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Marange alluvials: Are they selling us a dummy?
16/12/2013 00:00:00
by Mathew Nyaungwa
 
Diamonds have run out ... Mines minister Walter Chidhakwa
 
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THE discovery of alluvial diamonds in Marange came at a time when Zimbabwe’s economy was (and is still) in a coma. Therefore, diamonds were seen by many as the most sought after anecdote to recuperate the lifeless economy. This could have been derived from the fact that gems had proved to be a fulcrum for the neighboring Botswana economy and to some extend Namibia.

However, its public knowledge that the auctioning of the diamonds from Marange was once suspended by the Kimberley Process (KP) in November 2009 due to allegations of human rights abuses, which Harare demurred to. The European Union (until recently) and the United States maintained their sanctions on diamond companies operating in Marange despite the lifting of the KP trade embargo in November 2011.

This was often cited by authorities as the reason why diamonds had not contributed much to the growth of the economy as initially anticipated. However, such an argument did not find any buyers given that annual KP trade figures showed Zimbabwe as an active diamond trader.

One recalls former mines minister, Obert Mpofu, perhaps caught in a frenzied excitement, saying after the lifting of the KP trade embargo that “Zimbabwe will not be begging anymore. We are now going to unleash our worthiness to the world”.

He continued in the celebratory mood, as he promised more.

“The Ministry of Mines has the pleasure to announce that it is ready to lead and champion the economic recovery of this country through a robust, dynamic and aggressive policy to grow the mining sector in Zimbabwe whose growth is currently bullish and set to contribute in excess of 50 percent of our Gross Domestic Product,” he was quoted as saying by the State media.

“You cannot play against a giant, without Zimbabwe you can’t have KP. Our current production is estimated by volume to be in excess of 25 percent of the world production.”  

We were also told at the time that Zimbabwe was set to earn in excess of $2 billion per year in gross revenues from selling diamonds. However, no revenue of that magnitude was recorded from the diamond “giant”. In fact diamond miners in Marange were accused of failing to remit revenue to the Treasury.

Former finance minister Tendai Biti was forced to cut Zimbabwe’s budget last year to $3.4 billion from $4 billion after receiving $41 million from $600 million that he expected from diamond sales. Global Witness also claimed that about $2 billion in Marange diamond revenues had been unaccounted for since 2008.  Zimbabwe dismissed the allegations as false.



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Despite the fogginess, Zimbabweans hoped that diamond proceeds would one day flow to the Treasury like a deluge. But they were knocked for six to learn last month in a Financial Gazette report that the quality and quantity of alluvial diamonds mined in Marange had been on the “decline” since 2012. This was confirmed when mines minister Walter Chidhakwa, who recently toured Marange diamond fields, was told by miners that the alluvial deposits were fast running out on the claims that were allocated to them by government.

“Currently, we are exploiting low grade material compared to when we started. We have deep-seated conglomerate making it difficult to extract,” said Mbada Diamonds chief operations officer Tendai Kadyamusuma.

Anjin director Munyaradzi Machacha also said that the company was currently operating at below break-even point. “Our ore is much deeper to depths of about 40 metres and some of the areas we have had to abandon mining because it was no longer commercially viable,” he said.

Perhaps a testament of how bad things have become, Anjin said recently that it retrenched more than half of its workforce since it started operations in Marange three years ago. The diamond company said at least 950 workers out of about 1,800 people had been sent home, while about 190 of the remaining 845 workers still face the chop. It was targeting to remain with at least 655 workers by March next year.

Machacha said the retrenchments were cost-cutting measures on the back of depletion of alluvial diamonds forcing them to dig deeper for conglomerates. “We are taking these measures in order to remain viable. We have also put some of the machinery on idle mode. Of the seven processing plants that we have, we are only using four at the moment,” he said.

Some people are questioning the veracity of the claims made by the diamond miners on alluvial exhaustion given that these are coming shortly after the European Union had lifted sanctions on Marange diamonds. The miners or the government had previously refused to give constant production and trade figures citing sanctions. Skeptics were not convinced that alluvial deposits had run out as this was a ploy to cover up the siphoning of diamond funds.

That aside, the DTZ-OZ GEO, a joint venture between the Development Trust of Zimbabwe and the Russian company Econedra, said it was happy to mine its recently found conglomerate deposits in Chimanimani. The company was quoted as saying by NewsDay that it was capable of producing 2,5 million carats of top quality diamonds per annum.

This makes one wonder why there was much hullabaloo from Marange about conglomerates. Why are the miners in Marange failing to acquire equipment needed to mine the conglomerate? Surely, proceeds earned all these years should have been used to invest in new technology necessary to mine conglomerates as the miners knew fully well that the alluvial deposit would not last forever.

The recent dissolution of the Zimbabwe Mining Development Corporation (ZMDC), Minerals Marketing Corporation of Zimbabwe (MMCZ) and Marange Resources boards by Chidhakwa was enough evidence that all was not well in Marange. One of the resolutions that emerged from the just ended Zanu PF’s 14th National People’s Conference held in Chinhoyi was the need to “rationalise the number of players in the diamond mining sector to promote efficiency and transparency”.

Indeed, transparency, accountability and the streamlining of operations in Marange were necessary for Zimbabwe to realise maximum potential from the untouched claims. The same applies to Bikita were kimberlites were found recently. Diamonds, just like gold and platinum, can lift Zimbabwe from its economic quagmire and the time is now.

Mathew Nyaungwa can be contacted at mathew@rough-polished.com


 
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