VICE-President Emmerson Mnangagwa is entangled in a
multi-million dollar chrome deal involving dodgy South African investors
illegally granted permission to import fuel duty-free under the guise they are
running a project with national status, investigations by the Zimbabwe
Independent have shown.
Mnangagwa played an important role to facilitate for Africa
Chrome Fields (Pvt) Ltd, a subsidiary of South African mining company Fanshawe
Mining Holdings, to invest in a chrome mining and smelting project in
Chirumhanzu-Zibagwe constituency.
The vice-president is said to be close to ACF director
Zunaid Moti, a flashy car-loving tycoon arrested in 2012 over armed robbery and
attempted murder allegations.
Moti denied the allegations. ACF was granted a duty-free
fuel importation certificate by the Ministry of Transport, alongside the Dema
Emergency Power Project and Kariba South Extension. This has raised eyebrows
and parliament is now investigating the issue.
The duty-free certificate was issued through the Central
Mechanical Equipment Department (CMED). Other mining companies operating in
Zimbabwe have not been given the same privilege.
Under Statutory Instrument (SI) 184 of 2014, equipment for
national projects — not fuel — can be imported duty-free.
The Parliamentary Portfolio Committee on Mines and Energy,
chaired by Daniel Shumba, in June grilled Transport minister Joram Gumbo on the
issue. The committee argued SI184 of 2014 does not allow private companies to
import fuel duty-free.
As a result, the committee has also quizzed former
Transport ministry permanent secretary Munesu Munodawafa, CMED chief executive
Davison Mhaka and CMED board chair Sheunesu Mupepereki over this. It also
visited some of the projects.
The law says duty-free fuel can only be imported for use by
government exclusively.
“So for African Chrome Fields to get 12 million litres of
diesel duty-free and Sakunda 300 million litres under this statutory instrument
is corrupt and unlawful,” one government official said this week. “They cannot
hide under the cover of national project status. That is exclusively for
government. Private companies are only allowed to bring in equipment, not fuel,
under that dispensation.”
The law says once a project has been granted national
status by the Ministry of Finance, it is eligible for “rebate of duty on
capital equipment imported for use in specified industries”.
It clearly defines capital equipment as “plant, equipment
and machinery” to be used in the mining, manufacturing, agricultural and energy
generation sectors. That does not include rebate on fuel imports.
Asked about the legality of issuing the controversial
duty-free certificates, Gumbo told the committee his secretary had written to
Treasury highlighting the possibility of legal gaps with respect to SI184 of
2014 and requested that the Finance ministry, in liaison with the
Attorney-General’s Office, to close such loopholes.
In February, the committee questioned Mhaka and Mupepereki
over the matter after it emerged some private companies were taking advantage
of the duty-free fuel import certificates to bring in cheap fuel to sell in the
parallel market.
A letter written by Mhaka, addressed to Shumba, dated
December 1 2016, seen by the Independent, showed CMED had cleared ACF to import
more than a million litres of fuel.
“As custodians of SI184 of 2014, CMED was requested by
Ministry of Finance and Economic Development, through the Ministry of Transport
and Infrastructural Development, to facilitate the importation of duty-free
fuel for African Chrome Fields (Pvt) Ltd, for electricity generation on the
chrome smelting project,” Mhaka writes.
“A total of 1 095 million litres of diesel have so far been
cleared. So far 600 119 litres of diesel have been utilised and the acquittals
are attached. 495 000 litres are yet to be consumed and will be acquitted. CMED
has been paid US$24 000 for the services rendered.”
Mnangagwa’s dealings with ACF were debated in an explosive
politburo meeting a fortnight ago where a titanic battle between Higher and
Tertiary Education minister Jonathan Moyo and him erupted.
Moyo accused Mnangagwa of deceiving cabinet into lifting an
export ban on raw chrome in 2015 for self-serving purposes. He said ACF was
granted mining rights after Mnangagwa “wilfully misled” President Robert Mugabe
into believing ACF investors had the latest technology to process chrome ore
into ferrochrome.
It was on the basis of that promise ACF was granted mining
rights. Mugabe was invited to officiate at the commissioning of the plant in
2015. He was shown what was claimed to be the chrome ore processing machinery.
Mugabe at the event said he was told that the company would
require only 11 months to fully establish and start operating full throttle.
Moyo said truckloads of chrome ore had been smuggled out,
charging Mnangagwa’s business associates had in the process made over US$49
million.
Government lifted the ban on chrome ore exports and
scrapped the 20% export tax on the mineral, saying the move would improve
viability of miners, create thousands of jobs and improve revenue inflows for
the fiscus.
The ban on chrome exports was imposed in April 2011 to
encourage beneficiation of the mineral.
In e-mailed responses to the Independent, ACF national
project liaison director Ashruf Kaka said the aluminothermic technology that
would process chrome ore into ferrochrome is expected to be installed by the
end of January 2018. He also said commissioning of the plant will be complete
by February next year.
“The project is dependent on obtaining an Environmental
Impact Assessment approval which approval is imminently awaited,” he said. “To
date we have established six sites with 19 operating spiral wash plants
covering an area of approximately 30km along the Great Dyke. We are currently
employing approximately 900 workers.”
Kaka said his company was granted a duty-free certificate
to import fuel as a result of the remoteness of their sites as there was no
electricity in the remote areas. He said as a result, ACF was relying on power
from diesel generators.
“In the absence of electricity, we became acutely aware
that progress in the project was being stunted by the lack of electricity and
the only alternative to electric power was diesel-generated power,” he said.
“At a tremendous cost from a capital expenditure perspective, we embarked on
diesel-generated power as the only alternative, hence approached the Ministry
of Finance with a request to obtain a rebate on diesel such that the project
could continue in the absence of availability of electricity.
“The request was a formal application which was considered over
a period of a few months and eventually granted in 2015, and renewed towards
the end of 2016 for import in 2017.”
Asked to comment on the nature of Mnangagwa’s relationship
with his company, Kaka said: “At the risk of repeating ourselves in the media,
we are in the business of mining and beneficiation and are not politicians and
leave politics to the politicians.
“Having said that, we invested in Zimbabwe in the first
quarter of 2014 prior to us having any interaction with the vice-president and
our interaction with him commenced with the introduction to him of the
aluminothermic technology during the latter part of 2014, and more particularly
in the beginning of 2015. We had sought other investments in the chrome
industry from 2012 with particular reference to ZimAlloys.
“The relationships that we have with all politicians and
their respective departments are project-related and accordingly professional
in nature. We do not delve into the realm of politics as our focus is and will
always be beneficiation and all politicians, including the Honourable
Vice-President Mnangagwa, have considered the project beneficial to Zimbabwe
and the interest of Zimbabwe.”
Kaka refused to confirm whether or not ACF had siphoned
US$49 million worth of chrome through shady exports as Moyo alleged in the
politburo meeting.
“We do not wish to comment on the amount referred to herein
save to state that it is substantially exaggerated and it is not our policy to
detail this information in the public domain as we are a private company,” he
said.
“Our information relating to exports are succinctly
documented with the Minerals Marketing Corporation of Zimbabwe (MMCZ) on a
daily basis and you are free to approach the MMCZ for whatever information they
are able to furnish in the public domain. As you are aware, the MMCZ reports to
the Ministry of Mining and Mining Development, which is in itself kept updated
with all information.” zimbabwe independent
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