Zimbabwe’s diamonds lose bling

via Zimbabwe’s diamonds lose bling – The Zimbabwe Independent August 28, 2015

THE value of Zimbabwe’s diamonds on the international market tumbled by as much as 56% between 2013 and 2014 to US$238,6 million as the country’s precious stone seems to be losing its shine.

Taurai Mangudhla

According to the latest figures obtained from the Kimberly Process Certification Scheme (KPCS), the volume of diamonds produced by Zimbabwe in the year under review also took a 55% nosedive to 4,8 million carats.

An executive at a leading diamond producer who spoke anonymously said the volume decline is attributable to a drop in the grades obtaining.

“When we started, we had high yields per tonne of ore but now it’s as much as what you get anywhere else in the world so you need capacity to process more ore which we don’t have,” he said.

“The prices are a function of quality and we have more than 80% of our diamonds being low quality industrial or non-gem quality stones”.

The drop in diamond production volumes and value come amid concern there have been serious leakages of the precious stones into global markets through the country’s porous borders. In the mid -term Fiscal policy, Finance minister Patrick Chinamasa said the diamond sector has been disappointing with a significant decline in alluvial diamonds at the Marange Diamond fields, leading to reduced diamond output.

“Diamond output for the first half of 2015 is estimated at 1,44 million carats, compared to 1,45 million carats recorded for the same period in 2014. Diamond output for the entire 2015 is projected at 3, 5 million carats, down from the initial projection of 6,5 million carats,” said Chinamasa, adding there is need to expedite a controversial consolidation exercise that is expected to improve productivity and accountability in diamond mining.

By April this year, President Robert Mugabe had tasked the Reserve Bank of Zimbabwe to come up with ways to plug diamond leakages as government institutes desperate measures to increase ever dwindling revenues inflows.

The central bank indicated a huge portion of the trade deficit, which widened from US$1,768 billion in the first half of 2014 to US$1,831 billion over the comparable period in 2015, represents the extent to which commodities such as gold and diamonds are smuggled out of the country.

At the time, top government sources said Mugabe’s office had tasked the central bank to assist with measures to ensure all diamond revenues due to national coffers are collected following a realisation that mining revenues alone could turn around the economy if leakages are sealed.

“The money lost through illegal and underhand diamond deals could actually turn around this economy; it’s that simple and I can tell you that we don’t need anything special other than making sure we collect what we are supposed to get not only from diamonds but all minerals,” said the official.

Despite claims Zimbabwe could account for as much as 25% diamond deposits, the country’s production fell far below Russia’s 38,3 million carats valued at US$3,7 billion in 2014. Angola and Australia produced 8,7 and 9,2 million carats while Botswana and South Africa registered 24,7 and 7,4 million carats respectively. The Democratic Republic of Congo realised 15,6 million carats while Canada produced 12 million carats in the period under review, according to the KPCs report.

Despite producing only 1,9 million carats, Namibia fetched US$1,2 billion from its diamonds, a reflection of both the quality of the stones and marketing strategy.

Lesotho produced the highest value diamonds at an average of US$990 per carat, followed by Namibia at US$602 per carat, then Liberia at US$428 per carat.

Countries such as Guinea, Tanzania, Botswana and South Africa sold at above US$150 per carat on average, while Zimbabwe averaged a paltry US$50 per carat despite selling its diamonds in Antwerp in the year under review, and introduction of local auctions.

The statistics come as Zimbabwean diamond producers have been singing the blues with top miners-Anjin and Mbada diamonds-retrenching workers citing viability challenges relating to the running out of alluvial diamond deposits that are easier and cheaper to mine. As such, the alluvial diamonds have been driving volumes.

Following the near exhaustion of alluvial deposits, companies have been instructed by Mines minister Walter Chidhakwa’s department to invest in conglomerate mining, but the players have already indicated the occurrence of the conglomerate is not sufficient to warrant investment and instead are pushing for allocation of fresh alluvial claims.

This was at tangent with government’s long term plans for companies to invest and start kimberlitic mining. The need for investment coupled with government’s desire for transparency and improved monitoring of the sector, resulted in the state pushing for consolidation of all the country’s diamond producers into a single entity.