Zimbabwe: Chinese Salt Away U.S.$200 Million Diamonds


By Barnabas Thondlana and Bernard Mpofu

Chinese diamond mining company Anjin Investments, in which the military has an interest, a few years ago smuggled 3,7 million carats of diamonds from Chiadzwa mining fields in Marange worth about US$200 million to China’s financial hub, Shanghai, it has emerged.

This came as it also surfaced yesterday the Zimbabwe Consolidated Diamond Company (ZCDC), struggling to rise from the ashes of the closed mining firms – Anjin, Mbada Diamonds, Marange Resources, Diamond Mining Company, Jinan, Gye Nyame and Kusena — has fired three senior executives and two miners due to a series of problems rocking the troubled conglomerate.

These developments precede the Kimberley Process Certification Scheme (KPCS) meeting in Dubai from May 23 to 26 where Zimbabwe is likely to be back on the agenda.

Informed mining executives told the Zimbabwe Independent that following the seizure of local mining companies’ diamonds worth millions – including blocking Anjin’s US$20 million deal in 2012 — by the United States’ Office of Foreign Assets Control, which enforces economic, trade and financial restrictions, the Chinese decided to take their diamonds to Shanghai.

Executives say the US sanctions on local diamond companies prompted Anjin to approach then Intelligence minister Sydney Sekeramayi, currently Defence minister, to help bust the measures, resulting in the smuggling of the 3,7 million carats of diamonds to China.

“As a result of US interventions and the need to bust sanctions, Anjin externalised 3,7 million carats of diamonds which are currently being kept in Shanghai. At current KP rates, the siphoned diamonds are worth US$190 920 000. Zimbabwe, which used to produce an annual average of 10 411 817,65 carats, sells its diamonds at an average price of US$51,72 per carat,” one mining executive said.






“This is a significant amount of production and money. Remember Zimbabwe produced 10,4 million carats, valued at US$538,5 million, in 2013. After that figures started going down and have now been reduced significantly due to dwindling alluvial reserves and the disruptive consolidation of diamond mines.” (Read story on Page 5).

Sources said ZCDC executives were sacked by the company’s board after a meeting in Harare on Wednesday. The official reason is that they failed polygraph tests, which measure whether an individual is telling the truth or not, although insiders say nepotism, incompetence and failure to deliver explain this.

“ZCDC, which is run by acting chief executive Mark Mabhudhu and his failed Marange Resources team, and whose acting board chair is Francis Gudyanga, also Mines ministry permanent secretary and acting Minerals Marketing Corporation Zimbabwe (MMCZ) chairman, sacked the three executives for failing polygraph tests,” a senior mining official told the Independent.

“There three are Takawira Zhou (mineral and exploration manager), Stewart Musekiwa (finance director) and Desire Jam (human resources director). Two miners were also dismissed. It’s chaotic and the company is struggling; it’s only focusing on rummaging through tailings or residue from past mining activities.

“Besides, Gudyanga and Mabhudu, who were together at the Marange Resources, are running it like a tuck-shop. They brought in former colleagues and friends, creating a crony-based management structure. So they are now dismissing their cronies due to ineptitude and scrutiny. Even if the minister says ZCDC has so far produced 270 000 carats, at this rate it’s going nowhere.”

Anjin, whose operations and financial affairs were opaque, is a 50-50 joint venture between Chinese firm, Anhui Foreign Economic Construction Group and the local military.






According to the KP Compliance Verification Report on Anjin conducted in November 2011, Anjin’s shareholders are Anhui and Matt Bronze registered on December 24 2009. KP failed to nail down who Matt Bronze is.

However, investigations by the Independent have shown that Matt Bronze it is a front company for the military. Records at the Registrar of Companies show it was incorporated on April 24 2008 and is housed on the 9th floor, Travel Centre Corner, 3rd and Jason Moyo Avenue, Harare.

Zimbabwe’s diamonds are usually sold at auctions at MMCZ offices in Msasa in Harare.

Zimbabwe has lost billions in diamond revenues due to corruption, looting and smuggling.

President Robert Mugabe claims US$15 billion was lost through leakages, although experts question the veracity of this figure.

Last week parliament heard Jinan, a joint venture between Marange Resources and Anhui of China, allegedly smuggled out of the country more than US$500 million in diamond proceeds from Chiadzwa and deposited the money offshore.

“Despite criticism over the manner in which diamonds were sold clandestinely before the KP came into effect, the liquidity situation was not as severe as buyers from Dubai and several countries flew into the country for the auction system,” another mining executive said.

“After adopting the KP process Jinan and Mbada still had US$45 million in diamonds revenues withheld due to US financial restrictions. Anjin’s US$20 million deal was blocked by the US in 2012. Sekeramayi, as State Security minister then, subsequently authorised a sanctions-busting strategy, hence Anjin took 3,7 million carats to Shanghai.”

As liquidity constraints continued to buffet the economy, government is said to have approached Anjin to recover revenues from the diamonds stashed in Shanghai, but the Chinese were reportedly non-committal. A Chinese embassy official only identified as Mr Liu yesterday refused to comment on the matter referring questions to Anjin.






“Speak to Mr (Munyaradzi) Machacha who is the spokesperson of Anjin. The embassy does not control Anjin’s operations; you need to speak with the company,” Liu said.

Machacha could not be reached for comment on his mobile phone.

Former mines minister Obert Mpofu, who was in charge of the portfolio when the diamonds were shipped out, also refused to comment, saying current Mines minister Walter Chidhakwa should do so.

“It doesn’t work that way Cde, there is Chidhakwa now,” Mpofu said yesterday.

Efforts to contact Chidhakwa were fruitless as his mobile phone went unanswered. He had not yet responded to questions sent via sms at the time of going to press.

Sekeramayi was not reachable on his mobile phone and office landline. He also did not respond to questions sent via sms.

“Government is frantically scrambling to recover the diamonds or funds, but the Chinese are not co-operating. This saga and the US$15 billion claim contributed to infuriating President Mugabe, hence cancellation of mining licences for diamond companies and the forced consolidation process.”

Chidhakwa in February ordered all diamond mines to cease operations, claiming their operating licences had expired, paving way for the contested merger to form ZCDC, now reeling from mismanagement and chaos.

Source: All Africa


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