Rio, Russians query Zim diamond mines merger

Published: 07 June 2015

Rio Tinto (Rio) and Russia's DTZ Ozgeo are yet to agree on Zimbabwe's mandatory merger of diamond firms, with the two seeking clarity on the proposal.

This comes as a week ago, Mines minister Walter Chidakwa told Parliament that government will consolidate all seven diamond mining firms operating in Zimbabwe into one, with the State owning 50 percent of the merged entity.

DTZ Ozgeo is a joint-venture mining company owned by the Development Trust of Zimbabwe (DTZ) and a Russian company, Econedra Limited whilst global resources group Rio controls 78 percent of Murowa Diamonds, with the other 22 percent held by locally listed Rio Zim.

While reports yesterday indicated that the diamond miners had unanimously agreed to Chidakwa's proposal, a source close to the developments said the minister's meeting with the diamond firms on Monday "did not come up with a consensus as the companies' management wanted to clearly understand government's plans before their shareholders could come up with an official position".

"DTZ Ozgeo and Murowa never agreed (with government) and they have got no position yet because there has not been any clarity on government's take," the source told Business Live.

As of yesterday, the source indicated that Murowa had requested for further engagements with the Mines ministry to seek clarity on the implementation of the plan.

However, according to a March 9 letter addressed to Murowa's chairman G. O'Brien in Business Live's possession, Mines ministry secretary Francis Gudyanga said the Zvishavane-based miner's eventual equity in the merged unit – the Zimbabwe Consolidated Diamond Company (ZCDC) – would be determined by various factors.

"(We will consider) an outcome of evaluation of Murowa by an independent company and discussions with Zimbabwe Mining Development Corporation (ZMDC) and also Murowa's contribution to exploration as well as capitalisation of ZCDC," he said.

Gudyanga demanded that government "receives Murowa's willingness to participate in the… consolidation programme".

Murowa has been under pressure to comply with Zimbabwe's indigenisation policy, which compels foreigners to cede 51 percent shareholding to locals.

Meanwhile, analysts and civil society pressure groups have demanded that Chidakwa produces audited reports on the operations of diamond miners in Marange before rushing to merge them.
- dailynews

Tags: Rio,