Source: Diamond giant hits critical ‘breaking point’ – herald
Business Reporter
THE Government has raised the red flag over the deteriorating operational and financial state of Murowa Diamond Mine, warning that the situation could reach a critical breaking point.
Deputy Minister of Mines and Mining Development Engineer Fred Moyo described the environment at Murowa as “deeply worrying”, with the mine buckling under the weight of massive non-payment of creditors.
He warned that the situation is becoming increasingly dangerous, given the inherent sensitivities surrounding diamond mining.
Instability could degenerate into a crisis of protests and place the country’s entire diamond sector under a negative global spotlight.
Murowa, an associate company of similarly troubled RioZim Limited, has suspended production.
RioZim itself faces the possibility of corporate rescue following an application by one of its shareholders, citing insolvency.
The latest legal action against RioZim comes hard on the heels of another court application filed by the Zimbabwe Diamond and Allied Minerals Workers union (ZDAMWU) and two employees of subsidiary companies on similar grounds.
That application, however, was struck off the roll by the Supreme Court.
The financial paralysis has hit the local community hardest.
The majority of the mine’s workforce, largely comprising residents from surrounding wards, has reportedly gone unpaid for an extended period.
Eng Moyo said the failure to settle debts was an indicator of systemic collapse that could invite security risks.
“If villagers and unpaid workers begin trespassing into the mine’s premises, the response from security forces could ignite a ‘veld fire’ of uncontrollable chaos,” he said.
He added that violence at the mine or any human rights concerns could put the country under scrutiny by the Kimberley Process Certification Scheme (KPCS) and endanger Zimbabwe’s international diamond standing.
The KPCS is an international watchdog tasked with ensuring that diamonds entering the global market are not tainted with violence.
While its traditional mandate focuses on “conflict diamonds” — specifically those used by rebel movements to undermine legitimate governments — its role has evolved into a critical barometer for national stability and ethical governance.
Eng Moyo stressed that the situation at the mine should not be allowed to deteriorate further, given that aggressive security measures to protect production may pose a threat to economic stability and global compliance.
“The majority of workers from surrounding wards, including SMEs (small and medium enterprises), have not been paid for a long time,” he said.
“It is a worrying situation. This is a diamond mine that must not be allowed to deteriorate beyond a certain point, as this can bring in security issues and KPCS issues.
“Creditor non-payment is always a bad sign. If villagers and workers begin to trespass into the mine and security then descends on them and chaos ensues, the KPCS will naturally respond.”
Murowa general manager Mr Jonathan Mapisaunga confirmed the temporary suspension of production, but referred further inquiries to RioZim spokesperson Dr Wilson Gwatiringa, as per protocol.
Meanwhile, RioZim shareholders recently approved a restructuring transaction during an extraordinary general meeting, despite legal threats from creditors who claim the deal will cripple Murowa.
The approval grants the struggling miner the green light to move forward with a massive debt-for-asset swap aimed at extinguishing nearly US$61 million in liabilities.
Under this arrangement, RioZim will transfer its 22,2 percent stake in Murowa and four key diamond mining concessions, including Sese and Shavahuru, to Murowa at a combined value of about US$28,44 million.
The transaction includes a provision to write off the remaining US$32,33 million balance owed to Murowa, a move RioZim argues is essential to rescue RioZim’s balance sheet and restore its going-concern status.
However, the approval comes despite an earlier formal objection lodged by two employees, Stone Karimuuswa and Kudzai Mukondiwa, alongside trade creditor Carpafe Investments.
Represented by legal counsel, the trio argues that the 53 percent debt write-off constitutes a “substantial erosion” of Murowa’s assets, potentially leaving the diamond miner unable to settle its own US$67 million in outstanding debts to workers, pension funds and utilities.
Legal representatives for the creditors have raised the red flag over severe conflicts of interest, noting that the boards of both RioZim and Murowa share common directors and are effectively controlled by the same majority shareholder, GEM Murowa Investments.
The objectors contend the transaction is “heavily skewed” to benefit RioZim at the direct prejudice of Murowa’s financial stability.
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