Business / Economy
'Imposition of sanctions on Zim diamond producers, hampering fair trade' - Mpofu
11 May 2012 at 23:29hrs | Views
Mines and Mining Development Minister Dr Obert Mpofu on Friday said imposition of sanctions on some of Zimbabwe's diamond producers
is a threat to the country's projected $600 million diamond earnings
this year and goes against fair trade on the international market.
Mbada Diamonds and Marange Resources were early this year slapped with sanctions by the United States and the European Union.
Mpofu told the Chamber of Mines Annual General Meeting being held here yesterday that the performance of the country's diamond sector was pinned on fair access to international markets.
"In that regard we note with concern the continued imposition of illegal sanctions on some of our diamond producers, hampering fair trade, and this may lower earnings," he said.
"When the Finance Minister Tendai Biti in his 2012 national budget presentation last year announced that $600 million of the country's budget will come from diamonds in Marange, that statement alone provoked countries such as Australia and some of the buyers on the international market started becoming jittery. As a result some of our diamond producing companies have been placed on sanctions," he said.
He added that the Zimbabwe Mining Development Corporation (ZMDC) was one of the major parastatals slapped with the illegal Western embargo.
The mining industry has continued to be the major mainstay for economic growth and development in the country contributing an estimated 13 percent to the Gross Domestic Product in 2011.
This year the sector is projected to grow by 15,8 percent.
Dr Mpofu said Zimbabwe's mineral exports were on a rebound over the past three years saying in 2010 exports in the mining sector registered a 138 percent growth while in 2011 reflected 38,7 percent and this year projections stand at 13,3 percent growth.
He said in terms of earnings, mineral exports last year surged to $2,45 billion from $1,6 billion in 2010 driven mainly by increased platinum, gold and diamond production and buoyed by booming international prices.
"Diamond production in 2011 rose a marginal 3,4 percent on the 2010 figure. A significant milestone was achieved when the country got the Kimberly Process Certification Scheme green light to sell its diamonds from Marange on the international market in late 2011. In light of this development we, therefore, expect 2012 production to rise well beyond the MTP target of 12,1 million carats," he said.
He said Zimbabwe's diamond producers continued to meet their obligations to the country by remitting dividends to Treasury from time to time.
"In the year 2011, diamond revenue to the fiscus amounted to $166 million, excluding other taxes such as royalties and Value Added Tax. This year, Treasury is expecting remittances of $600 million from diamond revenue, and as a ministry we are committed to meeting this target," he said.
On coal and chrome production, Dr Mpofu said: "Coal output registered a five percent growth in 2011 while chrome moved up by 13,3 percent to 680 000 tonnes."
He said gold production rose by 38 percent and for the first time since 2006, Zimbabwe's production breached the 10-tonne mark resulting in the country being eligible for re-entry to the London Bullion Market.
Revenue from platinum gained 35 percent on the 2010 figure while production of the mineral grew by 41 percent surpassing the Medium Term Plan (MTP) projections and with continued expansion projects at some of the producers the trend was expected to prevail.
Dr Mpofu noted that the overall mineral production maintained its upward trend in 2011 and thus meeting the MTP projection for the year.
He said with the present production trend, the Government was optimistic of meeting the positive growth path this year.
However, he said although the outlook was bright the unavailability of medium to long-term credit facilities for working capital and recapitalisation requirements as well as power shortages continued to be major impediments to potential growth targets.
Despite the challenges being faced by the mining sector, the Government was in the process of devising policies that would ensure sustainable development of the industry taking into cognisance its critical role to the economy.
Policies being crafted include the Zimbabwe diamond policy which is expected to facilitate optimisation of exploitation of gemstones through the value chain, security and accountability of the mineral to ensure full realisation of the potential of the diamond industry.
"My ministry has looked at the legislation governing the precious stones industry and noted that the Precious Stones Trade Act has deficiencies that make it inadequate to effectively regulate the diamond industry in the face of emerging developments and new dynamics in the industry. To that effect my ministry is already working on amendments to the Precious Stones Act and other related pieces of legislation, to cover areas to do with exploration, mining, transportation, storage, valuation, marketing, beneficiation, value addition, capacity building and security and law enforcement aspects of the diamond industry."
On the Indigenisation and Economic Empowerment programme, he said the Ministry of Mines and Mining Development was leading the way in the implementation of the policy as evidenced by the ZMDC's increased participation in mining ventures and the coming on board of Community Share Ownership Schemes.
Mbada Diamonds and Marange Resources were early this year slapped with sanctions by the United States and the European Union.
Mpofu told the Chamber of Mines Annual General Meeting being held here yesterday that the performance of the country's diamond sector was pinned on fair access to international markets.
"In that regard we note with concern the continued imposition of illegal sanctions on some of our diamond producers, hampering fair trade, and this may lower earnings," he said.
"When the Finance Minister Tendai Biti in his 2012 national budget presentation last year announced that $600 million of the country's budget will come from diamonds in Marange, that statement alone provoked countries such as Australia and some of the buyers on the international market started becoming jittery. As a result some of our diamond producing companies have been placed on sanctions," he said.
He added that the Zimbabwe Mining Development Corporation (ZMDC) was one of the major parastatals slapped with the illegal Western embargo.
The mining industry has continued to be the major mainstay for economic growth and development in the country contributing an estimated 13 percent to the Gross Domestic Product in 2011.
This year the sector is projected to grow by 15,8 percent.
Dr Mpofu said Zimbabwe's mineral exports were on a rebound over the past three years saying in 2010 exports in the mining sector registered a 138 percent growth while in 2011 reflected 38,7 percent and this year projections stand at 13,3 percent growth.
He said in terms of earnings, mineral exports last year surged to $2,45 billion from $1,6 billion in 2010 driven mainly by increased platinum, gold and diamond production and buoyed by booming international prices.
"Diamond production in 2011 rose a marginal 3,4 percent on the 2010 figure. A significant milestone was achieved when the country got the Kimberly Process Certification Scheme green light to sell its diamonds from Marange on the international market in late 2011. In light of this development we, therefore, expect 2012 production to rise well beyond the MTP target of 12,1 million carats," he said.
He said Zimbabwe's diamond producers continued to meet their obligations to the country by remitting dividends to Treasury from time to time.
"In the year 2011, diamond revenue to the fiscus amounted to $166 million, excluding other taxes such as royalties and Value Added Tax. This year, Treasury is expecting remittances of $600 million from diamond revenue, and as a ministry we are committed to meeting this target," he said.
On coal and chrome production, Dr Mpofu said: "Coal output registered a five percent growth in 2011 while chrome moved up by 13,3 percent to 680 000 tonnes."
He said gold production rose by 38 percent and for the first time since 2006, Zimbabwe's production breached the 10-tonne mark resulting in the country being eligible for re-entry to the London Bullion Market.
Revenue from platinum gained 35 percent on the 2010 figure while production of the mineral grew by 41 percent surpassing the Medium Term Plan (MTP) projections and with continued expansion projects at some of the producers the trend was expected to prevail.
Dr Mpofu noted that the overall mineral production maintained its upward trend in 2011 and thus meeting the MTP projection for the year.
He said with the present production trend, the Government was optimistic of meeting the positive growth path this year.
However, he said although the outlook was bright the unavailability of medium to long-term credit facilities for working capital and recapitalisation requirements as well as power shortages continued to be major impediments to potential growth targets.
Despite the challenges being faced by the mining sector, the Government was in the process of devising policies that would ensure sustainable development of the industry taking into cognisance its critical role to the economy.
Policies being crafted include the Zimbabwe diamond policy which is expected to facilitate optimisation of exploitation of gemstones through the value chain, security and accountability of the mineral to ensure full realisation of the potential of the diamond industry.
"My ministry has looked at the legislation governing the precious stones industry and noted that the Precious Stones Trade Act has deficiencies that make it inadequate to effectively regulate the diamond industry in the face of emerging developments and new dynamics in the industry. To that effect my ministry is already working on amendments to the Precious Stones Act and other related pieces of legislation, to cover areas to do with exploration, mining, transportation, storage, valuation, marketing, beneficiation, value addition, capacity building and security and law enforcement aspects of the diamond industry."
On the Indigenisation and Economic Empowerment programme, he said the Ministry of Mines and Mining Development was leading the way in the implementation of the policy as evidenced by the ZMDC's increased participation in mining ventures and the coming on board of Community Share Ownership Schemes.
Source - Byo24News
