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Zimbabwe gives 70% of diamonds to Russian firm

by Mandla Ndlovu
12 Dec 2019 at 17:55hrs | Views
The Zimbabwean government is set to give 70% of Zimbabwe's diamonds to a Russian diamond company Alrosa.

ZBC has reported that the Russian diamond producer Alrosa says its two-year exploration in Zimbabwe would cost around $12 million. A joint venture, in which Alrosa plans to finalize a stake of 70% in December, has applied for a number of greenfield licences.

In July this year, Alrosa signed a deal to explore and mine diamonds in Zimbabwe, as the country seeks to leverage its mineral resources to boost the country's ailing economy.

Zimbabwe has large diamond reserves but mining of the precious stones has been chaotic with shady dealings rampant and policy flip-flops by the government a turn-off for investors.

In an interview with journalists after the signing ceremony, Alrosa CEO Sergey Ivanov said his company will invest an initial $12m in the venture.

"We are hoping that exploration will start in September. We see a lot of potential and we will invest more in the coming years depending on the outcome of the exploration," he said.

Speaking after the signing of the deal between Alrosa and the Zimbabwe Consolidated Diamond Company (ZCDC), mines and mining development minister Winston Chitando said there was a lot of scope for investment.

"This is a joint venture between Alrosa and the ZCDC. It will look at greenfield and brownfield projects. So there will be exploration in new areas that are not known to have diamonds and there will also be work in areas such as Marange and Chimanimani which are known to have diamonds. This is part of our vision to produce 10-million carats annually and to earn $1bn every year from diamonds," he said.

President Emmerson Mnangagwa said the deal had come to fruition owing to his country's excellent relations with Russia.

In January Mnangagwa travelled to Russia to seek funding for mining investments in the country.

Russian investors  also committed to invest $3bn for platinum production in Zimbabwe under a joint venture with government but the deal is yet to take shape — with concerns over shareholding demands by the government holding back the deal.  

In 2018 Zimbabwe scrapped its controversial indigenisation policy that forced all foreign investors to cede 51% shareholding in all investments but reserved platinum and diamond as the only sectors where investors are obliged to partner with government.

Source - Byo24News