News / National
'Shut down Chiadzwa diamond fields'
16 Mar 2014 at 06:24hrs | Views
Minister of Mines and Mining Development, Walter Chidhakwa
The state media on Sunday reported that Zimbabweans across various socio-economic strata are urging the Government to take decisive action to restore accountability in Chiadzwa, including shutting down the diamond fields, while measures are taken to maximise the nation's benefit from the precious mineral.
This comes in the wake of clear indications that the present system where several companies are mining the fields does not effectively unlock real value to the nation, but, instead, oils self-serving interests. An emerging perspective now calls for one or two entities to mine the national resource to ensure greater transparency and accountability.
It is acknowledged that Government executed its constitutional mandate remarkably in 2009 by moving into the fields, through the Zimbabwe Mining Development Corporation (ZMDC), to protect the resource and channel revenue to national coffers.
However, the fact that even the Minister of Mines and Mining Development, Walter Chidhakwa, is not fully aware of the revenue the seven Chiadzwa firms are generating has ignited spirited calls for Government to shut down all operations and start afresh.
On the back of growing concern the nation is yet to get comprehensive figures on production, total earnings, depletion fees and royalties since operations began. After the country fought hard to attain Kimberly Process certification, revenue reaching Treasury is still a pittance even though the diamond sector rakes in billions of dollars globally.
Recently, the Ministry of Mines and Mining Development revealed that Zimbabwe produced 12 million carats of diamonds in 2012, raking in US$644 million. In the same year, the country was the world's fourth largest diamond producer by volume after the Democratic Republic of Congo, Russia and Botswana.
Last year, the country reportedly produced 16 million carats, but the revenue target of US$1 billion initially set by the ZMDC was not achieved, although actual revenue figures are yet to be released.
Latest figures released by international consultancy firm Bain & Co show that in the global diamond sector, turnover of US$14 billion is realised in the exploitation and production of diamonds, meaning Zimbabwe, as a major producer, should get a significant chunk of this revenue.
Experts say due to inexperience in diamond trading, the Government has allowed the mining companies to do as they please, while its mining arm, the ZMDC, has let down the nation by failing to seek maximum benefits.
Mbada Diamonds, Anjin, Marange Resources, DMC, Kusena Diamonds, Jinan and Gye Nyame are the companies operating under 50-50 joint ventures with the ZMDC.
President Mugabe last week said heads would roll as Government investigates all shady dealings that might have taken place in Chiadzwa.
University of Zimbabwe Institution of Mining Research chairman Mr Spencer Kahwayi yesterday said lack of accountability and transparency at the Chiadzwa fields was hindering economic development.
Mr Kahwayi called for the cessation of operations, saying Government should adopt the Botswana model where diamond mining is conducted by a single company, Debswana, which is a 50-50 joint venture between the Botswana government and De Beers.
"I think we need to start afresh and take the Botswana model where the state has partnered with one or two investors," he said.
"By doing that, it increases accountability and transparency and, as a country, we will all benefit from our diamonds."
Jewellery Council of Zimbabwe chairperson Mr Fidelis Dana said the present system "is not working" and needs to be overhauled.
"There is need for a complete overhaul of the diamond operations in Chiadzwa because the current system is not working. Let's close and come up with a workable arrangement."
Minister of State for Manicaland Christopher Mushohwe said even the majority of Zimbabweans in the local communities have not been able to improve their quality of life despite having the precious mineral in their locality.
Mushohwe said the diamond mining companies were not doing enough to support the villagers.
"As a Government, we are worried why it is taking time for the companies to move these families. Just look at the dust that is around that these families are inhaling every day. This is a health hazard.
"Their grazing land and most of their fields have been taken by these mining activities. The land has been provided, but nothing is happening."
A legal practitioner, who preferred anonymity, however, urged caution, saying contractual details should be considered before moving on to shut down operations.
The practitioner said: "If Government creates a uniform system, how will they deal with other investors? We need to realise that inconsistencies will create chaos and damage our reputation as an investor-friendly country.
"Marange is a global player, so are the investors. Hence, the matter (halting operations) needs to be handled with care."
Contacted for comment, Minister Chidhakwa said Government was working on new approaches on Chiadzwa operations that will be announced soon.
He would not, however, be drawn into divulging further details. But the minister has on a number of occasions raised grave concerns about the goings-on in Chiadzwa.
In separate interviews, Chidhakwa and his Finance and Economic Development counterpart, Patrick Chinamasa, said they had ordered the mining companies to provide full production figures. Both ministers said they were not aware of the figures.
"We have agreed with the mining companies here (in Chiadzwa) that they are going to provide us information about their production levels, how many carats have they produced, where we are selling our diamonds and at what price," said Chidhakwa.
"As a partner, this information must be shared regularly, and we must be privy to the happenings at these diamond fields. There is no way I can be a minister of mines without knowing what is happening in these diamond mines.
"The relationship we are having with these companies is a business relationship and as a business partner, how come I don't know my production levels, how much carats are being produced, who am I selling these diamonds to, at what price?
"We want to know. We want that information as a matter of urgency. Everyone wants to know. I want to know. The President wants to know. The Minister of Finance wants to know. In fact, the whole country wants to know.
Minister Chidhakwa added: "Zimbabweans will never forgive us if the situation remains like this where we do not know what is happening. What we are saying is let's share this information; let's have access to it so that we can plan together as business partners. It is easy for us to plan if we know what is produced and how much we are getting.
"As a Government, we are carrying the country's hopes in terms of making sure that the majority of Zimbabweans benefit from these God-given resources. We hope to establish a beneficial relationship with the investors. What we want is a win-win situation."
Minister Chinamasa said a new economic model that Government has adopted to support the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim Asset) blueprint underscores the need to ensure full transparency and accountability for mining revenue.
"As you know, we are under extreme pressure from Zimbabweans who do not only want to see the benefits of these diamonds trickling down to the ordinary person but to know what is happening.
However, we are happy because the companies have agreed to this model and they have promised to co-operate so that everyone benefits."
Chiadzwa's diamond story got off to a controversial start since the fields were first explored by De Beers. Instead of just exploring, De Beers allowed the resource to be looted, with companies such as ACR clandestinely profiting from the precious stones.
ACR's clandestine operations caught the attention of villagers in the area, who got wind of the fact that the Marange area had this rich resource. This sparked a diamond rush that saw thousands of people descend on the area to illegally mine the diamonds.
Government eventually moved in to bring sanity to the area and carry out formal mining. - See more at: http://bulawayo24.com/index.php?id=editor&di=new_page#sthash.nmKRc8lO.dpuf
This comes in the wake of clear indications that the present system where several companies are mining the fields does not effectively unlock real value to the nation, but, instead, oils self-serving interests. An emerging perspective now calls for one or two entities to mine the national resource to ensure greater transparency and accountability.
It is acknowledged that Government executed its constitutional mandate remarkably in 2009 by moving into the fields, through the Zimbabwe Mining Development Corporation (ZMDC), to protect the resource and channel revenue to national coffers.
However, the fact that even the Minister of Mines and Mining Development, Walter Chidhakwa, is not fully aware of the revenue the seven Chiadzwa firms are generating has ignited spirited calls for Government to shut down all operations and start afresh.
On the back of growing concern the nation is yet to get comprehensive figures on production, total earnings, depletion fees and royalties since operations began. After the country fought hard to attain Kimberly Process certification, revenue reaching Treasury is still a pittance even though the diamond sector rakes in billions of dollars globally.
Recently, the Ministry of Mines and Mining Development revealed that Zimbabwe produced 12 million carats of diamonds in 2012, raking in US$644 million. In the same year, the country was the world's fourth largest diamond producer by volume after the Democratic Republic of Congo, Russia and Botswana.
Last year, the country reportedly produced 16 million carats, but the revenue target of US$1 billion initially set by the ZMDC was not achieved, although actual revenue figures are yet to be released.
Latest figures released by international consultancy firm Bain & Co show that in the global diamond sector, turnover of US$14 billion is realised in the exploitation and production of diamonds, meaning Zimbabwe, as a major producer, should get a significant chunk of this revenue.
Experts say due to inexperience in diamond trading, the Government has allowed the mining companies to do as they please, while its mining arm, the ZMDC, has let down the nation by failing to seek maximum benefits.
Mbada Diamonds, Anjin, Marange Resources, DMC, Kusena Diamonds, Jinan and Gye Nyame are the companies operating under 50-50 joint ventures with the ZMDC.
President Mugabe last week said heads would roll as Government investigates all shady dealings that might have taken place in Chiadzwa.
University of Zimbabwe Institution of Mining Research chairman Mr Spencer Kahwayi yesterday said lack of accountability and transparency at the Chiadzwa fields was hindering economic development.
Mr Kahwayi called for the cessation of operations, saying Government should adopt the Botswana model where diamond mining is conducted by a single company, Debswana, which is a 50-50 joint venture between the Botswana government and De Beers.
"I think we need to start afresh and take the Botswana model where the state has partnered with one or two investors," he said.
"By doing that, it increases accountability and transparency and, as a country, we will all benefit from our diamonds."
Jewellery Council of Zimbabwe chairperson Mr Fidelis Dana said the present system "is not working" and needs to be overhauled.
"There is need for a complete overhaul of the diamond operations in Chiadzwa because the current system is not working. Let's close and come up with a workable arrangement."
Minister of State for Manicaland Christopher Mushohwe said even the majority of Zimbabweans in the local communities have not been able to improve their quality of life despite having the precious mineral in their locality.
Mushohwe said the diamond mining companies were not doing enough to support the villagers.
"As a Government, we are worried why it is taking time for the companies to move these families. Just look at the dust that is around that these families are inhaling every day. This is a health hazard.
"Their grazing land and most of their fields have been taken by these mining activities. The land has been provided, but nothing is happening."
A legal practitioner, who preferred anonymity, however, urged caution, saying contractual details should be considered before moving on to shut down operations.
The practitioner said: "If Government creates a uniform system, how will they deal with other investors? We need to realise that inconsistencies will create chaos and damage our reputation as an investor-friendly country.
"Marange is a global player, so are the investors. Hence, the matter (halting operations) needs to be handled with care."
Contacted for comment, Minister Chidhakwa said Government was working on new approaches on Chiadzwa operations that will be announced soon.
He would not, however, be drawn into divulging further details. But the minister has on a number of occasions raised grave concerns about the goings-on in Chiadzwa.
In separate interviews, Chidhakwa and his Finance and Economic Development counterpart, Patrick Chinamasa, said they had ordered the mining companies to provide full production figures. Both ministers said they were not aware of the figures.
"We have agreed with the mining companies here (in Chiadzwa) that they are going to provide us information about their production levels, how many carats have they produced, where we are selling our diamonds and at what price," said Chidhakwa.
"As a partner, this information must be shared regularly, and we must be privy to the happenings at these diamond fields. There is no way I can be a minister of mines without knowing what is happening in these diamond mines.
"The relationship we are having with these companies is a business relationship and as a business partner, how come I don't know my production levels, how much carats are being produced, who am I selling these diamonds to, at what price?
"We want to know. We want that information as a matter of urgency. Everyone wants to know. I want to know. The President wants to know. The Minister of Finance wants to know. In fact, the whole country wants to know.
Minister Chidhakwa added: "Zimbabweans will never forgive us if the situation remains like this where we do not know what is happening. What we are saying is let's share this information; let's have access to it so that we can plan together as business partners. It is easy for us to plan if we know what is produced and how much we are getting.
"As a Government, we are carrying the country's hopes in terms of making sure that the majority of Zimbabweans benefit from these God-given resources. We hope to establish a beneficial relationship with the investors. What we want is a win-win situation."
Minister Chinamasa said a new economic model that Government has adopted to support the Zimbabwe Agenda for Sustainable Socio-Economic Transformation (Zim Asset) blueprint underscores the need to ensure full transparency and accountability for mining revenue.
"As you know, we are under extreme pressure from Zimbabweans who do not only want to see the benefits of these diamonds trickling down to the ordinary person but to know what is happening.
However, we are happy because the companies have agreed to this model and they have promised to co-operate so that everyone benefits."
Chiadzwa's diamond story got off to a controversial start since the fields were first explored by De Beers. Instead of just exploring, De Beers allowed the resource to be looted, with companies such as ACR clandestinely profiting from the precious stones.
ACR's clandestine operations caught the attention of villagers in the area, who got wind of the fact that the Marange area had this rich resource. This sparked a diamond rush that saw thousands of people descend on the area to illegally mine the diamonds.
Government eventually moved in to bring sanity to the area and carry out formal mining. - See more at: http://bulawayo24.com/index.php?id=editor&di=new_page#sthash.nmKRc8lO.dpuf
Source - Sunday Mail
