How Zimbabwe squandered Marange gift – Eddie Cross

via How Zim squandered Marange gift 21/04/2014 by Eddie Cross in NewZimbabwe

IN 1896, De Beers was given a monopoly over any discoveries of diamond deposits in Rhodesia. Over the following 100 years they did little to justify this right and all that the country had to show for this concession to the largest diamond mining company in the World, was a small, rather marginal diamond pipe discovery on the banks of the Limpopo River near Beitbridge. Even that deposit was not exploited by De Beers who were forced to forfeit their rights and allow another company to take over this discovery and start mining.

In 2002, De Beers, who maintained a small exploration operation in Zimbabwe, deployed a geologist to the Marange Communal Area in the Eastern Districts. The geologist established a camp on the Save River and spent 6 years exploring the area for diamonds, trenching in promising areas and sending truckloads of sample material to South Africa for analysis. The results led the De Beers management to allow their rights to lapse in 2006 and the geologist was withdrawn.

In London, the Management of a small quoted mining company called African Consolidated Resources (ACR), watched these developments with interest and when De Beers abandoned the field, they moved to take over the exploration rights. They transported a small team onto the field and in weeks had found gem quality diamonds. They registered claims over several thousand hectares and placed an advert in the London press to the effect that the discovery could affect the price of their shares.

The Ministry of Mines in Harare was also watching developments and no sooner had the discovery become public knowledge than they took steps to take over the claims of the ACR which was achieved by the end of the year. The measures adopted to achieve this were illegal and everything that followed this decision will eventually be affected by the latent rights of ACR for compensation for the unlawful revocation of their mining rights.

The Ministry then allowed the field to be occupied by small scale informal sector miners and within months, over 40,000 miners had established themselves on the site, exploiting the alluvial deposits scattered over some 60,000 hectares of land. By 2008, the site could be seen from satellites with thousands of shallow pits dug and many thousands of tonnes of soil removed and processed by hand. Diamonds were carried over the border and sold to traders and merchants who quickly established themselves in Mozambique.

In 2008 the State suddenly decided that these rich deposits could not be left to the informal sector and announced that they were going to take over the diamond fields. They lost no time in doing so and without consultation and in complete violation of either the rights of ACR or the small scale miners, the army was instructed to clear the fields of all small miners. Over 200 were killed and the rest displaced including villagers that had lived in the area for a long period. Over the next 4 years six companies, all 50/50 joint ventures with the ZMDC, were established. Three were the most important and occupied the prime deposits – Marange Resources, Mbada Diamonds and Anjin – the latter being a JV with a Chinese company.

In six years these companies processed millions of tonnes of soil and sand, exploiting the alluvial deposits that were spread over the entire field of 80,000 hectares. These activities were conducted under conditions of complete secrecy, despite this, information gradually emerged showing that the fields were yielding many millions of carats of diamonds. Up to 85 per cent were industrial grades at low unit values but the balance were gem quality stones and at least one stone has been cut and polished in Vietnam and sold for nearly $11 million.

Detailed records from both Marange Resources and Mbada Diamonds revealed that they were producing up to 20 carats per tonne and also disclosed the grades and prices that were being achieved for raw stones. From these records and the throughput of the equipment installed at the site, it became clear that Zimbabwe was supplying anything up to 25 per cent of global demand for raw diamonds. This peaked in 2012 at an estimated 30 million carats worth about $4 billion. Overall, over the total period of exploitation after ACR rights were violated I estimate that well over 100 million carats were extracted with a face value of $12 billion. Estimated costs of extraction were about 38 per cent and so at least $7 billion in surplus revenue has been siphoned off from the operation in 8 years.

The problem now confronting the people responsible for this operation is a technical one, the alluvial deposits have been exhausted and what is left is a belt of diamond bearing hard agglomerate which is very difficult to process. Experts suggest that only three companies in the world have the capacity to mine and process this deposit which is estimated to contain up to 9 billion carats worth more than $1 trillion.

For this reason the Ministry of Mines is now faced with the problem of removing the existing operators from the diamond field and replacing them with a single operator who can exploit the field in a transparent and accountable way. They are now looking at the example of Botswana where the industry is controlled by a 50/50 Joint Venture with De Beers that has been in existence for many years and controls the supply of a third of all raw diamonds in the world.

In Botswana the successful implementation of the JV has resulted in raising the GDP per capita to over $9000 and free access by children and young adults to the education system. The country has also accumulated surplus revenues amounting to two years of GDP and has been very careful to manage and secure the financial status of these funds. Most recently they moved to establish auction facilities in Botswana to handle their production.

The contrast with the actions of the Zimbabwe government could not be more blunt – we behaved illegally when we took the claims from ACR even though the company offered 50 per cent of the equity in the field to the State. Then we compounded the violation by forcing the small scale miners off the same property and in the process violated their human rights. We then recklessly mined the easy and most productive areas of the field, releasing tens of millions of new diamonds into an already oversupplied market, driving down market prices for all producers.

We simply squandered and stole the funds realized from the mines. A vast global network of shady characters became involved with aircraft flying in and out of the country with no supervision or control. When the whole thing was over, I hear the Chinese are even taking down and removing the fences they erected to protect their activities and interests. Others are leaving behind debts with local companies and suppliers.

If we had set out to create an example of how not to undertake an investment in the extractive industries, we could hardly have done a better job. Here we have a President who is constantly appearing on global television saying we will never again allow foreigners to control our natural resources – and this is what we do with that power and privilege. It’s a complete debacle and would be laughable if it was not so serious and the consequences for our people so severe.

Eddie Cross is MDC MP for Bulawayo South. This article first appeared on his website www.eddiecross.africanherd.com

 

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27 comments on “How Zimbabwe squandered Marange gift – Eddie Cross
  1. John Thomas says:

    ZANU has sold our inheritance for beads and mirrors, exactly like Lobengula. Nothing has been learned. This is the same old mistakes.

    • Nzou says:

      @John Thomas,we allowed zanu to sell our inheritance. Why blame zanu when all we did was stand by and watch? Unless we stop being bystanders, stop moaning and do something about it, the status quo will persist. There is a saying that you get the government you deserve and Zimbabwe is no exception.

      If Zimbabweans want change, there is no point in selecting leaders who put their p e n i s before their country.

      No point in electing leaders who are failures and refuse to be accountable.

      The people need to elect strong leaders who can rally the people to mobilise into an organised and committed chimurenga to liberate and toss out these electoral thugs and looters.

      There are no easy solutions and it’s high time people realised this.

      • Don Cox says:

        “The people need to elect strong leaders”

        Zimbabwe has had a strong leader for 34 years.

        What is wanted is not yet another strong leader, but a capable administrator, preferably with a good degree in agriculture or engineering, who can run the country for ten years and then hand over to the next.

        Somebody who can see the problems and work out practical solutions.

  2. Zen says:

    Whatever happens I’m happy in the knowledge that Zimbabwe will never be a colony again and that indigenisation will ensure that Zimbabwe’s natural resources only benefit Zimbabweans.Comrade Mugabe said so,so it must be true

    • Reverend says:

      Regardless of the fact that the population lives in sqaulor degradation and poverty and fear of zpf Zen? I think you need help too pal..

  3. Mlimo says:

    Zen Zimbabwe was never a colony. Rhodesia while it was said it was a colony was more independent than a colony. The federation of Rhodesia And Nyasaland was a colony. Southern Rhodesia was a colony. Colonialism has died out to be replaced Chinasim. This is the new nature of Zimbabwe who pays service to its master China. The wealth of Zimbabwe only goes to comrade Mugabe and zanupf .

  4. Zvomukonde says:

    The madness came,the madness has gone.The diamonds were a curse. Lets rebuild our lives our societies and move on. Thats all we know,thats all we ever do. Tomorrow the rain will come,the crops will grow again,we shall smile again

    • I am not the one! says:

      ..u r delusional… “Tomorrow the rain will come,the crops will grow again,we shall smile again” ha ha ha.

  5. Rwendo says:

    Good summary of our Marange debacle. One still wonders about the sending of “truckloads of sample material to South Africa for analysis” by De Beers.

  6. Godobori says:

    Every Zimbabwean child to be born in the next 50years is already indebted to the amount of USD18,000 from day one.

    Well done Cde President. You have done for Zimbabwe what Smith and his white folks failed to do as a foreign conqueror. You can now sit back and smile at how efficiently you have decimated our livelihoods…and still demand that we keep bowing at you and your Chinese masters, who keep you in power!

  7. Eddie with all due respect to you I do’t agree with the word WE as put in the article. I think THEY is more appropriate. If we use WE then that would suggest WE all as Zimbabweans have benefited from this mess. Obviously some like the above @ZEN have got something out of this. Those that ruled missed an opportunity to prove their doubters wrong. Instead greed took a hold and now it is too late to do anything about it.@Nzou with all due respect to you brother, that voting story does not Gel any more. Nobody can honestly believe that any of the past elections have been anywhere near fair. I don’t know how old you are but I have been around from when Zanu was formed. The late 80′s they continued to show that they would kill to hold on to power. How many of their own that dared to stray were killed. I am not going to pretend that I know the solution because I have got confidence, God is going to see us through.If the elections were fair and Zimbabweans voted in these great numbers for Zanu why then all the secrecy surrounding the ballots for the last Election? Knowing Zanu pf if they would have won fairly they would be asking the man on the moon to peruse the voters roll and the ballot. We all know that something was smelling even prior to the elections. When something gives we will maybe be able to strip the looters of their ill gotten gains. Eddie ZANU PF AND ONLY ZANU PF IS TO BLAME NOT WE.

  8. Chanisa says:

    It’s Mugabe stupid, and his belief that political intrigue is the highest human form which, by the way, he holds as a convenient artifact by a coward who had power thrust upon him. His game has nothing on socio-economics, and it matches well the obsequeous, fawning, and cringing Zimbabwean mentality. Eat your heart out.

  9. Mukanya says:

    “Zimbabwe squandered Marange gift” is too blanket a description; it should read as;”How Mugabe’s Zanu pf squandered the Marange gift”.

  10. roving ambassador. says:

    Zanu ndeyeropa, they looted ,killed and pillaged the nation. The acts of treason continue unabated. Its a party of Barbarians. History shall be written.
    Shame on you Mugabe.

  11. Roger Zulu says:

    Does Robert Mugabe ever read any of the above comments?

    Silly question!

  12. munzwa says:

    He knows how unpopular he is, he wants to die in office as a result, its the rest of his family we should be watching to see where the loot is to be spent…

  13. Dave Wood says:

    You are ALL so mistaken…we are dealing with a bunch of born thieves who will destroy everything come what may. I am referring to the Shona individuals who are responsible for the destruction of our once vibrant economy. They have blamed others for their incompetent useless ways since the 1800′s…it’s never their fault they keep telling us, it’s the Breeetish or sanctions our the white farmers. To all of you who think the ballot box will change things, well you are ALL so very wrong. You are dealing with a lire and a thief, a tribe that cannot be trusted and who would slit your throat tomorrow. Unfortunately there is only one way , I repeat, one way, to get rid of this scourge….you all know it, but hide behind alternatives that have never worked. AND, don’t for one minute think the Shona’s are going to rise up and do it, look at that spineless runt Tsangarai and his little band of lieutenants..each and every one of them were bought off, why, because they are all untrustworthy shona’s. It’s about time you all woke up and smelt the coffee instead of bearing about the bush!!!!

  14. NBS says:

    The curse of a thief: “Then I turned and raised my eyes and saw there a flying scroll….This is the curse that goes out over the face of the whole earth: every thief shall be expelled according to this side of the scroll and every perjurer shall be expelled according to that side of it. I will send out the curse and it will enter the house of the thief… (Zechariah 5: 1-4)

  15. apolitical says:

    REAL ECONOMIC FACTS
    Clearly from his comments it is time for Eddie to retire.
    Firstly there are no soft loans there is always a price to pay, one of the countries mistakes was it took advantage of such loans leaving us in debt.
    It is those who advised taking those loans that broke the camels back so to speak.
    In the 80ties we did too well our textile exports closed down texile businesses in the EU.
    Enter ESAP, – Export you cotton close your textile industry and as many manufacturing concerns as you can it is hurting the EU economy.
    The Eddie Cross’s of this world said what a good idea – dont protect local industry close it and it worked Tarrif protection was removed.
    Government had a problem as the unemployed put pressure on the land reform program where Britian had failed in its agreement to fund compenmsation – agricultural land was supposed to revert to government by 1990.
    The propaganda promoted lies did hit the press quoting the millions supposedly paid – in truth the money paid was for the alleviation of the rural poor, as usual our non existent investigative reporters failed again and cost the country money.
    Simultaneously thec legal frsternity hadv turned into legal mafia and anti corruption hadv commenced investigsations into corruption, frasud and murder with Judges at the top inmplicated.
    Solution a new constitution.
    An announcement after the first draft was adopted from John Deary says it all.
    “We had to adopt it that way, we couldn’t afford objections, the whole objective of this constoiytuiomn was to protect Justice McNally and Gubbay, theybare our friends, the bargaining went up and down and we had to agree to fasttrack the land reform in return for protecting them from suspendsion or prosecution and we succeeded. Unfortunately in terms of the draft Mugabe is in for another term and the farmers lost, but some one loses oin every agreement”. Please don’t rock the boat.
    This constitution was a no vote but in the recent one the same objectives were reached – lawyers are protected and a reduction to farmers of the compensation terms agreed by Britain at independence- agreed and accepted by the CFU being funded by Britain in return.
    Propaganda cover up was implemented in that the reason for the closure of the manufacturing sector already close prior to the land issue was the claiming of farms as Zimbabwe suddenly became a agro based economy as opposed to the reality in the early 80ties that industry and mining equated to 80% of our economy.
    By reversing this equation the EU managed to shift blame away from them supported by local economists such as Eddie to convince locals.
    A swift way to reverse the economy is to get hold of the ESAP conditions and reverse all.
    Soft loans are the way to close the economy for good as any businessman knows, only idiots think that because you have borrowed money in your account you are doing well.

    • Chidumbu says:

      no matter what you say @apolitical we all know you are just a failure like your idiot boss mugarbage, Britain didn’t fail to pay for land reform, where is the £400 million you and those idiots were give for that, instead you squandered it and then asked for more, what a bunch of w”3@$rs.

    • Zvichanaka says:

      Apolitical..you sound like Jonathan Moyo, someone who does not like to accept there is a leadership and economic crisis in Zimbabwe. Your argument is hollow…this is 2014, the world has moved on and Zimbabwe is trailing further and further behind..thanks to the Dictatorship in power.

    • masvukupete says:

      @apolitical. And Zanu pf did not see it coming and just went ahead without scrutinising those suggestions. Incompetency if you ask me.

  16. @Dave Wood your kind of comments are exactly what will hold Zimbabwe back. You are entitled to your own opinion unhelpful though it is. We had someone else who would have all the Ndebele people wiped off the face of the continent. His name is Munyaradzi if you have been following the stories here. Another rather mischievous character who would love to see a civil war. I myself have seen the worst of people in every tribe colour a creed. During my time I have seen some bad corrupt men of all colours and tribes. I can also say that I have seen the best of human beings in all colours tribes and races. Some that I have come to know are right here on this forum. I would like to think that we are all in this together and that an empty belly has no tribe colour or race. What I am against is any sort of statements that seem to want to cause friction between people of different cultures because to me it is mischievous.This is the year 2014 and some people need to grow up and talk sense when they comment on sensitive issues. How are we to get by our differences if we do not acknowledge each other. I do not intend to start tribal debate because at this time we need unity of purpose.

  17. Ngoto Zimbwa says:

    The job is a tough one, lets not underestimate it.

    ZANU controls everything in zim, the Police, the Army, the CIO, etc etc….
    On top of that, all of Africa is seemingly behind old bobo, Botswana excepted, of course.
    The major power in our region SA, in the shape of its presis Mbeki and Zuma have thrown their weight behind bobo.
    What chance any opposition to this regime, realistically?

    By the way, the security apparatus is full of zimbos of all persuasion.

  18. Nzou says:

    @Ngoto Zimbwa. Yes you are correct. Many high ranking ANC chefs have been cultivated over the years by ZanuPF (CIO).

    Never EVER trust anyone in ANC as they could well be part of ZanuPF patronage. Looking at Zuma’s sudden about turn towards the end of the GNU illustrates how he was used to deceive the global community.

  19. Dave Wood says:

    …comment deleted by moderator…[Dave Wood, you've contributed to this debate. Thank you. At times you've overstepped our moderation guidelines and we've continued tolerating. You have good cause but that's now aside. Please contribute constructively. Our call, your choice...the floor is yours sir.]

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