Zim problems mount over Amari wrangle

HARARE - The long-drawn and acrimonious dispute between cash-strapped government mining investment company, the Zimbabwe Mining Development Corporation (ZMDC), and Amari Holdings — over compensation for a lost concession by the Mauritian mining company — is getting more ominous for Zimbabwe.

Amid the current promising efforts by Finance minister Patrick Chinamasa to woo Bretton Woods institutions, particularly the International Monetary Fund (IMF), it has emerged that the Amari case is one of the issues that could get in the way of Harare getting such critically-needed fiscal support.

Well-placed sources confirmed to the Daily News yesterday that Amari’s legal team was engaging with numerous entities that are considering supporting or investing in Zimbabwe, the IMF and the European Union.

Prominent Johannesburg-based lawyer, Ian Small-Smith — who has previously and successfully represented hundreds of Zimbabwean refugees in South Africa pro-bono, and who represented Amari in its recent arbitration case against the ZMDC — said numerous potential investors from as far as China and Russia, including banks, had also recently approached Amari “for a better understanding of how an international arbitration award could be ignored by a government”.

“Amari will do whatever the law allows it to get its funds from the ZMDC, including taking its cause to entities which the Zimbabwe government is engaging to secure financial support and investment.

“The process of international arbitrations is the only process through which investors can secure their investments and if the government ignores arbitration awards, investors won’t invest in Zimbabwe,” Small-Smith said.

The Daily News reported two months ago that Zimbabwe faced more economic turmoil after the ZMDC lost the latest instalment of the long-drawn legal case, at the centre of which is compensation for a lost concession by Amari Holdings.

This followed the International Court of Arbitration’s ruling that the ZMDC caused Amari Holdings damages of $54 million, upon which it ordered the ZMDC to reimburse Amari.

The ZMDC then approached the Zambian High Court for an injunction, which application was turned down with costs — effectively leaving ZMDC with no way out, but to settle. But the cash-strapped parastatal is still to settle the award.

Zimbabwe is a signatory to the New York Convention wherein it assured the international community that it would recognise and make good on International Arbitration Awards.

Among other measures that Amari has been contemplating to get its money, was launching proceedings to attach struggling Air Zimbabwe’s planes in South Africa, which would effectively sound the death knell for the troubled national flag carrier, as the Harare-Johannesburg route is its most profitable.

Amari has also been engaging the International Diamond Board to challenge Zimbabwe’s Kimberley Process-approved status — which if successful, would have dire implications for the country’s diamond industry.

Belgian authorities seized Zimbabwean diamonds worth about $45 million awaiting an auction in Antwerp in September last year, following a court order in Belgium.

Although the diamonds were returned on legal technicalities, these shortcomings have since been addressed by Amari and similar court orders have been obtained in other jurisdictions where diamond auctions are held.

It is the ZMDC’s fear that similar diamond consignments may be seized abroad that has moved them to have all diamond auctions held in Zimbabwe, rather than the lucrative markets of Dubai and Belgium. But well-placed sources say that diamond buyers are paying up to 40 percent less for the diamonds in Zimbabwe.

The judgment in Zambia that rejected the ZMDC’s injunction application did not just leave Harare with red faces, it also meant that there is no other legal route still open for the parastatal and the government of Zimbabwe on this matter.

At the centre of the dispute is Amari’s acrimonious departure from Zimbabwe in 2010 when the government cancelled its right to operate its Serui platinum concession on the Great Dyke — a range of mountains and hills that run down through the centre of Zimbabwe — after the company had spent millions of dollars exploring and identifying an economically-viable resource of 18 million ounces of platinum group metals.

The ZMDC operates joint ventures in the Marange diamond fields with the likes of Anjin Investments and Jinan Mining — while the parastatal is also active in the area on its own through its wholly-owned firm Marange Resources. It also has interests in several other mining operations in copper, gold, asbestos and other minerals.

It has been reported that the ZMDC is practically insolvent after it was recently revealed that the parastatal had a working capital deficit of $128 million for the year ended December 2013 — notwithstanding its myriad investments.

In the meantime the platinum-rich concession which was taken away from Amari by the ZMDC is lying idle, undeveloped and with no investors keen on taking over the disputed resource.