Dubai diamond auction proceeds delayed | The Herald

via Dubai diamond auction proceeds delayed | The Herald April 25, 2014 by Lloyd Gumbo and Felex Share

It has taken 30 days for Zimbabwe to receive payment for diamonds sold to Dubai merchants last month, a period observers in the industry say is too long for such deals.
It is also understood that the delays crippled Government and diamond firms’ operations, justifying calls for the country to conduct local auctions.
Zimbabwe had its maiden tender of 380 626,24 carats at the Dubai Diamond Exchange Centre in Almas Towers, United Arab Emirates on March 24, earning US$29,3 million.

Investigations by The Herald show that the facilitator of the sale, Global Diamond Tenders, had problems transferring the money to Zimbabwe.

Proof of funds transfer was only received yesterday.

Mines and Mining Development Minister Walter Chidhakwa confirmed the delay saying: “They were supposed to have transferred the money before Easter; maybe due to inefficiency on the part of the facilitator hence the delay.

“However, I understand the facilitator has now collected the money from the buyers and is now transmitting it.”

Marange Resources acting chief executive Mr Mark Mabhudhu added, “It has taken long for the payment to come through. We do not know the logistical problems the facilitator had, but he has just sent proof of transfer today (yesterday).”

Mr Mabhudhu said the facilitator did not explain the reason for the delays.

Sources said diamond mining firms that sent their consignments to Dubai were now facing operational challenges with most of them struggling to settle debts and pay salaries.

“This delay has had a negative effect on companies because they were expecting payment immediately after the sale,” he said. “Usually the payments should come after a few days like what happened with the Antwerp (Belgium) tenders but this one took a month.”

Zimbabwe had two tenders in Antwerp in December 2013 and February this year, earning US$79,8 million from 1 237 734 carats sold.

Zimbabwe is turning its attentions to the potentially more lucrative United Arab Emirates auction, with President Mugabe two weeks ago indicating that the country would continue trading its gems at the Dubai Diamond Exchange to gain experience in the complex business before starting its own local auctions.

The President toured the Dubai Diamond Exchange Centre at Almas Tower, which also trades gold and other precious metals and minerals.

The average price at the Dubai auction was US$76,91 per carat, which was 5,4 percent better than the US$72,96 realised at the second Antwerp sale.

Unlike in the two Antwerp auctions, the Dubai tender saw Zimbabwean companies presenting clean and well-sorted diamonds, with companies like Mbada Diamonds realising a 20,66 percent improvement in value over their reserve price. The highest price per carat was US$121,05.

Mr Mabhudhu said the Dubai auction suited Zimbabwe’s needs.

“Technically it is a viable and vibrant market for us because it is open to various dealers compared to the Antwerp system where dealers should be registered with Antwerp for them to trade.”

Stakeholders in the diamond industry say beneficiation is the way to go for Zimbabwe to realise maximum proceeds from its mining.

About 29 diamond beneficiation firms were registered in 2011 but only one subsisted by the end of 2013 due to high license fees and for one-year tenure.

Zimbabwe Diamonds Technology Centre chairperson Mr Lovemore Kurotwi said it was imperative for Zimbabwe to go the Botswana way and add value locally.

“Our emphasis should be on cutting and polishing the diamonds such that we do not sell them in raw form,” he said. “We have a capacity of contributing up to 30 percent of the world’s production when in full operation, that is if we sell cut and polished stones.”

Diamonds are cleaned through a process called “deep boiling”, in which they are subjected to high temperatures to rid them of impurities.

Mr Kurotwi said centralisation of diamond trading through construction of a trading centre would see buyers flocking to Zimbabwe.

“One of the major advantages of such centralisation is the attraction of a plethora of investors and buyers, not just positively impacting the diamond industry, but also giving an upper hand to downstream industries for example tourism and infrastructure development.

“It is believed centralisation of diamond trading will enhance accountability, transparency and security while increasing convenience, efficiency and returns from the mineral. Right now we have to pay about 4 percent of the total value of what we will be exporting to insurance companies, something we can avoid if we start trading locally.”

Botswana has a centralised diamond hub with banking facilities.

Debswana – a 50-50 joint venture between De Beers and the Botswana government – sell diamonds in Gaborone.

The same situation prevails in Namibia where sorters are based in Windhoek before selling gems to clients known as sight holders, who cut and polish them locally.

 

COMMENTS

WORDPRESS: 5
  • comment-avatar
    Little Dorrit 7 years ago

    Delayed or diverted? Hope the cheque is not in the post

    • comment-avatar
      furedi 7 years ago

      They had to wait for Bob to go and collect his share first hence the trip soon after the auction.

  • comment-avatar

    In what universe is it necessary for an entity to prove that they have transferred funds? Either the money is in the account or it is not! This recalls the situation whereby Biti said that Treasury had not received diamond funds, while the diamond companies claimed that they had deposited the funds – and yet the money never appeared! Who was lying?

  • comment-avatar
    Tongoona 7 years ago

    Somebody most probably was playing games with the money for 30 days. Now that they have made profit, the money is suddenly found. Corruption is the privilege of devils sitting in high offices and the 30 days alleged delay was harvesting time for them crooks. Sorry maningi for the poor generality.