HomeBusinessCash crunch cripples Shabanie Mines

Cash crunch cripples Shabanie Mines

SHABANIE Mashaba Mines (SMM) is sitting on orders worth US$105 million, but will not be able to underwrite business as cash constraints continue to cripple operations.

SMM administrator Arafas Gwaradzimba on Monday in the capital admitted before the parliamentary committee on mines that the company was sitting on a huge order of asbestos from a South African company but could not finance the deal.

Production at SMM has stopped under the care of Gwaradzimba. Gwaradzimba, a government-a pointed caretaker of the mining group who took over from mogul Mutumwa Mawere in a long-standing ownership dispute, is accused of running down the once productive mine.

The company requires immediate recapitalisation of close to US$60 million.
Committee chairperson Edward Chindori-Chininga asked: “We are made to understand that you are sitting on an order of US$105 million. What’s stopping you?”

Gwaradzimba replied: “The banks are saying they do not have capacity to finance it.”
He said his firm, AMG Global Chartered Accountants, though not taking a cent from SMM, was working hard to find new investors for the firm.

Gwaradzimba said he had gone four years without receiving an administration fee because the once giant mining firm was broke.

Justice minister Patrick Chinamasa entitled Gwaradzimba to 6% of turnover made by the disputed mines.
“I last earned that money in 2006. At the moment I’ve not been getting any money. I am not there for money,” Gwaradzimba told MPs.

He said the mine last made asbestos sales in 2006 and used proceeds to pay local debtors and acquire machinery.
Since 2004, the mine has faced a host of perennial problems that include non-payment of wages, foreign debt, break down of machinery, power cuts and subsequent underground flooding.
On flooding, Gwaradzimaba told the mining committee that the problem was “not insurmountable” despite operating with nine pumps out of the 20 required.

However, despite past botched efforts to source funding for the troubled mines, Gwaradzimba told MPs that a proposed deal with an undisclosed partner could save the mining company from further distress.

SMM, once the world’s sixth largest asbestos producer, requires close to US$60 million to boost production output which at peak produced 240 tonnes of asbestos fibre daily, which have gone down to four tonnes.

“Currently we have signed a confidentiality agreement with one company,” Gwaradzimba said. “We expect to see the letter of comfort this Wednesday or Thursday at the latest. I am very hopeful that in the coming two months we should be concluding the confidentiality agreement,” he said. “The main reason why I’m positive is that the ruling on the reconstruction order came on May 11 and people are confident they can do business without the high risk of being disposed their assets.”

Last month, co-Home Affairs ministers Kembo Mohadi and Giles Mutsekwa de-specified Mawere, which could mark a fresh fight for control of the 26 companies once owned by the Zimbabwe-born South Africa businessman.

The committee was neither convinced nor sympathetic to Gwaradzimba. “There were 17 long-haul dumping machines working in 2006 and now there is nothing. Nothing is going on,” remarked Masvingo West MP Tachiona Mharadza.“What are you reconstructing? Mr Mawere never failed to pay his workers…Workers are going to nearby farms to do maricho (part-time jobs). Is that fair?”

Gwaradzimba responded saying: “When I went there the problem was bad and it might have gone worse, but the issue is funding. I believe I have the chance to reconstruct… I am still pursuing the private placement route. We have managed to sign a confidentiality agreement with one of the parties.”

SMM, according to the administrator, sold two of its eight mining claims since 2004.
Emotions continued to flare in the Senate Chambers before Clerk of Parliament Austin Zvoma surprisingly assumed the role of committee clerk relegating the substantive clerk to a spectator. Glen View North MP, Fani Munengami during the meeting a vised Gwaradzimba to quit, but was asked to withdraw
the remarks by Chindori-Chininga.

Bernard Mpofu

 

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