Reprieve for Mbada Diamonds

By Daniel Nemukuyu

Government has instructed the Attorney-General’s office to contest yesterday’s High Court order compelling the State to allow the return of Mbada Diamond Private Limited to its diamond mining site in Chiadzwa to secure its diamonds and equipment pending determination of the dispute between the firm’s Mauritius-based shareholder Grandwell Holdings and the Government of Zimbabwe.

In an interview with ZiFM last night, Mines and Mining Development Minister Walter Chidhakwa said Government intended to contest the High Court decision.

“We have instructed the Attorney-General’s office to look into the matter and file an appeal. Maybe tomorrow, we will be filing the appeal,” said Minister Chidhakwa.

Justice Joseph Mafusire issued the court order yesterday after postponing the urgent chamber application by Grandwell Holdings to tomorrow (Wednesday).

Grandwell Holdings and Marange Resources entered into a joint venture mining partnership in which the two held 50 percent each some seven years ago.

A diamond joint venture company, Mbada Diamonds was formed, which carried out diamond mining activities in the Chiadzwa area in terms of the set conditions.

Government ordered all diamond mining companies off the Chiadzwa fields after they defied a policy directive for all to merge into a single company called the Zimbabwe Consolidated Diamond Company (ZCDC).

Mbada, among other diamond firms, was given 90 days to remove its equipment and other assets from the site.

However, Grandwell is seeking the eviction of the Ministry of Mines and Mining Development and representatives of the Zimbabwe Mining Development Corporation, Marange Resources and the Zimbabwe Consolidated Diamond Company from the mining site.

The company is also seeking restoration of its full control, peaceful and undisturbed possession of the mining site.

Pending determination of the urgent chamber application set for Wednesday, Justice Mafusire granted an interim relief that will see Mbada temporarily having full access to the diamonds, equipment, site and other properties as a security measure.

The order reads:

“The matter is postponed to Wednesday 2nd of March 2016 at 1430 hours.

“As a contingency plan pending the hearing of this matter on Wednesday, 2 March 2016 as aforesaid or such other day as it might be heard, all the fifth respondent’s (Mbada Diamond) security personnel, with all their chain of command, shall forthwith return to the fifth respondent’s mining site in the Chiadzwa Diamond concession and the first, second and fourth respondents (Minister of Mines, ZMDC and ZCDC) shall allow such security personnel full access to the mining site, full access to all the relevant premises thereat, including residential premises; full access to all the equipment, diamond ore, and any other assets belonging to the fifth respondent for the purposes of safeguarding such assets in every manner possible and the first, second and third respondent shall desist from interfering with such personnel.”

Advocate Thabani Mpofu acted for Mbada Diamonds while Mr Sternford Moyo and Evans Moyo and Mr Brighton Mahuni of Scanlen and Holderness represented Grandwell Holdings.

Mr Ralph Tsivama represented ZMDC, Marange Resources and ZCDC.

Grandwell Holdings holds 50 percent of the issued share capital of Mbada while the remaining 50 percent is held by Marange Resources, which is wholly owned by ZMDC.

In a founding affidavit deposed by Grandwell Holdings chairman Mr David Kassel, the Government scheme that has resulted in the eviction of Mbada and other companies was described as “unlawful”

“As appears from what is set out below, the Government respondents have embarked upon an unlawful scheme which is designed to facilitate the nationalisation and/or expropriation of Mbada’s assets,” he said.

Government accused Mbada of failing to renew the special grant, hence the expiration of such grants now requires the company to shut down its operations and vacate the premises.

However, Grandwell in its application, argued that Marange Resources, a Government company, undertook to do the renewal of the grants among other warranties on behalf of the joint venture company.

“Part of the Principal Agreement reads:

“Marange Resources undertakes that it shall forthwith after the signature date and thereafter for the duration of this agreement:

“Pay all necessary fees and make application for the renewal and/or continued existence and of all that may be necessary so as to ensure that the special grants and rights thereunder are in good standing and remain valid for the duration of this agreement allowing Marange to mine and prospect the concession areas in perpetuity”

Grandwell argued that Government, through Marange Resources, undertook to protect the rights of the foreign investor and to “observe the utmost good faith and not do, or omit to do anything which might prejudice or detract from the rights or interests” of the foreign investor.

The company argued that Government had wilfully and with malice, breached its obligations and undertakings.

Grandwell chairman Mr Kassel said Mbada, over the existence period of the joint venture agreement, paid $472 million into the fiscus, the figure which will drop to zero if the company’s operations are permanently shut down.

The company stated that diamonds were being stolen from the mining sites in the absence of Mbada’s security personnel and there was need for an order compelling Government to allow the diamond company’s security team back to the site.

It was also claimed that Mbada’s equipment was being misappropriated and damages were being sustained on an on-going basis. The Herald