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Zimbabwe will never beg again - Obert Mpofu

by Staff reporter
10 Dec 2011 at 15:33hrs | Views
Mines and Mining Development Minister Dr Obert Mpofu says Zimbabwe will not beg for anything again after the Kimberley Process Certification Scheme (KPCS) in October cleared the country to freely trade in its diamonds, ending three years of contention and indifference.

The country is home to the world's largest diamond reserves ' both alluvial and kimberlitic resources ' following a recent discovery of vast alluvial diamond deposits in Chiadzwa, Marange, in eastern Zimbabwe.

Geologists claim the reserves may be larger than the known and estimated, ahead of extensive geological mapping and exploration, expected in a few years.

At its plenary meeting in the Democratic Republic of Congo (DRC) in October, the KPCS certified Zimbabwe's diamonds as conflict-free, including those produced in Marange by companies in which Government has equity interest.

Buoyed by the news, the country's fiscal planners subsequently adjusted their revenue forecasts for 2012, taking into account additional revenue expected from auctions of diamond stockpiles and those expected to go through the mill.

Treasury expects to receive about $600 million which is about 15 percent of the 2012 National Budget from diamonds. Government, which owns 100 percent of Marange Resources and a further 50 percent stake in Mbada Diamonds, Pure diam Anjin Investments, Diamond Mining Corporation and Sino-Zim Mining Resources, receives dividends on a monthly basis. The gems reportedly contribute an estimated $30 million per month to the fiscus, the bulk of which is being committed to civil servants salaries.

At the current rate of extraction, all diamond companies operating in Chiadzwa are, in aggregate, expected to generate as much as $2 billion a year, boosting the national purse, which has been overly lean since Zimbabwe dollarised in February 2009.

In 2009, the value of the purse was only $1,9 billion, adding just $500 million the following year. This has restricted government expenditure to wages and suppressed votes to capital projects, which would ordinarily accelerate the pace of Zimbabwe's recovery from a decade of cumulative downturn.

The country's infrastructure bill is currently estimated at $14,2 billion, initially expected to be funded from external capital from foreign direct investment, loans and aid.

Dr Mpofu, who is still in a euphoric mood, says the KPCS certification has freed Zimbabwe from the shackles of dependence and positioned the country to establish a tract in the world diamond market.

"We've been under sanctions for nearly a decade now and we've not been receiving any support in terms of balance of payments and lines of credit from our traditional partners. We've been relying on our own local initiatives to sustain our economy and development," Dr Mpofu says.

"With the KPCS certification, the country is going to realise substantial income. Zimbabwe will not beg for anything from anybody again. We're actually going to be a world market leader in terms of diamonds. There is huge demand for our diamonds."

Dr Mpofu also says efforts by global diamonds giant De Beers and UK-based civil society grouping Global Witness to exert undue political influence on the global market against Zimbabwean diamonds are a wild-goose chase.

Global Witness has quit the KPCS, where it had an observer status, protesting Zimbabwe's certification, while De beers, which keeps the global diamond market tied round its finger across the value chain, has recently remarked that diamonds mined in Chiadzwa were inferior.

"Those are remarks from a suspect," Mpofu says.

"Did it have to take a company like De Deers 15 years to know that the quality of diamonds is inferior? It's quite an unprofessional statement on a product that the whole world knows about and it shows who exactly they are.

"De Beers did not report to Government that there were diamonds there and pretended they were still prospecting for 15 years. Government only got to know when villagers started scrambling for the diamonds. When they realised Government was beginning to be suspicious and to sniff around for information, they ran away, leaving African Consolidated Resources (ACR), which also wanted to loot quickly. We've evidence to show that De Beers took thousands of our diamonds to their processing plants in South Africa."

De Beers gave up its claims in Chiadzwa in March 2006 and moved out of the country the same month after 15 years of "prospecting", on grounds the deposits were not economic enough to justify mine development. But just two months after the pullout, ACR disclosed to its shareholders in London that it had discovered huge deposits of alluvial diamonds on the same claims, raising questions about their activities in the Chiadzwa over that long period.

Official records show that from 1996 to 2005, De Beers exported over a thousand tonne of diamonds to South Africa as exploration and drill samples.

With the certification battle behind it, Zimbabwe's next challenge, according to Dr Mpofu, is to develop a vibrant diamond industry across the value chain, starting with new investments in value-added processing, specifically diamond cutting and polishing.

The development plan also encompasses the development of a stand-alone diamond law to regulate the prospecting and trading of diamonds as well as the establishment of a diamond training institute and a diamond bourse, primed to transform Zimbabwe into a regional diamond hub.

"We've received almost 20 applications from people who are interested in investing in diamond cutting and polishing in the country. Ten are almost approved," Dr Mpofu says.

The value-added strategy would be supported by a diamond training institute, which maybe based in Mutare, to build a sustainable skills base for the industry, which is fast emerging as the leading growth industry in Manicaland, replacing forestry.

Diamond-led community development is also likely to flourish in the wake of the planned investments and a new government policy encouraging mining companies to focus their development within host communities.

In terms of the policy, all diamond companies operating in Chiadzwa should relocate their headquarters to Mutare, the provincial capital of Manicaland.

Source - TC