Govt to offset debt with diamonds

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TAURAI MANGUDHLA

The Mines Ministry has committed to set off a $2,7 million diamond parcel as part payment for a $14,6 million debt owed to United Arab Emirates registered commodities company Pure Diam DMCC (Pure Diam) by Zimbabwe Consolidated Diamond Company (ZCDC), confidential documents in our possession show.

Pure Diam and the Zimbabwe Mining Development Corporation (ZMDC) entered into a joint venture to mine diamonds under Diamond Mining Corporation (DMC).

Pure Diam in 2015 sold its 50 percent stake worth $10,9 million to ZMDC and agreed to cession of a $8,6 million shareholder loan, bringing the total amount due to Pure Diam $19,5 million. This was prior to the consolidation exercise that resulted in all mines in
Marange being shut down.

To date, ZMDC repaid $6,325 million with the balance being guaranteed by ZCDC. As guarantor, ZCDC said the payment shall be made without objection or legal proceedings of any kind, upon receipt of Pure Diam’s first written claim stating that ZCDC has not fulfilled one of its contractual obligations.

Furthermore, ZCDC committed that no amendment to terms of the agreement signed between Pure Diam and ZMDC can release them from its obligation under the guarantee. Furthermore, the financial guarantee would remain in place until Pure Diam is fully paid.

“Reference is made to discussions held between the ministry of mines and Mining development, (Minerals) MMCZ and ZCDC on the above subject matter and your proposals to purchase Tender 3 parcel at a value of $2 250 000 million against the revised offer by MMCZ of $2 661 000,” reads part of a letter written to DMC by Mines permanent secretary
Onesimo Moyo on March 6.

The letter was copied to Mines minister Winston Chitando and his deputy Polite ambamura, MMCZ general manager Tongai Muzenda and ZCDC CEO Moris Mpofu

“As per our deliberations, we kindly request for a 48 working hour reprieve to allow for the completion of our due process to get the necessary approvals. We remain committed to honouring our obligations and we are grateful for your understanding in this regard,” wrote
Moyo.

This came after a High Court ruling of October 2018 that ZCDC repays $14,6 million into DMC’s United Arab Emirates account inclusive of interest accrued till April 30, 2018 plus another $561 371 being further interest at 5 percent per annum from May to October 2018.

In terms of the judgment, terms of payment of the amount would be governed by the deed of settlement and ZCDC would pay plaintiff’s costs of suit calculated at a legal practitioner and client scale and collection commission calculated in terms of the Law Society bylaws.

Court documents in our possession shows Pure Diam wrote to ZCDC in March 2018 seeking to participate in tenders pending authorisation of a set off deal.

Business Times interviewed a number of parties in the case prior to publication of the story. Their sentiments are that the plaintiff preferred not to take the matter to court in honour of the good spirit that facilitated their JV in the first place.

The Dubai Company in 2018 said it is actively involved in the diamond trade in Antwerp and Dubai and has interest in accessing diamonds to meet the demands of its market.

Following indications from Government that it wanted to take over all diamond mining operations in the country, Pure Diam and ZMDC discussed and negotiated for a buyout of plaintiff’s shares in the joint venture which they jointly owned on a 50:50 basis.

Negotiations were held over a two-three month period which culminated in an agreement for sale of the shares.

“At the core of the cession of shareholder loan agreement was plaintiff would be able to remit its funds offshore as it had invested offshore funds.”

DMC was operational since 2011 to early 2016.