Miners bypass diamond cutters and polishers

A NUMBER of local diamond cutters and polishers have closed shop because they are not getting the gems from miners, a report by the Parliamentary Portfolio Committee of Mines and Energy has said.

In terms of the diamond policy adopted by the Government last year, a quota of locally produced diamonds should be made available for beneficiation by local cutters and polishers. The main objective of the arrangement is to encourage a broader local participation in the sector.

But Government had been reluctant to ensure a portion of locally produced gems are reserved for the locals.

"In a meeting with the association of local cutters and polishers, the committee noted with concern that Government was not very supportive in developing this sector," the parliamentary report said.

"This was evidenced by the vague policy by Government in terms of the quota and the quality of gems to be supplied to the local cutters and polishers. At the same time, some (diamond) local cutters and polishers lost their money to Government after paying licence fees without a corresponding duty of accessing the diamonds.

"The committee would like to implore Government to seriously consider the development of local cutters and polishers as this has the potential to create more wealth and employment for the economy. The country's diamonds are being exported in raw form, creating more jobs and wealth for other countries. This is indeed a travesty of justice."

Diamond cutters and polishers pay a licence fee of US$50 000, that is renewed every year. This was also impeding the growth of the sector. The committee also noted with concern some of the diamond producers have plans to actively participate in the cutting and polishing industry.

"This creates a conflict of interest and has the potential to stifle the growth of local cutters and polishers," said the report.

"The growth of the local cutters and polishers was also being impeded by exorbitant licence fees . . . and yet there was no guarantee of receiving a parcel or reimbursement if the parcel is not delivered.

As a result a number of local cutters and polishers had to fold their operations and yet they had invested heavily through the acquisition of machinery and training of personnel."

Zimbabwe's diamond production from Marange rose 8,7 million carats in 2011 to 12 million carats last year. This year, production is expected to further increase to 17 million carats, according to the report.

Globally, the industry is robust and has fully recovered from the 2008 recession. India's cutting industry is currently the largest, with one million cutters, while China's industry has grown from nil cutters 20 years ago to 60 000 cutters today and Botswana's cutters increased over the past years from 300 to 3 000, according to the World Federation of Diamond Bourses.

South Africa, though fairly mature, is in distress as cutters and polishers have dropped from 4 500 to less than 600.

The report has recommended that the Minerals Marketing Corporation of Zimbabwe should be encouraged to carry out a study on ways of developing the growth of the local cutting and polishing industry.

Government should also encourage local entrepreneurs to get involved and should deliberately put in place favourable conditions. Similarly, investment policies and fiscal regimes must be put in place to encourage foreign investments in joint ventures with local entrepreneurs in the cutting and polishing industry.