Zimbabwe, which discovered a vast diamond field in Marange about five years ago, is slowly becoming a recognised budding player in the diamond industry.
Prior to the discovery of the Marange diamond fields, the country had two known diamond mines.
The two are Rio Tinto’s Murowa Diamond Mine and a privately-owned River Ranch Mine.
For years there was a deafening silence regarding the diamond industry in Zimbabwe, until Marange gems dredged up on the scene in 2006 sparking what is commonly known as a diamond rush.
Harare dispatched ruthless security personnel in a frantic bid to bring sanity in the diamond area.
Civic groups, however, claimed thousands were killed during the clean up exercise, an allegation the Zimbabwean government refuted.
Smuggling of diamonds also became rampant; while some overzealous civic groups branded Marange stones, “blood diamonds”, a move that later saw the Kimberley Process suspending the export of these gems.
As Zimbabwe unsuccessfully fought to have its Marange diamonds gain international recognition, it also had to deal with a legal battle against Africa Consolidated Resources (ACR), which acquired claims to the diamond fields after De Beers gave up the area after a long period of exploration.
The diamond giant claimed the diamond fields were uneconomic.
This claim irked Harare and now strongly thinks De Beers “looted” its gems throughout the period it was in the country.
So, despite a protracted war in the court, Zimbabwe revoked the ACR claims saying it had acquired them fraudulently.
Despite ACR’s pleas to establish a joint-venture with Harare, it went on to grant mining claims to several firms that are currently digging for diamonds in partnership with the state-owned Zimbabwe Mining Development Corporation (ZMDC).
After realizing the potential that the diamond fields had, the Zimbabwean government announced that its cabinet had “agreed unanimously" to own 100 percent of all diamond mines under the Indigenisation and Economic Empowerment Act.
“The broad principle that has been set up by government is that the alluvial diamonds belong to the state and they must benefit the people of Zimbabwe,” the local media quoted Youth Development, Indigenisation and Empowerment minister Savior Kasukuwere as saying last year.
Finance Minister Tendai Biti was also quoted then as saying that Zimbabwe would like to have all alluvial diamond mining conducted by the state.
“There is consensus in government that there has to be a new Diamond Act that says alluvial diamond mining in Zimbabwe be conducted by and through the state,” Biti said in a mid-term budget speech.
He said the inclusive government desperately needed revenue from diamonds to revive the country’s ailing economy.
Biti said private companies the government had joint ventures with were not sharing the wealth, hence the need to nationalise.
Apart from the 100 percent ownership of all alluvial diamonds mines, Zimbabwe said locals would also own a 51 percent share in non-alluvial mines, a move that would affect Murowa Diamonds and River Ranch.
This 51 percent ownership policy would not only apply on diamond mines, but would also affect all mining operations in the country, as well as other foreign owned companies, be it in the banking sector or manufacturing.
Several miners were, however, resisting the move and had made their own proposals instead.
The Chamber of Mines proposed to comply with the 51 percent local ownership laws by selling 26 percent equity stakes and making up the remaining 25 percent with empowerment credits comprising corporate social investment, local procurement and skills development.
Kusukuwere claimed the government had rejected this proposal.
“Mining companies operating in Zimbabwe will not be given the so-called empowerment credits for social initiatives and will not be discussed as most of the proposals submitted so far fall short of government’s expectations,” he was quoted as saying by local media.
The debate rages on.
However, Zimbabwe had completely turned a blind eye on events unfolding in Angola’s diamond industry.
In a massive climb-down, Angola dropped last March, a policy that stated state-owned gem miner Endiama had to own 51 percent of every concession of kimberlite mining.
Endiama chairman Antonio Carlos Sumbula said recently that Angola abandoned the policy because it discouraged investments.
He said Endiama’s shares would rather be negotiated with each company.
Saumbula said Angola wanted to bring investors to prospect for new diamonds in the southern African nation.
“Diamond prices have improved, now we go to the next stage,” he was quoted as saying. “We’re seeking new investors so they can prospect new areas and identify new reserves.”
He said Endiama had discussed investments with Russia’s Alrosa, which operates the Catoca diamond mine in Angola, as well as South African and Israeli companies.
Zimbabwe might state that De Beers had an equal partnership agreement with the governments of Botswana and Namibia, as a point to justify its stance.
However, what should be noted that these agreements do not reflect the countries’ policies on ownership structures as they were only limited to Namdeb, in the case of Namibia and Debswana in the case of Botswana.
There are some diamond firms in these countries that have full ownerships in diamond mining ventures.
So, it remains to be seen whether Zimbabwe would come to a realization that investors turn to shy away when stringent entry requirements are set.
Angola was indeed a good example on how bad policies can scare away potential investors.
Mathew Nyaungwa, Rough&Polished
