Zimbabwe angling for $213bn diamond sub-sector

Zimbabwe angling for $213bn diamond sub-sector
Published: 22 April 2018 (278 Views)
Government, through state mining entity - the Zimbabwe Consolidated Diamond Company (Pvt) Ltd - is angling to tap into the $213 billion per annum global diamond cutting and polishing sub-sector as a way of unlocking real value from the country's diamond deposits.

The cutting and polishing sub-sector earns players much more across the globe every year, compared to a paltry $15 billion per year that the rough diamonds sub-sector earn producers annually.

The country has, since the beginning of diamond mining at the Chiadzwa diamond fields in 2006, heavily relied on revenue from the sale of rough diamonds due to lack of capacity to tap into the lucrative cutting and polishing industry.

This saw Government getting measly taxes and royalties worth $282 million from private diamond firms that operated in Chiadzwa in a joint venture arrangement with the Zimbabwe Mining Development Corporation over a six-year period.

In his key note address to mark the country's 38th Independence Anniversary on Wednesday last week, President Emmerson Mnangagwa said Government is in the process of formulating a comprehensive diamond policy to guide operations, development and sustainability in the industry.

Speaking to journalists on Thursday last week, ZCDC chief executive officer, Dr Moris Mpofu said the state owned mining entity is now going beyond mining of rough diamonds to spearhead value addition and beneficiation in line with the Government's thrust.

Dr Mpofu conceded that there was not much money to be made, for fiscal benefit, in the mining and selling of diamonds in their rough state, but a whole lot could be made in the downstream industry.

To that end, Mutare City Council has already availed 55 hectares of land in Fern Hill, for the construction of a multi-million dollar diamond centre or Gemology Park that will also apply for Special Economic Zone status.

The Zimbabwe School of Mines and the Diamond Beneficiation Association of Zimbabwe (DBAZ) are also working in collaboration with ZCDC.

They are already in the process of mobilising an initial $18 million that is needed for the first phase of the project. This is likely to include foreign investors.

The centre will be subdivided into four sections, namely the School of Gemology, which will offer training across the value chain, a section for cutting and polishing companies, Jewellery Blacksmith and Manufacturing for Blacksmith and Manufacturers as well as Ancillary Services that will house all supporting businesses.

"ZCDC is mandated to mine rough diamonds. However, we have gone beyond diamond mining by also trying to spearhead value addition and beneficiation because it is in line with the Government's thrust," said Dr Mpofu.

"Having realised that there is not enough capacity in the country to value add and beneficiate on the amount of diamonds that we are producing and not to mention the volumes that are going to come in the near future, we then spearheaded a project to establish a gemology centre in Mutare.

"So there is a lot happening behind the scenes in trying to get compliance permits for that land and also the designs, drawings for the buildings. We are playing a very active role as ZCDC to ensure that there is value addition and beneficiation of our diamonds.

"We have a few companies that are cutting and polishing our diamonds but I think we can do more in value addition and beneficiation given the volumes that we will be producing annually.

"At the moment, statutorily, local companies can only buy 10 percent (of the country's total diamond output).

"We would want a situation where we create capacity in the country and then that 10 percent can be increased to accommodate the demands of the cutting and polishing companies.

"It is very critical to tap into value addition and beneficiation. This end stream is the one that generates almost $213 billion per annum," he said.

Current production figures are on the rise and the firm has registered an 80 percent increase in its first quarter. This put them in good stead to achieving their 2018 annual target of 3 million carats.

In his independence speech, President Mnangagwa said, "The mining sector continues to be one of the leading sources of investment and export earnings, with a huge impact on employment opportunities and the economy. A comprehensive diamond policy will be formulated to guide operations, development and sustainability in the diamond industry," he said.

"Related thereto, the Zimbabwe Consolidated Diamond Company will commence full commercial production of conglomerate diamonds during this second quarter, following the installation of a conglomerate processing plant," he said.

Dr Mpofu advised that construction work on the project will start this year with three phases currently under consideration.

- zimpapers

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