Private diamond sales to boost revenues

Source: Private diamond sales to boost revenues | The Sunday Mail June 30, 2019

Private diamond sales to boost revenues

Martin Kadzere
Senior Reporter

Zimbabwe has invited seven international diamond buyers to participate in a private sale of nearly two million carats of the commodity, Minerals and Marketing Corporation of Zimbabwe (MMCZ) general manager Mr Tongai Muzenda has said.

The country postponed the sale of diamonds about three months ago as authorities wanted to understand processes and procedures involved in diamond marketing.

Upon satisfying themselves with the procedures, the MMCZ was given the nod to resume the sales and last week, seven international buyers were in the country to undertake valuations of 1,9 million carats of industrial, near gems and gems.

The diamonds were produced by State-owned Zimbabwe Consolidated Diamond Company (ZCDC).

ZCDC was formed in March 2016 after the Government evicted all diamond mining firms in the Chiadzwa fields following the expiry of their licences.

Under a private sale, selected buyers are invited for valuations of diamond parcels available for sale. The price that the buyer offers is then compared with the valuations that would have been done by the producer. If there is a variance in what the producer is asking for and what the buyer is prepared to pay, the parties negotiate.

If the parties fail to agree on price, the parcel will be rolled over and other buyers will be invited.

Private sales are a new model since consolidation of the diamond industry. Previously, the sale of diamonds was only done through scheduled auctions, where buyers were publicly invited.

In an interview with The Sunday Mail Business, Mr Muzenda said under private sales, more value will be realised. He said buyers can connive to manipulate or suppress prices under the auction system.

“We invited the buyers and they have been doing valuations of the parcel that we intend to sell, which ranges from the least quality (industrial diamonds) to the best quality (gems).

“We would like to sell the diamonds in the best possible manner to ensure that the country realises maximum value from the resource,” said Mr Muzenda.

He said the MMCZ will continue conducting scheduled diamond auctions. However, they are looking at restricting the model to industrial diamonds (the least quality) in the future.

Zimbabwe is ramping up diamond production and negotiations are ongoing with some global investors, including Alrosa of Russia, which intend to extract the mineral.

According to the Zimbabwe National Diamond Policy, ZCDC, Murowa Diamonds and two other companies will be permitted to undertake diamond exploration and mining.

Apart from Chiadzwa diamond fields, ZCDC has also been conducting exploration in Mwenezi.

Zimbabwe has more than 130 known kimberlite pipes and dykes, which occur in clusters.

Kimberlites are igneous rock in which diamonds are sometimes found.

The Mwenezi cluster is known to have the bulk of the country’s kimberlite pipes and dykes in varying sizes.

Last year, diamond exports were only valued at US$29 million, weighed by ZCDC’s depressed production.

However, since the company took delivery of new mining equipment from Belarus, production is expected to shoot to one million carats by the third quarter of the year.

This could catapult export earnings to US$100 million this year.

COMMENTS

WORDPRESS: 1
  • comment-avatar
    Mukanya 5 months ago

    This is a corruption riddled arrangement! Change of spanners doesn’t mean change of practices.