Diamonds are not Forever

NATURE has been kind in bestowing on Zimbabwe the diamond deposits at Marange, which by all accounts is one of the richest global discoveries of recent times.

It’s of a scale that has the potential to transform the fortunes of this country — to fund hospitals, schools and infrastructure.

Diamonds are forever, so the saying goes. But they’re not. They are a precious and finite resource that needs to be husbanded with the greatest care.

What a tragedy therefore that the huge revenues now flowing from Marange are going not to the benefit of Zimbabwe, but into a handful of well-lined pockets. It’s a depressing and all too familiar story.

The title holder of the central concession in the Marange fields has been elbowed aside — in contravention of a High Court judgment — and the discovery gifted to two companies about which little is known.

Whoever makes such decisions has come to the conclusion these companies are more reliable partners to exploit this precious resource than a publicly listed, well respected minerals firm that has been in the business for years and is of proven integrity.

The figures tell the story of what is at stake. In the 42 days up to October 18 2009, the Zimbabwe Mining Development Corporation (ZMDC) mined the Marange concession at an average of around 69 tonnes per day.

Even at this relatively slow pace they declared 59 373 carats of diamonds. With the two new companies in place, and their machinery going full bore, the pace of extraction has accelerated hugely.

About 3 800 tonnes per day are now being processed — 55 times as much as ZMDC managed. One can safely assume the volume of carats has expanded similarly.

Medium and high-grade stones comprise a small proportion of the Marange output (around 10% and 4% respectively) but the figures are nonetheless massive.

In deposits of this type, 10% of the diamonds mined yield 90% of the profits. On that basis, Marange is generating somewhere between US$30 million and US$300 million dollars per month. I

t’s difficult to be more precise because all transparency is lacking. Where is all this money going? Of one thing we can be sure — the high-grade gems are going out the back door, while the lower grade industrial stones are put on public display. What’s happening is in direct contravention of the Kimberley Process and industry norms.

Zimbabwe’s economy made great strides in 2009 and will grow for the first time in 10 years. Sound management is in place and basic services have been restored.

But, despite increased revenues and the significant donor funds flowing in from the US and EU and elsewhere, everyone knows the going is tough. The government is struggling to deliver services on a budget of around US$100 million a month. Set alongside this, the tax revenues from Marange would have the potential to transform this situation.

There’s another aspect to this too: Zimbabwe desperately needs to attract foreign investment. With the economy stabilising, potential investors are now beating a path to Harare. They like what they see in terms of economic management but they view with great concern the manner in which property rights — whether for a diamond field or a farm — are being flouted and investment agreements disregarded.

A spotlight, clear and bright, needs to be shone on the riches flowing from Marange before this precious resource is squandered. The choice is simple — are revenues from these diamonds to be a national birthright, funding health education and infrastructure, or are they to be frittered away to the benefit of a chosen few?

Diamonds are certainly not forever.  — By a  Correspondent.

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