Zimbabwe diamond production declines by 62 percent

ZIMBABWE's diamond production declined by 62 percent to 924 388 carats since January this year due to court cases filed by evicted miners resisting Government's decision to consolidate the sector.

Production of the precious mineral totalled 3,2 million carats in 2015, but has been negatively impacted this year by ongoing court cases where two miners are objecting to consolidation of the industry.

Giving oral evidence before the Parliamentary Portfolio Committee on Mines and Energy yesterday, Mines and Mining Development Minister Chidhakwa said diamond production this year was severely affected by resistance to consolidation, which saw some mining companies challenging the decision in the courts.

The Government ordered all diamond miners in the Chiadzwa/Marange to cease operations in February this year to pave way for consolidation of the sector following production and accountability issues, but some of the firms have opposed the directive.

Two of the seven firms that operated in Chiadzwa went to court alleging breach of contract by Government. The Court processes have prevented consolidated diamond mining entity, Zimbabwe Consolidated Diamond Company, from moving into areas where the evicted diamond mines where exploiting the gems.

"So far deliveries to ZCDC in terms of weight, total 924 388 carats and that compares badly with the 3,2 million carats for 2015.

The explanation is that the 924 000 carats are coming from the two mining locations not the seven. So we need to finalise the court cases.

"Since we started consolidation, we have been in and out of courts.

"We were at the High Court for three months and won the case then one of the evicted diamond mining companies decided to go to the Constitutional Court. By that time we then started the process of trying to evict them," said Minister Chidhakwa.

"As such, out of the seven companies that were operating, we are only mining in two areas, formerly Marange and DMC, whom we had an agreement with and they said they were not going to challenge us in the courts and agreed to move out. We have just finalised discussions with DTZ OZGEO so that we also take over their territory because they also did not go to court," he said.

Minister Chidhakwa also said Government had shifted from the previous consolidation plan after realising that the mining firms that would form the consolidated company did not have licences. He said there is a new structure of the consolidated mining entity and its mandate was to produce to support inflows to the fiscus.

"ZCDC has not only been about production of diamonds, but the process entailed change of structure, and when I came into office one of the things that became clear was that we needed to make the diamond industry responsive to Zimbabwe's needs.

"When you look at inflows from diamond companies outside royalties; in terms of declaration of dividends by companies that were making money in Chiadzwa and were 50 percent owned by Government, expectation was that dividends would be declared with 50 percent of the proceeds going to Government.

'However, that did not happen, which led us to the idea of consolidating the companies, but when we discovered that their mining licences had expired we then said we will not renew the licences because the spirit of sharing, which was contained in the original agreement had not been met in the initial phase of the operation of the licences," said Minister Chidhakwa.

"We then changed the structure completely and when you change a structure naturally you don't get good results immediately particularly because they went to Court and up to today. I have already told ZCDC that they need to mine to feeding into the fiscus. We are discussing budgets, equipment and ways of sourcing the equipment so that we help them as the shareholder," he said.

Minister Chidhakwa said there was need for finalisation of the cases at the courts and he has been talking to the Attorney General and different Embassies so that a diplomatic solution is found.