New diamond firm to honour $50m CSOT pledge
Lovemore Zigara, Midlands Correspondent
MINES and Mining Development Minister Walter Chidhakwa says the Zimbabwe Consolidated Diamond Corporation (ZCDC), an amalgamation of all diamond concessions in the country, will honour the $50 million pledge to the Marange–Zimunya Community Share Ownership Trust (CSOT).
In 2012 diamond mining companies operating in Chiadzwa pledged to contribute a total of $50 million towards the community empowerment fund but have failed to do so to date.
Minister Chidhakwa said the ZCDC will inherit both the assets and liabilities of the diamond mining companies including the pledges towards community share ownership trusts.
“The successor company will inherit both the assets and liabilities of the merging companies.
“What it means is that companies in Marange, as is the case, took a position on the community share ownership trust.
“The new company will take over that responsibility and will therefore have to fulfil that pledge,” he said.
However, the minister could not give a time frame of when the diamond merger of the companies would be complete as the majority of the diamond companies are against the move.
He said in order to enforce the merger, companies operating in Chiadzwa whose special grants have expired will only be renewed on condition that they are part of the new diamond corporation.
Said Chidhakwa: “While some of the companies were non-committal (on the merger) the majority said they would not want to be part of the consolidated company and we wanted to pursue a company route”.
He added: “As it stands now we’ve noticed that the special grants of all the companies, which were issued when they started operating have expired and none of the companies came to renew.
“Therefore, all we would be saying to the companies is that we’ll not renew the special grants but we’ll only do this under the consolidated company”.
Minister Chidhakwa said the valuation of the company will be determined by the net asset value of the company including diamond reserves of each company as exploration is set to be undertaken before the merger is concluded.
The minister said companies which fail to raise capital equivalent to their net asset value will have their shares forfeited to other companies who can raise the money.
“We’ll then say that the percentage that would have been allocated from net asset base would also be the percentage share contribution that each company towards the budget.
“For instance, if a company had from its net asset position earned itself 13 percent total shares of the consolidated company, what it would mean is that if we say the budget we would need for the new company is $500 million.
“It means the company will contribute 13 percent of that $500 million into the project.
Those companies that fail to raise the percent contribution in monetary terms would forfeit their shares and their shares would be bought by the other companies,” he added.