3 December 2012

Zimbabwe: Gold Mine Cornered

A GOLD mining concern in Gwanda has come under pressure from government to immediately establish a community share ownership scheme or face unspecified consequences after a traditional chief complained that the mine, owned by Duration Gold, had failed to respond to pleas to comply with the country's empowerment laws.

Vumbachikwe, one of the oldest gold mines in Zimbabwe, had previously clashed with government over provisions of the empowerment law which compel foreign controlled firms to cede at least 51 percent shareholding to locals.

The mine is accused of defying the indigenisation legislation by refusing to join 15 other mining companies that formed the Matabeleland South Community Share Ownership Trust.

Its white owners have argued that they were Zimbabwean nationals and were not compelled to comply with the indigenisation law, but in June, government angrily reacted to their explanation with Youth, Indigenisation and Empowerment Minister, Saviour Kasukuwere saying he was "fed up with trying to negotiate with the Vumbachikwe mine management who seem to think they are still operating in Rhodesia".

Zimbabwe was known as Rhodesia before gaining independence from Britain in 1980.

Vumbachikwe Mine was at the centre of a heated discussion on Monday last week when Johannesburg Stock Exchange-listed cement producer, PPC, concluded its empowerment transaction with communities and workers.

Chief Mathema, who represented the Gwanda community at the signing ceremony held in Harare, hinted that while he was happy with the PPC transaction, Vumbachikwe's failure to comply with the law worried the communities.

Reports said Vumbachikwe had submitted its empowerment plan in June but it was not clear this week how government had reacted to the proposal.

"Vumbachikwe Mine is failing to comply with Zimbabwe's laws," chief Mathema said last week.

"We are worried with Vumbachikwe; we don't know what is happening," he said.

Mines and Mining Development Minister, Obert Mpofu, said he was ready to flex his muscle if Kasukuwere did not act.

He said after clashing with the mine's authorities in June, he had assumed Kasukuwere had acted.

"I thought the issue of Vumbachikwe had already been dealt with," Mpofu said.

"Those that don't want to abide by the laws of this country know what happens to them. In Gwanda, people are suffering, with no food; they are on arid ground...with all these mines we cannot have our people suffering," Mpofu said.

Government indicated that it was going to deploy its full arsenal to deal with the mining company, but after previous threats by Kasukuwere in June that government had taken it over and was planning to hand it over to the Zimbabwe Mining Development Corporation, authorities at Vumbachikwe could think these are just idle threats.

"Mining companies such as Mimosa, Anglo American, Rio Tinto, Metallon Gold and Mwana Africa have agreed to be part of this initiative. Who is Vumbachikwe, after all?," Kasukuwere fumed in June.

"There are ways of dealing with such issues and we will put pressure where it is [required]. The fact that the mine authorities are Zimbabwean is not an excuse and will not stop us from taking over the mine," Kasukuwere said.

Vumbachikwe is controlled by Duration Gold, which is wholly owned by Clarity Capital.

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