German investor pulls out as ZMDC bungles

30 Mar, 2018 - 06:03 0 Views
German investor pulls out as ZMDC bungles

eBusiness Weekly

Hebert Zharare
Lynx, a partner between the Zimbabwe Mining Development Corporation and Graphit Kromphmuhl of Germany to mine graphite, has reportedly shut down after the foreign investor pulled out and set up a similar project in Mozambique. This follows disputes over corporate governance matters including interference in managerial issues by ZMDC board members.

The Government owned mining firm seconded two of its board members – Chris Chitambira and Luke Akino – to the Lynx board, but sources close to the matter say instead of formulating policies and supervising management, the duo “literally” ran the firm.

Akino is doubling up as ZMDC board member and acting general manager of the Government mining company, a development insiders say raised issues.

The Karoi mine was jointly owned by ZMDC and Graphit Kromphmuhl of Germany and following the other investment partner’s departure sometime last year, it is alleged only skeletal staff maintaining some equipment is on the ground.

The sole graphite mining firm has been operating in Zimbabwe since 1965 and in August 2015 it celebrated its 50th anniversary.

Graphit Kromphmuhl is a Bavarian-based company with over 140 years history of mining graphite. Lynx has been one of the largest employers in the Karoi area and its closure is likely to see over 260 workers and their immediate family members directly affected.

A senior officials based at the Karoi mine who cannot be named for professional reasons, on Monday confirmed there were no activities at the company, but tried to play down the matter saying the shutdown was to “allow routine maintenance.”

In written responses Akino said the mine stopped production in August 2017 due to working capital constraints and under capitalisation.

He said in terms of the current business plan, the mine needed $ 6.033 million for recapitalization and working capital support.

“Yes, we are aware that Graphit Kropfmuhl had been setting up a graphite mine in Mozambique for some time before they eventually left Zimbabwe. Graphite Kropfmuhl is still our customer.

“The German partner had promised to inject cash for recapitalisation and decided to sell back their shares. “The mine is not closed; it is under care and maintenance. ZMDC is in search of a JV partner and recently floated a tender to this effect.

“The response has been overwhelming.

“Thereafter a new joint venture partner will be brought on board and operations will resume in the shortest possible time. In addition, other options to enable earlier resumption of operations are in progress.”

Akino confirmed Chitambira was Lynx board chairman, but there was clear segregation of duties between management and Board, adding the board gets involved at the appropriate level.

Commenting on corruption allegations, Akino said; We did not receive any complaints on corruption from the Germans during and after the joint venture.”

Business Weekly has it on good authority that following the exit of the Germans the ZMDC board transferred a few senior managers to head office among them, mining Secretary Godfrey Ngorima and accountant Ricky Muzangaza, where they are receiving full salary.

The transfers comes as over 260 workers at the Zimbabwe German Graphite Mine, were always striking protesting non – payment of their salaries owed for the past 13 months.

“The Germans have since left Lynx and they sold their shares to ZMDC for $1 and have formed a similar graphite mine in Mozambique. They were protesting the interference by Mr Akino and Chitambira in managerial decisions yet they were board members seconded by the ZMDC.

“These people are in ZMDC board as well and we do not understand why the same were seconded to the board of a company owned by ZMDC, I smell good corporate governance violations there. The Germans were frustrated and they left.

“The Germans were at one point forced to fund the company’s anniversary singled handedly from their coffers yet it is co-owned. These men were like fulltime employees at Lynx,” said a source that declined to be named for professional reasons,” he said.

The graphite mining company, reports say, has been operating at breakeven point, but some “unnecessary demands and questionable decisions” from some ZMDC officials infuriated the Germans resulting in them leaving for Mozambique.

All has not been well at the graphite mine whose production has gone done to 500 tonnes monthly as the price of the mineral dropped from $600 per tonne to $340 among other debilitating factors.

Graphite is a critical mineral industrialized countries mainly as it is used in batteries production, fuel cells and plastics and also key components in other products of the chemical industry.

Together with lithium, graphite has become one of the future “strategic minerals” of the world economy, mainly due to the switch to electro mobility in the automotive industry. The worldwide graphite market is currently estimated at an annual volume of one million tonnes and Zimbabwe has been a major supplier of the product.

Despite the mounting challenges, the Lynx mine in Karoi, has reserves for the next 12 to 18 years, a situation observers say could have seen the mineral playing a critical role towards the country’s turnaround efforts.

President Emmerson Mnangagwa has since declared mining and the agriculture sector will be key towards national economic revival.



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