Chegutu Councilor Drags Zimplats to Court Over Community Shares

Mining giant the Zimbabwe Platinum Mines (Private) Limited (Zimplats) has been dragged to court over failure to honour its legal commitment to allot 10 percent shares of the company to economically disempowered communities in where it has been mining platinum.

Zimbabwe’s platinum deposits are among the largest in the world, while deposits mined by Zimplats have been a significant contributor to its South African majority shareholder Impala Platinum (Implats), accounting for 22 percent of Implats market value.

Tatenda Gwinji, a local councillor and Council Chairperson for the Chegutu Rural District Council has instituted the legal action, having written a letter dated 11 August 2022 imploring chiefs representing beneficiary communities of the Zimplats Mhondoro Ngezi Chegutu Zvimba Community Share Ownership not to forego Zimplats’ obligation to their communities.

Reached for comment Councillor Gwinji could not give more enlightenment about the case now before the courts. He did however reiterate that the question of the community shares in Zimplats needed to be finally resolved by the courts.

Gwinji is adamant that it is the constitutional right of the local communities to achieve their development aspirations through a share in wealth from platinum resources mined locally by Zimplats.

With a decade passed since Zimplats signed off on the founding of a community trust set to be allotted 10% in the company, question within affected communities is whether Zimplats must continue to generate wealth from local Zimbabwean communities to the enrichment of foreign shareholders, as far off as Australia and in South African while Zimbabwe’s rural communities are denied the 10% share Zimplats committed to?

Sources who spoke to this publication said the platinum company is having profits but is failing to fulfil its commitments.

“Last year they declared a dividend of US$85 million and we must get 10 percent of that. So if we are to work with that it’s a plus $100 million which the community is owed

“The Implants SA model, Royal Bafokeng they have an investment portfolio of US$475 million and what have the Chegutu, Mhondoro Zvimba got nothing?

“SA Traditional Chief of Rustenburg is now a billionaire and ours they appreciate borehole drilling at their homes against exploitation. They are being given food hampers against our wealth,” the source said.

Zimplats Holdings, the Australia listed holding company through which Implats owns and controls the majority 87% stake in Zimplats operations and wealth generation in Zimbabwe, has become known as the “jewel in Impala Platinum’s crown” with a US$ 2.26 billion market capitalization.

Zimplats Holdings has acquired the status of a blue chip company due to it producing steady stream of dividends for its shareholders, who exclude the communities from where platinum is mined.

Hence, the legal case now presented to the courts is far from barking up a dry wrong tree. It is only the tip of an iceberg of the aspirations of local communities, where the platinum inspired local economic hope seems always disillusioned by unwillingness by the miner to share directly in the vast platinum wealth.

Some within the impoverished communities have will point to the donations Zimplats has made over the years, such as refurbishment of Kadoma General Hospital at an estimated $2,5million and upgrading Gora Clinic. Chegutu Rural District Council received an ambulance and one 75 horse power tractor, a tow-grader to maintain more than 1000km of road network. Zimplats has also pursued livestock revitalisation programmes and embarked on building capacities of the local community to provide Zimplats with goods and services.

In 2017 Zimplats reported spending US$2.2 million on social investments, up from US$1,9 million in 2016. For 2018 Zimplats reports increasing corporate social investment spending to $6 million.

A comparison of Zimplats social investment initiatives has had others in the same communities pointing out that Zimplats donations are far less in value than the 10% shareholding due to the community. They argue that the value to be drawn from owning 10% shares in Zimplats will enable the communities to leverage off such value towards attaining their development.

Reference has been made to Zimplats dividend declaration in June 2021, of US$85,000,000. With 10% shareholding the community would have received as much as US$8,4 million in one year alone, far more than any donations or social investment by Zimplats.

And so Zimplats’ donations are to some a sistraction from the real value of 10% shareholding. Even the Chiefs representing the community on the Zimplats Mhondoro Ngezi Chegutu Zvimba Community Trust have been on record complaining that their trust is under the control of Zimplats, to manage the extent of the communities’ development aspirations.

When one considers the statements by the CEO of Zimplats’ South African parent company, Implats, Nico Muller, that “Zimbabwe has been our best jurisdiction in which to operate over the past 20 years” and this despite the perception of Zimbabwe risk.

Zimbabwe only need look at another foreign owned company, Caledonia owned Blanket Mine, that has been performing well in gold mining despite the “Zimbabwe risk” and, unlike Zimplats, it having fully disposed of 10 percent shares in Blanket Mine to the Gwanda local community.

Recently, on 17 November 2022, His Excellency President E.D Mnangagwa was commissioning the new central shaft by Blanket Mine.

Since the community paid off its loan debt to Blanket mine sometime in October 2021, that community has reportedly received during 2022 no less than US$1,5million from its unencumbered 10 percent shareholding in Blanket Mine.

The court case brought about by Councillor Gwinji may have come at a crucial and critical juncture then. When the community, Zimbabwe must reassess the reality of achieving sustainable development for its people. Quite recently the legislator for Norton has raised before parliament the need to reaffirm the 10% shareholding by communities in companies extracting local mineral resources.