementation of the program particularly insofar as it lacked public participation; andtransparency and accountability. The research results postulated the Community DevelopmentAgreement model as a better model for indigenization given its participatory and tripartite nature ofinclusivity with the key stakeholders from government, mining companies and communities having anequal input.There are now allegations that the deal undervalued the platinum resource that the company sits on.Media reports also allege that the deal is problematic in terms of funding for the acquisition of theshares by the government, the community and the employees. Indications are that there is a likelihoodthat communities and other empowerment entities may fail to pay for the shares disposed potentiallyresulting in the forfeiture of the same. There are also allegations that there was no consultation withinterested stakeholders in government and that the firm that provided consultancy services forstructuring the deal, Brainworks Capital, was awarded that contract irregularly in flagrant disregard ofthe standing rules governing the awarding of tenders above $300, 000, 00 as set by the Tender Board.Brainworks Capital alleges that the service provided was to a publicly listed company and thereforethere was no obligation to go to tender. However, it is the National Indigenization and EconomicEmpowerment Board (NIEEB) that signed a mandate letter engaging the advisory firm on June 8, 2012 .This is just the tip of the ice-berg in terms of the potential areas of concern with regards to the deal.While various parties to the deal have come out to defend the process and the content of the deal, thefiner details are even murkier. The challenge extends beyond the Zimplats deal as indications are thatthe same consultancy firm was retained to provide similar services in the deals agreed to by Mimosa,Anglo American’s Unki Platinum, Pretoria Portland Cement and Caledonia. The total value of these dealsis said to be over US$1 billion.What remains missing from the public domain are the documents detailing the deals that are ostensiblymeant to benefit us as Zimbabweans. The government stance seems to be –do not worry about mediareports, trust that we negotiated deals to the full benefit of the nation. Yet in the face of the mediareports being published, this surely cannot suffice. The current legal and policy framework governingmining does not provide sufficient scope for transparency and accountability. However, the dictates ofgood governance certainly provide a basis for their classification as public documents that ought to beavailed to the general populace for public consumption. It is hoped that the Mines and MineralsAmendment Bill will contain key provisions on transparency and accountability. There is now globalconsensus that openness in mineral resource governance is central to unlocking value. The Africa MiningVision recognizes the need for transparency and accountability while the Extractive IndustriesTransparency Initiative is now an accepted global standard for extractive industries transparency. Thereis need to publish all the negotiated documents related to the deal and ensure that the indigenizationprogram, going forward, is participatory. In respect of deals that have already been agreed to, there isneed for a commission of inquiry to be established and investigations carried out into the finer details of 2
  3. 3. these agreements and what exactly they mean for the nation. As both parties to the deal allege thateverything is above board, this should not prove to be a problem. 3

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