News Column

'Anjin Shareholder Remains a Mystery'

August 4, 2014

Victoria Mtomba



Government should clearly state which department or agency has a 40% shareholding in diamond producer Anjin to ensure that diamond revenue goes to Treasury, the Zimbabwe Environmental Law Association (Zela) has said.

According to the 2012 annual report of the Zimbabwe Mining Development Corporation (ZMDC), the corporation has 10% shareholding in Anjin, while Chinese firm Anhui Foreign Economic Construction Company owns 50% and the remainder is owned by the government.

"There is need to find out how the other holder of 40% government stock in Anjin is accounting to the Treasury to ensure transparency and accountability in the management of the country's mineral resources," said Zela in an analysis of the ZMDC 2012 financial results.

The analysis by Zela also showed that ZMDC's subsidiaries were facing viability challenges stemming from losses and poor liquidity.

Zela said the auditor's report showed that Marange Resources incurred a loss before tax of US$24,3 million while its current liabilities exceeded current assets by US$52 598 293.

Jena Mines, Kimberworth Investments and Mbada Diamonds also had current liabilities exceeding current assets in 2012.

"These conditions along with other matters as set forth under Note 32 to the consolidated financial statements indicate the existence of a material uncertainty that may cast significant doubt about the ability of the subsidiaries and joint venture to continue as going concerns," it said.

ZMDC wholly owns Marange Resources and Kusena Diamond has 50% shareholding in Mbada Diamonds, Jinan Mining, Diamond Mining Corporation and the now defunct Gye Nyame Resources.

The analysis by Zela showed that for the year 2012 ZMDC failed to produce financial statements for some of its subsidiaries that include Shabanie Mashaba Mines, Todal Mining and Gye Nyame Resources.

ZMDC holds 76% in Shabanie Mashaba Mines, 40% and 50% in Todal Mining and Gye Nyame respectively.

Zela said the auditors of the financial reports had pointed out that the lack of valuation of Marange diamond reserves undermined the economic rationale in terms of joint venture agreements.

"Consequently, this lack of transparency with respect to lack of proper economic justification in parcelling out mineral rights presents a fertile breeding ground for corruption and ultimately prejudices the State of much needed revenue," it said.

Zela said ZMDC must immediately release its overdue 2013 audited financial statements in line with best practice for transparency and accountability which calls for timeliness in the provision of such information.

There have been concerns that diamond revenue was not flowing to Treasury coffers amid claims that senior government officials were lining their pockets. Last year, government promised the International Monetary Fund that it would issue a statutory instrument establishing a formula for calculating diamond dividends.

Its latest report to the IMF said the instrument was not issued due to lack of enabling legislation, but broadly equivalent measures have been introduced in 2014 to increase diamond revenues and boost transparency in the industry.

It said the 2014 Finance Act, signed into law in April 2014, introduced the withholding of a special dividend equal to 15% of the gross proceeds from diamond sales.

It said government constituted a joint task force composed of technical staff from the ministries of Finance and Economic Development and Mines and Mining Development and the Zimbabwe Revenue Authority to forecast and monitor diamond-related revenue flows.

IMF said government submitted the 2012 audited financial accounts of ZMDC to Parliament and published them online.


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Source: AllAfrica


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