Reports say Zimbabwe’s Marange diamonds have potential to make the country the third largest diamond producer by 2020 and potentially supply 25% of global demand, earning the economy up to US$2 billion annually.
This is despite indications Marange diamond fields have been exhausted in terms of alluvial deposits and can only be sustained through kimberlite exploration and mining.
While such reports generally bring excitement and optimism, particularly after Zimbabwe secured Kimberly Process (KP) certification in 2011, the country’s infrastructure remains poor with access to basic social services such as education and health remaining a major challenge to the ordinary citizen in what experts say is a sign the local diamond industry is flawed.
As citizens and government wonder what has gone wrong, the upcoming 2014 Zimbabwe Diamond Conference, to be held between November 6 and 7 in Harare, is seen as a grand opportunity for frank dialogue on challenges affecting the diamond industry with a view to devise pragmatic solutions that are quickly implemented.
Diamond revenues have perennially underperformed resulting in budget revisions with former Finance minister Tendai Biti saying the opaqueness of the industry made it difficult for his office to collect what was due to the national coffers.
Zimbabwe Environmental Law Association (Zela) head of research Shamiso Mtisi said the upcoming event should look at the benefits of the KP certification so far with a view to interrogate any leakages.
He said emphasis should also be on potential investment growth, adding there was need for exploration in the mining sector as a whole and not in the diamond sub-sector and further exploration in but across the country for diamonds as well as value addition.
“Also there is the issue of transparency and accountability which should be looked at to make sure people account for the diamonds they get for cutting and polishing, some people who are given these diamonds are not cutting them,” said Mtisi.
To attract investment, Mtisi said the diamond conference should discuss ways of stimulating investment into the diamond industry.
“There is need through revising or amending the Precious Stones Act to make it tight on access to information and marketing of products,” he said.
“Government should ensure there is control around production through the involvement of the Zimbabwe Republic Police minerals unit.”
Economist Takunda Mugaga said the conference should discuss penalties for any player with a penchant to informalise trading of diamonds.
“Key markets must be redefined to avoid losses related to underpricing of the gems. Zimbabwe has to be encouraged to restructure the diamond industry because the country does not need more than two mining companies,” said Mugaga.
Mtisi said there was need to ensure that investors have security on their investments laws and policies invest without fearing to lose their licenses and capital.
“If you do not change laws such as the Indigenisation Act, you will only get opportunists investors and not the ones that are long term and sustainable,” Mtisi said.
Mining investor Challenge Mukamba said there was need for government to ensure clarity on the indigenisation policy in order to attract invest in all sectors of the economy.
“I think another issue that needs to be addressed is that of transparency and good corporate governance I the diamond industry,” said Mukamba in a telephone interview.
Mtisi said government should invest in geological surveys and exploration to meet investor demands for specific mineral data.
“Once you do your exploration you will have a database of what is where rather than giving someone a claim which has nothing and you do not want to create a situation where investors speculate, you need predictability and government should ensure the exploration company is well resourced.” he said.
Mtisi said players in the diamond industry, government and civil society should create a functional tripartite arrangement as in the case of the KP to to ensure there continuously dialogue on sector specific issues.
He said investors also need to ensure communities benefit from their operations through employment creation, paying taxes, involvement in community development projects and key infrastructure provision.
Economist John Robertson said the event should debate government’s direct involvement in diamond mining.
“The issue is that government is interfering in the whole process and I would expect them to start all over again and see whether the current model is ideal,” said Robertson.
“The private sector should lead the way, do the investing, operate the mines and declaring profits to government because we need an encouraging business structure.”
Robertson also said the conference should also look at measures to fight leakages.
“We are concerned about the way diamond proceeds have been distributed and the ministry of finance believes the money should be coming to the fiscus. Where has that money gone?” said Robertson.
We need a model that is based on business. What we have here is a political model which is not of any benefit to the economy and community.”