Responsible Investments Campaign


1. Introduction
The Zimbabwe Environmental Law Association (ZELA) is running a PAVE (Petition, Amplify Voices and Engage) campaign on Responsible Investments. The aim of the campaign is to ensure that local communities from resource-rich areas meaningfully benefit from the extraction of the natural resources. The manifesto of the current government is prioritizing economic development through foreign direct investment(FDI). Indigenisation and Economic Empowerment Laws have been softened to improve Zimbabwe’s appeal to foreign investors. Whilst Zimbabwe is in need of FDI, there is a high likelihood that some of the investors may come from countries with poor human rights records. By emphasising on the issue of “Zimbabwe is open for business”, it is likely that the government may overlook issues of community beneficiation and violation of human rights in host communities. Against this background, ZELA’s campaign on Responsible Investments seeks to petition duty bearers, amplify community voices and engage duty bearers on responsible investment and human rights. ,

2. About the Campaign
The Responsible Investments campaign was launched in May 2018 during the Great Dyke Provincial Alternative Mining Indaba 2018. The campaign covers Zvishavane and Mutoko Districts. These areas are renown for extensive Chrome and Granite mining . ZELA’s PAVE campaign strategy gives power to the communities themselves to organise themselves and demand accountability from duty bearers .

3. Community members demands
The Zimbabwean government has entered into investment agreements with investors. One of the most talked about investment is the 4.2 Billion Platinum deal with Karo Resources . In light of the signing of investment agreements, host mining communities are calling for the following demands;

4.1. Mining Companies and Investors
• Invest in getting a social licence to operate. All mining companies must meaningfully engage communities from exploration to end of the mining project, respect human rights and cultural values of the communities and local employees, including exercising gender inclusion in all processes

4.2. The Environmental Management Agency
• Safeguard the environment and ensure funds for environmental rehabilitation are set aside and used for this purpose before, during and after mining operations.
• Provide easy access to environmental information to mining-affected communities so that they can easily monitor compliance with Environmental Management Plans.

4.3. Rural District Councils
• Enhance social service delivery from mining taxes and royalties and publish what you receive from mining companies

4.4. Government
• Disclose Mining contracts with the relevant stakeholders and meaningfully engage rural district councils and mining-affected communities along the mining cycle. Put in place laws and policies that promote local employment and local enterprise development and/or enforce these laws and policies where they exist.

4.5. The Zimbabwe Human Rights Commission
• Investigate and act accordingly on time on human rights violations reports received from mining-affected communities effectively harnessing all powers and authority within the confines of the Constitution and ZHRC Act.
• Enable ease of access to ZHRC reporting mechanisms throughout the country.
• Influence quick adoption of frameworks like the UN Guiding Principles on Business and Human Rights to contribute to improved economic, environmental and social justice

5. Notable Success
Since the campaign launch, the Government halted the mining of chrome on the road sides in Zvishavane. This was observed on the road linking Shurugwi and Zvishavane where chrome extraction was happening less than 10m away on either side of the tarred road.

6. To get involved
To get involved in the campaign, follow the hashtag #ResponsibleInv on Facebook and Twitter. We conducted radio interviews on Star FM. To listen to this recordings, follow the appended link. Please kindly visit our website and sign an online petition.

Radio Interviews:
Youtube Documentary:
Twitter Campaign:#ResponsibleInv
Photo Gallery:
Online Petition:

Auditor General’s Report: Accountability Issues for ZCDC

Conglomerate diamond mining at ZCDC’s. Picture taken by Nyaradzo Mutonhori

The quest to bring improved transparency and accountability in the management of Marange diamonds – scandalously known for “missing $15 billion” birthed the Zimbabwe Consolidated Diamond Company (ZCDC). As the Zimbabwe Environmental Law Association (ZELA), an organisation with solid interest in resource governance, we are compelled to sift the latest Auditor General’s report to have a better understanding of how well or bad is ZCDC managed for the benefit of all Zimbabweans.  After all, Chiri, the Auditor General is famed for digging out publicly data exposing the rot in the management of State Owned Enterprises (SOEs). Her reports were quite revealing on ZCDC’s predecessor in Marange, the Zimbabwe Mining Development Corporation (ZMDC). Apart from sifting through the evidence provided by the Auditor General, the scope of this article covers audit areas that must be improved to hold to fully hold ZCDC accountable.

Stale audited report

Audited reports are an important health check on the performance of an entity. Mismanagement of resources, like any disease early detection, even better prevention is quite critical to ensure operational sustainability. Here we are in 2018, discussing audit findings from ZCDC’s 2016 annual financial report. A clear one-year unproductive fallow period, 2017, shows that we are dealing with stale information. This a clear violation of the Public Financial Management (Act).  The Act requires SOEs and government institutions to produce annual audited financial statements within six months after the end of each financial year. ZCDC’s predecessor in Marange, Zimbabwe Mining Development Corporation (ZMDC) was notoriously known for producing outdated audited reports.

Apart from the Auditor General’s findings, there is no public record of ZCDC’s income statement and balance sheet. Citizens, therefore, have been denied the opportunity to know pertinent information like how much income did ZCDC generate in 2016. Considering that Zimbabwe is well behind on mineral revenue transparency best practice, the public does not have a clue how well ZCDC’s performance regarding taxes – royalties, customs duty, withholding taxes and Pay As You Earn (PAYE) among others. The same information can easily be publicly mined for Caledonia’s Blanket gold mine in Gwanda courtesy of Canada’s Extractive Sector Transparency Measures Act.

ZCDC is in financial distress

The Auditor General noted that ZCDC Made a loss of $7, 445, 606, negative working capital amounting to $7, 981, 756 and a total negative equity of $7,445, 576. Even worse, ZCDC is owed $20,307, 027 by related companies – SOEs that have closed. A figure that could not be verified by the Auditor General. The fact that ZCDC’s owed $20 million by related companies shows that the mismanagement of SOEs is contagious. There is a huge risk that ZCDC could have been used as a conduit to milk public funds through propping up companies that have since closed.

Mine rehabilitation fund problematic

The “missing $15 billion” from Marange diamonds has attracted great public attention, overshadowing environmental issues, rehabilitation and mine closure. The Auditor General failed to verify the $11,068,975, a provision for rehabilitation of mines left by the companies that used to mine diamonds in Marange. ZCDC’s response was that an expert will be hired to establish the budget needed to rehabilitate the mines and funding will be requested from the shareholder – government. As a regulate and player in Marange diamond mining operations, the state should lead by example. Unfortunately, ZCDC is painting a different picture.

Poor corporate governance cited

The Auditor General noted the Audit and Risk committee and Human Resource and Remuneration committees were not constituted properly in line with best practice on corporate governance. The CEO and executive audit officer are part of the Audit and Risk committee, and the CEO and the human resource executive are part of the Human Resource and Remuneration Committee. A development that compromises the fundamental oversight role of such committees as well as bringing reputational risks. The President has repeatedly stated the desire to fight corruption, the scourge stifling Zimbabwe’s growth. This war cannot be achieved without good corporate governance.

Illegal diamond mining activities

The Auditor General’s report is silent on the widely reported illegal diamond mining activities in Marange. Such activities are a loss to ZCDC and ultimately, government. As part of audit preparations, the Auditor is required to gain an understanding of the context under which the entity that he or she is planning to audit is operating under. Recently, ZCDC announced that it is planning to empower the community through artisanal mining to curb illegal mining activities and attendant losses through smuggling of diamonds.

Business and human rights and the threat posed by synthetic diamonds

The business case, especially in the diamond sector is growing beyond profitability. Because diamond industry is all about global value chain systems, from mining, cleaning and sorting, marketing of rough diamonds, cutting and polishing, jewellery production and marketing, consumer behaviour cannot be ignored. Increasingly, diamond consumers are demanding that beauty of diamonds should be preserved by ethically sourced diamonds which deliver sustainable development to communities impacted by mining operations. The audit scope must have been broadened to include management of risks posed by failure of government and corporates to protect and respect human rights, and in case of violations to provide access to remedy – United Nations Guiding Principles on Business and Human Rights. Notably, ZCDC has been ordered by the high court not to arbitrarily displace communities as required by the Section 74 of the Constitution. Pressure on ethical sourcing of diamonds has been piled up by the emergence of lab grown or synthetic diamonds which do not carry the burden of human rights violation linked to mining.

Legal risks and arrangements with companies displaced to pave way for ZCDC

ZCDC’s creation was blighted with legal challenges, companies like Mbada Diamonds, Anjin and Jinan taking to disputes to the courts. ZCDC failed to carry out mining activities in the disputed concessions. Consequently, ZCDC’s ability to optimise diamond production for the country’s benefit was affected. Along the way, it was announced that government is not negotiating with the affected companies to resolve the issue amicably.  Parliament oversight lacked during these negotiations as required by Section 315 (2) (c) of the Constitution. On 20 April, during the field visit by EU delegation, ZELA observed that the Chinese were fencing off claims formerly held by Anjin Investments. It was clear that ZCDC was not involved from the brief that we received from ZCDC’s top management. The Audit report must have ordinarily been alive to legal risks and the status of disputes between ZCDC and the companies that were forced to close to pave way for the new arrangement – this is a sustainability issue.


For an entity that was established to promote transparency and accountability in the management of Marange diamonds, the Auditor General’s report shows a false start for ZCDC. The entity’s audited report is lagging by one year, there is poor corporate governance, and a company that is in financial distress lending $20 million to related companies that are now closed. The Rehabilitation and mine closure fund issue is a timely reminder to government, we cannot talk of counting the benefits without fully accounting for costs of mining. In the diamond sector, value addition is not only about cutting and polishing, but embracing the UNGP on business and human rights. Consumers want diamonds that are ethically sourced, and diamonds which deliver sustainable development to communities. Areas that ZCDC and government are found wanting.

Diamonds should sparkle in fight against inequality

With roughly $15 billion allegedly lost from Marange diamonds, the opportunity to fight inequality through domestic resource mobilisation was possible squandered. All is not lost though. This undesirable situation can be reversed in the quest to fight inequality. Government, therefore, must immediately adopt the following measures to ensure that diamonds champion the fight against inequality in Zimbabwe.

Zimbabwe Consolidated Diamond Company (ZCDC) must give 10% equity to Marange-Zimunya Community Share Ownership Trust (CSOT). This will legally empower the community to get a share of profit from diamond mining activities in Marange. The softened indigenisation and economic empowerment framework still requires diamond and platinum sectors to cede 10% equity to host communities.

To fully exploit diamonds in Marange in a manner that promote community access, ownership and control of resources, ZCDC must move with speed to formalise artisanal diamond mining activities. “Indeed, there was greater economic impact from diamonds during times of uncontrolled alluvial panning than what is being realised following introduction of formal diamond mining arrangements” former Finance Minister, Patrick Chinamasa, 2016 National Budget Statement. Formalising artisanal diamond mining resonates well with Washington Declaration on Integrating Development of Artisanal and Small Scale Diamond Mining with Kimberley Process Implementation Kimberly Process (KP)

ZCDC must disclose payments made to different government institutions like Mutare Rural District Council (MRDC), various taxes paid to Zimbabwe Revenue Authority and Ministry of Mines. This disclosure will help the public to connect the dots between diamond mining activities and mobilisation of tax revenue to fund social service delivery. The Constitution, Section 276 (2) (b) empowers local authorities to mobilise resources from economic activities to fund local service delivery. By disclosing tax contribution to Mutare RDC, ZCDC can acquit itself well on how the entity is contributing to local development rather than glossing its Corporate Social Responsibility (CSR) activities. All in all, government must embrace move with speed to implement the Extractive Industry Transparency Initiative (EITI).

Former companies linked with looting of Marange diamonds should not be allowed back. We have noted with concern activities on claims formerly owned by Anjin that the Chinese and military owned outfit is preparing to come back. Notably, the Auditor General raised a red flag that Anjin failed to produce audited financial statements to verify depletion taxes paid to government.

The return of Anjin to Marange: the blind side of the ‘Zimbabwe is open for business’ agenda

By Mukasiri Sibanda
Government is on the overdrive to attract investment to stimulate desperately needed socio-economic development. Since Zimbabwe is endowed with huge mineral wealth, mining is the heart beat of the “Zimbabwe is open for business” mantra.

By nature, mining is a capital-intensive business. Attracting investments, therefore, is critical to turn mineral wealth into modern schools, hospitals, roads and water infrastructure. Care must be taken, however, to choose investors that do not swindle citizens of their right to get a fare share of benefit from mining.

So far, there has been strong public disquiet on mining mega deals that are being sealed by government. Since the contracts are not publicly available, the citizens’ radar cannot detect how the mega deals are primed to dig Zimbabweans out of poverty.

Government’s move to select Anjin Investment (Chinese) and Alrosa (Russian) as the two foreign companies that will explore and mine diamonds escalates cynicism on mining mega deals.
Anjin Investments is not a new investor. Has government “learnt nothing and forgotten nothing” from fresh saga on “missing $15 billion” from Marange.

Anjin Investments was one of the seven companies that was operating in Marange diamond fields prior to the consolidation of the mines in 2016.

The other companies included Mbada Diamonds, Diamond Mining Corporation (DMC), Jinan Investments, Marange Resources, Kusena and Gye Nyame. Government owned a 100% stake in Marange resources and 50% in the other six entities that were mining diamonds in Marange.

In a rare show of convergence of views, government, civil society organisations (CSOs) and communities, expressed huge disappointment with diamond companies that were operating in Marange.
Red flags
Patrick Chinamasa, the former Finance Minister, gave a damning assessment that “…. there was greater economic impact from diamonds during times of uncontrolled alluvial panning than what is being realised following introduction of formal diamond mining arrangements.”

Along with Parliament, the Office of the Auditor General (OAG) raised several red flags concerning the joint venture companies that were operating in Marange. Chindori Chininga’s 2013 report on diamonds flagged that there was no transparency in the manner in which government’s joint venture (JV) partners were selected.

The report noted that from the due diligence exercise undertaken by Zimbabwe Mining Development (ZMDC), it emerged that the selected joint venture partners “have no diamond mining as part of their vision and growth strategy.” For example, government’s JV partner in Anjin Investments is Anhui Foreign Economic Construction Company Ltd of China (AFECC).

OAG pointed out in 2012 that Glassfinish investments failed to pay $40 million for acquiring ZMDC’ 40% stake in Anjin Investments. Shareholders of Anjin Investments are AFECC 50%, military linked Matt Bronze Investments 40% and ZMDC 10%.

Matt Bronze Investments acquired shares in Anjin Investments via a related company, Glassfinish Investments. Parliament’s report on the “missing $15 billion” recommended that Government arms, such as the security sector, should not be involved in mining ventures and should focus on their core business.
Hidden figures?

OAG and Parliament noted that Anjin Investments never produced financial statements to account for its diamond mining operations.

According to Parliament report on missing $15 billion, “the company started operating in 2010 and from its inception to 2015, produced approximately 9 million carats which generated about 332 million dollars in revenue. Out of that figure 62 million dollars went to government as royalties and 86 million dollars was spent under corporate social responsibility.”

Because of Anjin Investments’ failure properly account for its business, OAG could not verify the investment made by government’s JV partner as per JV the agreement. This includes taxes paid to government as well.

ZMDC contributed a diamond concession and the JV partners were supposed inject agreed funds to meet mining development an operational cost. Although OAG could not verify whether the agreed amount was invested in Anjin Investments, the company admitted before Parliament in 2018 that the full agreed investment was not met.

The agreed capital contribution and amount were not stated though.
Due to its military connections, Anjin Investments constructed a defence college amounting US$98 million. This shows poor public expenditure prioritisation. Modernisation of health and education is a major priority.

Top government officials are squandering the country’s scarce foreign currency by seeking modern health and education services abroad for their families.

Of course, the Chinese are our all-weather friends, but, in Anjin Investment’s case, government should put national interests first.
How can a company mine diamonds from 2010 to 2015 and fail to produce audited financial statements, a basic integrity requirement?

The JV partners failed to inject the agreed funds into the business and yet we expect the company to be born again.

Government should make efforts to recover $40 million from Glassfinish for acquisition of ZMDC’s 40% stake in Anjin Investment.

A vast uncertainty

Parliament should hold accountable, the Minister of Mines, Honourable Winston Chitando, on the selection procedure that resulted in the choice of Anjin Investments and Alrosa. What happened to the agreement involving Vast Resources and Botswana diamonds to explore diamonds in Marange?

National interests should not be used as a ruse to evade accountability. Section 315 (2) (c) of the Constitution requires Parliament to play an oversight role during negotiation of mining contracts, including performance monitoring of mining contracts.

It is disheartening to note that when the President sealed mega deals in Russia, he requested assistance to modernise the military. What Zimbabwe needs now is to modernise its health and education services. Mining agreements should be made public to enable citizens to scrutinise the fairness of the deals. A proactive move to hinge sustainable socio-economic development on mining as envisaged by the Transitional Stabilisation Plan (TSP).