Chiadzwa diamonds lose their glitter

Diamond production in Chiadzwa plummeted from 12 million carats in 2012 to 3,36 million carats in 2015 due to diminishing alluvial deposits and anxieties over amalgamation of companies operating there.

This saw a corresponding decline in earnings from US$700 million-plus to US$180 million.

Experts, however, say further exploration should be conducted to determine the resource's full extent as indications point to vast deposits in the diamond fields.

Government is also forging ahead with an amalgamation plan to revitalise the sector.

Marange Resources, Gye Nyame and Kusena have already been merged into the Zimbabwe Consolidated Diamond Corporation, with Mbada Diamonds, Jinan and Anjin expected to soon follow suit.

The ZCDC became a legal entity in 2015 when it began recruiting technical staff.

The inaugural Mining Industry Survey Report released to The Sunday Mail by the Chamber of Mines states that diamond revenue dropped from US$336 million in 2014 to US$180 million in 2015, with production declining from 4,77 million carats to 3,36 million in that period.

It also shows that the sector accounted for the biggest drop in value earned from minerals in 2015. Treasury received US$2,189 billion in 2012 and then US$2,05 billion in 2013.

"Total value of mineral revenue generated in 2015 declined by 7 percent from US$1, 95 billion in 2014 to around US$1, 8 in 2015," reads part of the report.

Mines and Mining Development Minister Walter Chidhakwa told The Sunday Mail that remedial work was in progress.

"We are worried about the performance of the diamond sector as we feel that this is a sector that should contribute to national economic development in a big way. However, we believe that the process we have begun to consolidate the operations of companies mining in Chiadzwa will bring better results.

"We are putting in place a number of initiatives. Last week, I was in Belarus to discuss the possibility of getting new equipment for the ZCDC. Negotiations for equipment are at an advanced stage, and we are expecting this to be the first boost in the operations of the ZCDC."

An official with a diamond mining company attributed declining production to diminishing alluvial stones and "a wait-and-see attitude" among miners. "Production declined as our shareholders were  last year seized with the consolidation issue. We could not invest in more equipment because there were uncertainties over the way forward," said the official. "Remember, alluvial diamonds are also running out, so this also contributed to low production."

University of Zimbabwe Institute of Mining Research chair Mr Lyman Mlambo recommended further exploration.

"We need to be sure about the quantity of the resource because what was stated a few years (ago) is not what we are seeing now," he said.

"More exploration needs to be carried out so that we get the correct figures of what is available in Marange, and this will help authorities to plan accordingly."

Experts say consolidating diamond mining companies will optimise production and earnings.

In Botswana, Debswana — a joint venture between the Botswana government and mining giant De Beers — controls all diamond production, operating four mines. Cumulative production can reach 30 million carats annually, making the firm the world's leading diamond producer by value. Diamonds account for a third of that country's GDP, over 90 percent of export earnings and 50 percent of government revenue.

In Russia, Alrosa — a grouping of several companies — virtually controls diamond production.

The Russian Federation — represented by the Federal Agency for Management of State Property — is the majority shareholder with 44 percent.

Alrosa is the world's leading diamond producer by volume, producing 33 million carats in 2013.