Time to reconsider diamond consolidation

Time to reconsider diamond consolidation Diamond mine
Diamond mining companies should source funds to buy machinery, so that they can extract the kimberlites that have more value, instead of concentrating on alluvial diamonds

Diamond mining companies should source funds to buy machinery, so that they can extract the kimberlites that have more value, instead of concentrating on alluvial diamonds

Lloyd Gumbo Mr Speaker Sir
Ever wondered why one cannot explain how Zimbabwe is rich in resources, but poor in economic performance? Ever wondered where money from the minerals that are mined here goes to? Well, Mr Speaker Sir, our policies have let us down over the years.

The problem is that Zimbabweans have been gripped by an asset stripping mentality where officials and ordinary citizens and foreigners have been looting or accumulating wealth as if there was no tomorrow.

The rate at which resources have been extracted and shipped outside the country as if there was no tomorrow smacks of a mercenary mentality.

Given the mineral resources that Zimbabwe boasts of, it defies logic why our national budgets since the multi-currency regime came into force continues to hover around $4 billion.

There can be no justifiable explanation as to why when the majority of Zimbabweans are struggling to make ends meet, others are living lavishly.

It would seem like there are a privileged few Zimbabweans and cursed majority.

Mr Speaker Sir, the major issue where authorities have let the country down is on the extractive industry where we seem to have mortgaged the country’s minerals either by commission or omission.

One could say this has been as a result of desperation on the part of Government to bust the illegal sanctions imposed on the country by the West.

But we have also shot ourselves in the foot in some instances.

The diamond sector is one industry that was supposed to transform for good, Zimbabwe’s economic fortunes, but almost 10 years down the line since the discovery of diamond deposits in Chiadzwa, we have nothing to show for it, yet our neighbouring countries’ economies are hinged on the same precious mineral that we have in abundance here.

When one looks at Botswana, Namibia, South Africa, Angola and the Democratic Republic of Congo, diamonds have contributed significantly to their economies, yet we are still counting our losses.

Yes, Zimbabwe may have been subjected to an onslaught by Western countries, who influenced the Kimberley Process to frustrate the country from selling its gems on an open market, and in an attempt to avoid the unjustified action, it is the Zimbabweans who lost out.

The majority of diamond mining firms in Chiadzwa, despite being equally represented between Government and foreign investors, allegedly abused the open cheque to ship out the finite resource and proceeds thereof.

In the process, Zimbabwe became a laughing stock, prompting Government to propose a new plan that could also see us losing out again.

Mr Speaker Sir, it’s a given that the manner in which Zimbabwe reacted to the discovery of diamonds in Chiadzwa was out of desperation and excitement.

Authorities did not have time to consult or take a leaf from neighbouring countries with diamond deposits how they managed extraction of the precious mineral.

Here, Government immediately engaged five investors and dished out diamond claims in Chiadzwa.

One investor was even given 50 percent shares in two companies.

The miners abused the fragmented manner in which the diamond industry was managed, which resulted in some of them declaring output that was more than 100 percent less than what other firms declared.

But 10 years since discovery of the gems, Government must have learnt its lessons.

Authorities have approved consolidation of the diamond industry where all diamond companies will be brought together to form one company.

The objective, we are told, is to bring transparency and accountability to the sector.

Mr Speaker Sir, while the plan may sound good, there are serious problems with this strategy.

What has happened over the years is that some of the firms in Chiadzwa spent most of their time “panning” alluvial diamonds from the surface, shipping out the precious gems and externalising the money as well.

They did not invest in highly mechanised production for them to do proper mining where they extract kimberlites.

All they wanted was the alluvial hence further requests for more claims so that they could extract from the surface again and hold on to claims for speculative purposes.

Mr Speaker Sir, there is no need for Government to co-opt all the firms in Chiadzwa into the consolidated diamond company.

There is Marange Resources that is wholly-owned by Government while Kusena and Gye Nyame have joined Marange Resources.

That is as far as Government should go in consolidating diamond companies.

What needs to be done now is for Government to capacitate Marange Resources through highly mechanized machinery so that they can extract the gems on a large-scale.

This way Government will have a greater say in diamond production in the country which will also bring in significant money from the sales.

It is understood that Marange Resources already has claims that have some of the best grades in Chiadzwa.

This is what Government should take advantage of to ensure that Zimbabweans do not lose out.

By bringing companies that have already benefited from the gems into the consolidated firm to given them shares in that company will not be good for the country.

Let them remain on their claims and extract what they can and if they don’t buy machinery then Government should give them a deadline to surrender the claims.

They have already benefited, so let Zimbabweans benefit from their God-given resource.

These are companies that are already struggling because of their poor business plan where they drowned merry-making in proceeds from alluvial diamonds without regard to long-term mining hence lack of investment.

Surely, they have no business in the consolidated company as they will not bring anything, but poor business strategies that will take the diamond industry backwards.

Mr Speaker Sir, Government would rather source funds to buy mining machinery for Marange Resources so that they can extract the kimberlites that have more value.

Even if it means getting machinery from Belarus under the same terms as the ones for mining gold along the country’s river beds.

If they can do the extraction extensively it will increase output which would in turn increase revenue inflows particularly when the envisaged diamond bourse takes shape.

That is what Government should be focused on instead of trying to bring on board those companies.

It is high time we did things for the good of the country.

It is important that Mines and Mining Development Minister Walter Chidhakwa seriously considers this before committing to a consolidated firm with all those companies.

Marange Resources has the capacity to deliver as long as they can be capacitated with modern machinery and equipment.


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