By Malvern Mkudu
ZIMBABWE’S diamond beneficiation drive is in danger of becoming a pipe dream as local diamond cutters and polishers continue to be sidelined in favour of foreign diamond processors while the precious gems continue to be flown to Antwerp and other destinations for valuation, grading and cutting.
Despite rhetoric that it is committed to beneficiation and value addition as the cornerstone of its economic recovery, government continues to work without a clear diamond policy.
More than 10 local diamond cutting and polishing companies are not operating because diamond miners have failed to supply raw diamonds for cutting and polishing.
This is despite government announcing that it is pursuing value addition and beneficiation as key pillars of its economic revival and empowerment policy.
Diamond cutters and polishers are supposed to buy raw diamonds from the various mining companies but this has not happened because diamond miners have not been availing diamonds to local cutters.
Government has no control over operations in the mining fields, allowing private companies to do as they please.
Only poor quality diamonds which are uncompetitive on the international market have been availed to local diamond cutters, making business unprofitable for them. Resultantly, they have chosen not to operate until government intervenes to make their ventures profitable.
A local diamond cutter blamed this on the lack of a diamond mining policy in Zimbabwe.
“There is no mines and mineral policy in existence. Zimbabwe has no mineral policy despite mining for years.
Local players receive no protection from government and mining companies in Chiadzwa offer us rejects to cut and polish which would result in us not being able to compete with international players,” said Pearson Mungofa, a local diamond cutter.
After spending US$20, 000 for a license valid for 12 months to deal in precious stones, diamond cutters still do not have access to rough gems from the diamond miners.
In the past, they would import rough diamonds from Belgium which they would cut, polish and then resale on the international market through the Mineral Marketing Corporation of Zimbabwe.
The commencement of diamond mining in Chiadzwa was expected to bring with it better fortunes since raw stones are now available in abundance but this has not been the case.
But why are diamonds not reaching local cutters?
Those who are privy to the goings on in the diamond mining sector heap the blame on corruption and non-transparency.
Cosmas Sunguro of the Diamonds Workers Association of Zimbabwe said diamonds are transported from Marange by two helicopters, one belonging to the Air force of Zimbabwe and another one whose private owner could not be established.
From there, they are taken to the sorting house near the Harare International Airport which was built by Chinese diamond firm, Anjin.
They are kept there for two days and sorted according to their value before being flown to Antwerp, Dubai or other destination known only to the diamond companies.
It is essentially the military along with private companies who are involved in diamond mining and these export all the raw diamonds to Belgium and other countries where they are valued and then sold.
This has left Zimbabwean diamonds vulnerable to theft and other securities.
In 2014, Zimbabwean rough diamonds were targeted and stolen at a diamonds auction in Dubai but despite these risks government continues to frustrate locals who are trying to run diamond cutting and polishing facilities.
Diamonds are also leaking at the Marange diamond fields with reports of foreigners, among them, such as Chinese, Lebanese and Mozambican nationals setting bases in the eastern parts of the country to buy diamonds from security agents and other community members who have accomplices working for the various diamond companies.
Meanwhile, President Robert Mugabe announced that government has enlisted the services of four companies to help establish diamond cutting and polishing facilities in Zimbabwe as part of its value addition and beneficiation policy.
A mining expert who spoke on condition of anonymity told the Financial Gazette that government seemed out of touch with reality.
“Government is out of touch with reality because the real issue is that diamonds are not being availed to cutters by the mines currently operating here. Even if other players come in, what diamonds will they cut?’ .
Instead of ensuring that mining companies deliver diamonds to existing cutting and polishing companies, government is enlisting the services of foreign companies that are likely to face the same problems if policy is not re-examined.
According to government policy, at least 10 percent of diamonds mined locally must be processed by companies operating in the country.
But with no transparency on the exact quantity of diamonds mined by the companies in Marange, it is impossible to enforce this policy.
“Can you believe that Zimbabwean diamonds are being graded and valued in Antwerp? We have not seen the 10 percent that was supposed to be set aside for the local cutters. The figure must actually be 20 percent because Zimbabwe has a lot of diamond cutters,” said another diamond cutter who refused to be named.
While the country waits for beneficiation to take root, diamond revenue continues to be elusive amid leakages caused by a number of factors including corruption.
According to a report published by Partnership Africa Canada, Zimbabwe lost more than US$770 million between 2008 and 2012 through under-valuation and transfer pricing of diamonds.
Countries that are cutting and polishing local diamonds are gaining in excess of 200 percent profits from the industry, money that Zimbabwe could harness if it started beneficiating the mineral.
Diamonds continue to be graded, valued and processed in other countries despite the fact that many Zimbabweans are unemployed. Diamond cutters in the country say they have the capacity to create 300 000 jobs if government supports and protects them through its beneficiation policies.
While government is to blame for failing to ensure that local diamond cutters are supplied with good quality diamonds, it has also emerged that some of the players are not adequately equipped to carry out diamond cutting and polishing.
Government has advised to emulate Botswana’s diamond mining initiative, which promotes the diamond cutting industry by availing quality diamonds to domestic players.
Botswana has a clear diamond policy which promotes transparency. For example, it has independent experts who value diamond output in the country. Diamond beneficiation in Botswana follows a strict criteria set by the Diamond Trading Company of Botswana (DTCB).
This is in contrast with Zimbabwe where diamonds are flown out and valued in foreign countries while local cutters are denied access to the gems.
If government is serious about promoting beneficiation the first step must be ensuring that local diamond cutters get access to rough diamonds.
This will not happen until government takes control of diamond mining by breaking the hold that the military and private diamond miners have on the sector. Currently the operations are carried out under murky circumstances, resulting in a few individuals benefiting.
Since assuming office in 2013, Mine Minister Walter Chidhakwa has spoken of consolidating the country’s eight diamond companies into one organisation. But two years later, the process, though on the table and under discussion, is yet to be concluded.
Possible bottlenecks to this end, include questions on how the legal obligations of each of the companies would be dealt with in the face of a merger. Only time will tell.