Belarus mining investor sub-contracts the Chinese

On Nov 1, 2023

Kenneth Matimaire

THE highly publicised Belarusian investors that were awarded a special mining grant amassing vast tracts of mining land along Mutare River have been sub-contracting other firms to undertake alluvial gold mining, it has emerged.

Information shows that the investors have been relying on other already established locally registered foreign firms — mainly from China — to extract gold in eastern Zimbabwe. This has raised concerns over the capacity of the Belarusian investors to conduct mining activities in the country.

Mining requires heavy machinery, expertise and capital, which the Belarusians have struggled to provide after establishing Zimbabwe Goldfields (Private) Limited on 10 April 2018.

A prior investigation published by the The NewsHawks on 22 July this year headlined Belarusian firm Goldfields wreaks havoc in Manicaland established that Zim Goldfields is a partnership between the Zimbabwe Mining Development Corporation (ZMDC) and Belarus’ Midlands Goldfields Limited (MGL).

The ZMDC has 30% shareholding while MGL has a 70% stake.

The initial investigation linked the project to the two leaders, President Emmerson Mnangagwa and his Belarusian counterpart Alyaksandr Lukashenko.

It was established that the Belarusians were awarded the special grant following Mnangagwa’s visit to Minsk in 2018, which was reciprocated by two visits by Lukashenko’s confidant, Viktar Sheiman, the same year.

The investment received wide publicity from state-controlled media as one of the massive investment deals clinched by Mnangagwa after taking over power from his late predecessor Robert Mugabe in a military coup in November 2017.

Our July investigation showed that Zim Goldfields has been operating with an expired special grant licence and has contributed to the pollution and diversion of Mutare River, leading to onward pollution of Odzi River, a tributary of the Save River.

Further investigations this week showed that the deal has failed to live up to the billing.

The NewsHawks identified a total of four companies which have been sub-contracted by Zim Goldfields since its inception five years ago.

These include Zhong Jin Investments, Sino Africa, Climax Investments and Eternal Brands. The firms have, in turn, left a trail of environmental and mining violations in Mutasa which ranged from, inter alia, river bank mining, diversion to pollution of Mutare River.

The investigation, supported by Information for Development Trust — a non-profit entity — further unearthed that the politically linked Belarusian investors are using the grant for speculative purposes as they charge a certain percentage per produce to companies using the grant.

This comes at a time the murky investment is on a collision course with irate villagers who feel poorly compensated by the sub-contracted companies.

The project, situated along the north end of Mutare River, falls under Premier Estates — a predominantly farming area in Mutasa district.

The farming lands were converted for mining purposes under Special Grant 6859, which measures 10 450 hectares.

Company representative Dmitri Krasilnikov did not respond to questions sent to give a position of the entity.

Dependent on sub-contracts

“They (Belarusians) don’t have capacity to mine. They have no equipment and the Chinese have been in (local mining) for a while and have both machinery and expertise,” said a source in one of the contracted Chinese companies.

Information shows that Zhong Jin, which sparked outrage in the local farming community after it buried alive two gold panners in 2020 during a land reclamation exercises, was contracted the same year. The company’s general manager then, Xu, presented a shoddy company profile when quizzed to shed light on their operations.

Xu, who spoke through an interpreter, initially said the Chinese company was in partnership with Zim Goldfields before he downplayed the business relations as contract based.

He also classified Zhong Jin as an earthmoving equipment firm and non-mining entity but went on to reveal that they were also into coal mining in Hwange where they partnered another company.

Penhalonga Youth Development Trust — a pressure group operating in Mutasa district — identified two other Chinese companies that are currently operational.

“Right now they are outsourcing services to Sino Africa and Climax Investments for their mining,” said the trust director, Clinton Masanga, adding that the Belarusians have no capacity to mine.

Investigations further indicated that the Belarusian investors sub-contracted another Chinese company trading as Eternal Brands operating in Premier West B. It was gathered that although the company was sub-contracted last year, it began operations in May this year.

“But what is important is that the Belarusian special grant is open to anyone, even Zimbabwean (companies) can partner. They (Belarusians) only want a certain percentage per produce and accessible to anyone okay with the condition,” added the source.

The ZMDC, which oversees operations of Zim Goldfields at board level, said it is aware of some of the shortcomings.

ZMDC managing director Blessing Chitambira said he is only aware of one company but could not immediately identify it by name.

On the sub-contracts, Chitambira said the issue was once addressed in board meetings.

“They (Belarusians) said at the moment, they can’t bring in equipment from Belarus considering the (small) scale of the project and that they are still in exploration phase and the restrictions that have been placed on alluvial gold mining. So, they said they would rather sub-contract companies here to do the work,” said Chitambira.

Efforts to get a comment from Mines minister Soda Zhemu as to why the government awarded a special grant to an investor not ready to commit fully, did not bear fruit as he did not respond to questions sent via WhatsApp.

The ZMDC has 30% shareholding while MGL has a 70% stake.

The initial investigation linked the project to the two leaders, President Emmerson Mnangagwa and his Belarusian counterpart Alyaksandr Lukashenko.

Zhemu later said he was in a meeting.

Critics indicated that the Belarusians are receiving special treatment owing to the high-level characters behind the project.

“It doesn’t make sense that a government serious about development would award a special grant to an investor with no capacity at all? Why invite investors that are not ready to invest in a project? This whole thing stinks of political stalwarts aiding the exploitation of the country’s minerals at the expense of the local community,” said Masanga.

Observations made indicate that although Zim Goldfields’ licence which expired on 28 May this year has since been renewed, its London-registered major shareholder MGL is operating like a shell company after records obtained during the initial investigation indicated that it was dissolved on 22 September 2020.

The deal was also brokered at a time Mnangagwa was under pressure to appear as if his ascendancy to power attracted investors as opposed to the tenure of his predecessor.

Compensation crisis

Meanwhile, the murky project has come at a cost to the local farming community that is heavily reliant on agriculture for sustenance.

Villagers are up in arms with the contracted companies as they feel poorly compensated by the firms.

Information gathered indicated that villagers whose fields fell under the special grant were compensated between US$2 000 to US$10 000.

“Villagers at Premier (B) West were given US$2 000 as compensation by a company called Eternal Brands, which does alluvial gold mining in Mutasa South along Mutare River. The Chinese company is mining under the Belarusian Special Grant,” said a source.

“Initially, the amount seemed like a lot of money to the former farm workers but they later felt duped and are now demanding US$10 000,” added the source.

Efforts to get a comment from company officials hit a brick wall as they did not respond to questions.

However, it was established that the company was this year forced to pay an extra US$1 500 in compensation to make it a total of US$3 500 for a 1-hectare field.

The development did not douse the fire as villagers still want US$10 000, which was compensated to three hectares of land holders.

“That was not my agreement with them, and people were complaining that the amount was too little. They also promised to give me a cast but are not standing by their word,” said Simba Mukono who is among the aggrieved farmers.

Sources said the company feels it has gone way beyond the bounds of fairness in compensating the farmers, which has led to the conflict.

The environmental impact assessment (EIA) conducted prior to the commencement of the project warned that it is critical to take necessary protocols relating to relocation and compensation of the villagers.

“Besides, the compensation of the villagers is crucial since some people in the area may be dependant on farming as their main source of income and they would need farms as well as start-up capital to continue their previous activities. This compensation should be of a form that is agreed by both parties so as to minimise any conflict and resistance by the community,” reads part of the EIA.

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