Zimplats, chiefs in opaque ‘new’ share ownership deal

MOSES MATENGA

On 12 October, 2011, then president Robert Mugabe officially launched the Chegutu-Mhondoro-Ngezi-Zvimba Community Share Ownership Trust.

After the launch, platinum giants, Zimplats, were set to begin the process of ceding 10% shareholding to benefit communities but alas, 12 years on, the deal remains in limbo.

The platinum miners registered a Deed of Trust incorporating 12 chiefs from Mashonaland West province, representing the communities and was supposed to give US$10m dollars to the local communities.

The mining firm was also meant to cede 10% shareholding in its operations to the Community Share Ownership Trust.

Zimplats was also to conclude a share subscription agreement, capturing the 10% community shareholding.

However, Zimplats has only given US$10m but not the 10% shareholding.

Consequently, communities that were supposed to benefit from the deal continue to wallow in poverty, according to stakeholders in the communities that include councillors, community leaders, Members of Parliament and members of the community.

Investigations by Business Times working in collaboration with Information for Development Trust (IDT), a non-profit organisation that supports journalists in Zimbabwe and in the region to investigate issues of corruption in the public sector and bad governance, have revealed that Zimplats is seeking to reverse the legally binding arrangement, opening itself up for litigation.

Zimplats now stands accused of hoodwinking chiefs into endorsing the new controversial deal without involving other key stakeholders that include local councillors and Members of Parliament, who are now crying foul.

Zimplats is owned by South Africa’s Impala Platinum and under the deal, they were legally mandated to cede shares to benefit communities.

But the new deal, a far cry from the 2011 scheme entered into between government represented by exiled former indigenisation minister Saviour Kasukuwere, with full support from the late former president, will see chiefs getting 5% shares in companies, which they acknowledge they know nothing about except what they have been told by Zimplats.

 

New deal raise eyebrows

It also emerged the chiefs are yet to visit the promised companies amid fears by analysts that it could be a way to hoodwink them into making them endorse a controversial new deal.

Chiefs are yet to get details about the companies and a copy of the deal. They only know what they have been told by Zimplats officials.

In separate briefings with Business Times about a meeting held on June 28 in Chegutu, sources said Zimplats officials explained the new deal to the chiefs, stating that the company would allocate 5% shareholding. They described the deal as a “good development model for the province”.

Six chiefs attended the one-hour long meeting, which angered other communities’ stakeholders, who demanded to know why Zimplats invited only the traditional leaders.

Chiefs, who were part of the meeting, said up to now they are unclear about the new deal. They called for site visits of the companies.

Chief Ngezi, whose community was meant to benefit from the deal, told Business Times that they were recently given certificates by Zimplats, adding communities now have 5% shares from new companies formed by Zimplats.

“They have given us companies we now have shares in,” he said.

“They said we will soon visit the companies that we now own. We have 5% as community and the proceeds come to our trust account.”

Interestingly, the same Chief Ngezi in 2019 wrote a scathing letter to Zimplats questioning why they were reneging on their initial agreement.

Chief Zvimba said he was unaware of the specifics of the new deal though he said on face value, it was “promising”.

The letter is part of the court papers.

“What is most saddening for us is that Zimplats has for so long been failing to honour its commitment and yet chiefs in South Africa Royal Bafokeng province have seen their communities empowered directly by their 13% ownership of Implats,” the letter by Chief Ngezi read in part.

Chiefs in Royal Mafikeng in South Africa have seen their communities benefitting from mining firms that include Royal Bafokeng Platinum that has been visible in infrastructure development.

According to the World Economic Forum (WEF), The Royal Bafokeng Nation (RBN) is a traditionally governed community that has retained its unique cultural identity and developed world-class administrative and corporate institutions to enable the social development of its citizens.

It is situated on the second largest platinum reserve in the world and has transformed the royalties it receives from platinum mining into a diversified investment portfolio with a business objective meant to maximise the returns on its investments to provide the community with benefits that are sustainable.

“Are the chiefs in Zimbabwe less deserving to have their communities also participate directly in the wealth that Zimplats is extracting from our local communities?”

The chiefs, whose jurisdictions were set to benefit, include Benhura, Murambwa, Mushava, Nyika, Chivero, Mashayamombe, Ngezi, Nherera, Nyamweda, Rwizi, Chirau and Zvimba all in Mashonaland West province where Zimplats is operating from.

Areas meant to benefit from the deal stretch from the platinum and chrome-rich Mhondoro-Ngezi to Chegutu and Zvimba and its surrounding areas.

 

Questions raised over new deal as legal battle hots up

Chegutu Council chairperson Tatenda Gwinji has dragged Zimplats to court seeking an order to have Zimplats meet its side of the deal. While the court processes are ongoing, he has raised questions on why the platinum miners have brought in a new deal.

Gwinji is a community leader, whose area of jurisdiction as councillor and chairperson of Chegutu Rural District Council, should also be covered by the deal.

“They (chiefs) are being misled by the promise of questionable businesses Zimplats is promising to start in the name of empowerment on behalf of communities but which businesses Zimplats will own,” he said.

“Will those businesses Zimplats now promised as a preferred alternative under economic empowerment, even put together, ever have more value than 10% shareholding in Zimplats, which is worth billions of dollars on global markets?

“I cannot understand why they cannot just wait for transparent due legal process to play out. If I lose, rather if the people lose, due to my argument before the courts having no legal standing so be it.

“But why nicodemously get chiefs and the minister to sign off on a betrayal before the courts have their say?” Gwinji queried.

Tafadzwa Mugabe, Gwinji’s lawyer, warned that Zimplats would be in violation of local, regional and international statutes if it continued to renege on its legal obligation.

“Failure by Zimplats to give that 10% shareholding to the community is in violation of the constitution of Zimbabwe. It is also in violation of regional human rights instruments Zimbabwe is state party to,” Mugabe said.

“It is also in violation of other international human rights instruments that Zimbabwe is state party to, specifically the right for communities endowed with mineral resources to benefit from those resources,” he added.

Secret deal exposes Zimplats

It has emerged that Zimplats has drafted a memorandum of understanding, which was signed by the Chegutu Mhondoro Ngezi Zvimba Community Share Ownership Trust and the Ministry of Industry and Commerce, in which it seeks to have government and the communities exonerate it from its legal obligation to dispose 10% of its shares to the community trust.

Sources said the memorandum of agreement was signed in April 2023, less than five months after a legal case was filled challenging Zimplats’ attempt to allegedly wiggle out of its obligation to ensure communities from where it has been extracting platinum resources can derive a direct benefit from such resource wealth.

 

No joy for communities

While communities expected over US$100m that was set to change their lives, including roads rehabilitation, construction of hospitals and several other self-help projects, nothing much has happened on the ground, investigations show.

This was confirmed by Chegutu West Member of Parliament Dexter Nduna, who said not much had been done by Zimplats. This he said was in comparison to what other mining companies were doing in areas they were operating from.

“They (communities) benefitted nothing and you can see that Zimplats was busy rehabilitating Kadoma hospital without doing anything for communities that were supposed to benefit from the programme in Chegutu,” Nduna told Business Times.

“Most Zimplats workers, in fact over 12 000 of them, stay in Chegutu, Kaguvi, Phase 4 and had agreed to a new water tank to cover for them but nothing has been channelled towards that. Roads are now terrible yet their buses are all over transporting workers in the communities.

“They (Zimplats) had promised clinics, schools among other things but there is nothing. Compare this to Hwange Colliery, which built a whole community and 900 kilometres of road and projects they have since handed over to the government,” he said.

A community leader, Frank Mawoza, said while over 80% of Zimplats operations were in Mhondoro-Ngezi, there was nothing much to show for it. “Roads are terrible, schools in Mhondoro-Ngezi have no computers and this is in a place you have made billions of dollars,” he said.

“There is no hospital in Mhondoro-Ngezi, mothers die during childbirth, Kadoma is far and the roads are bad yet you give to the refurbishment of Kadoma hospital.

“Charity begins at home, you have totally failed the people of Mhondoro-Ngezi and it’s so scandalous,” Mawoza said.

Parliamentary Portfolio committee on Industry and Commerce member Senator Maybe Mbowa said though Zimplats and other mining companies have tried, their actions fall short of community expectations on development.

“We wanted people to have direct benefits from what’s happening in their areas,” she said.

“That was what we thought of as a committee but we left a lot of things hanging when we adjourned.

“It is our wish for traditional leaders to benefit because of degradation and other things. If nothing happens it’s a loss.

“Zimplats partly did something. They bought chairs for schools, clinics and other projects that benefitted only a few. They tried but it’s not to the satisfaction of the community and more needs to be done,” Mbowa added.

Veronica Zano, a legal expert in the extractive sector, said legal loopholes have allowed the government and mining firms to renege on their promises with impunity.

“There were some challenges on governance. For example, who was to be held accountable and what would then happen if one side does not meet its side of the bargain,” she said.

“There was, however, no solid legal structure, and mining companies operated on the basis of benevolence as if they were doing communities a favour.”

Zimbabwe Union of Residents and Ratepayers Associations (Zurra), a grouping of organisations representing different communities, said though Zimplats has tried to meet their side of the bargain, there was no transparency.

“In terms of who is representing the communities, we have been found wanting. We feel there is no transparency and accountability in terms of what is coming from corporates and what is getting to communities,” Zurra spokesperson Marvelous Khumalo said.

 

Zimplats coy on 2011 deal

Zimplats representative, Busi Chindove however, could not give details on the new arrangement saying: “I cannot comment on issues before the courts”.

On the Chegutu meeting, she said: “We cannot discuss issues raised in a board meeting.”

Discord in government over way forward

While Zimplats is changing goalposts, Mines and Mining Development Deputy Minister Polite Kambamura insists it was only fair for Zimplats and other involved parties to implement the 2011 deal.

“Where the mines agreed with communities, they should own up,” he told Business Times.

“Indeed we amended the Indigenisation Act but in the spirit of Ubuntu, the involved companies should come to the party and act on what they agreed on with the communities,” he added.

 

What the law says

Kuzivakwashe Ngodza, a senior lawyer with Veritas said despite government amending the Indigenisation and Economic Empowerment law, mining firms including Zimplats that signed the deal in 2011 should own up.

“On essence the law does not apply in retrospect. If there is an agreement dated before the amendment, then the law before the amendment applies,” she said.

This story was commissioned by Information for Development Trust (IDT) and published by BusinessTimes