ZIMBABWE’S diamond value addition company, the Zimbabwe Diamond Centre (ZDC), recently acquired diamond cutting laser technology worth US$1 million from India as part of its initiative to push for local cutting and polishing of the precious stones. Zimbabwe Independent business reporter Taurai Mangudhla (TM) on Monday interviewed ZDC chair Lovemore Kurotwi (LK) during a tour of the company’s premises. Below are excerpts:
TM: You have been pushing for value addition of all our diamonds locally, what is the basis of your argument?
LK: When we sell rough diamonds in their unprocessed form, we lose a lot. It means we are foregoing about 300% of the value at which we sell our rough stones. This naturally a lot of money for a country like ours. When you talk of the margins, they are quite huge and over and above that 300% we are also throwing away an opportunity to create jobs and improve liquidity. If we export rough diamonds worth US$100 million that are not value added, we are foregoing US$300 million.
TM: What do you think should be done to maximise the value Zimbabwe realises from its diamonds?
LK: Government should stop forthwith exporting rough diamonds because there is no reason why we are exporting rough diamonds. Value addition can be done here because it has been done elsewhere. Government now should see how best we can process all our rough diamonds locally.
TM: Just to take you back you said there is a ready market for locally cut and polished diamonds, what has been your experience?
LK: This is the first lot we are doing using the modern technology, but before that we have offloaded some as finished products because we also do rings. Now we are producing in mass because of the new technology which makes things a little different perhaps.
TM: What’s your biggest market as a company so far?
LK: At the moment our biggest market is Asia.
TM: When was this new technology acquired and what has been its impact on operations?
LK: We are now using the latest modern laser technology which we recently acquired for US$1 million from Indian firm Sahajanand. There will be other consignments of the technology.
Before we acquired this technology, we used old traditional methods where a person used to take 14 days to cut one stone, but now we can cut within minutes. We can now complete the job within minutes with the technology which is doing about 90% of the work whereas the manual work is between 5 to 15 %. This creates capacity for us to polish more stones.
TM: What is your production capacity using the new technology?
LK: At the moment we are trying to balance because the government has not yet put up a system in place which guarantees constant supply to the factory so we are getting stones from the tender system and sometimes you can miss them.
TM: What have you done to make sure you get a steady supply of rough stones?
LK: We are waiting for government to do what other countries do; they give active dealers allocations every month or fortnight so that you are guaranteed to run your factory 24hrs. Right now we are still subjected to the tender system where you will be competing against with the whole world to buy the diamonds. So we are suggesting to government that they must employ government evaluators who would know what these diamonds will cost and ensure that local industry gets an allocation at a given approved price instead of asking the whole world to tender.
TM: What are the weaknesses of the tender system?
LK: The tender system is not really benefiting anyone because the whole idea is to give to the highest bidder and the same people go and make a killing and pocket the margins on our diamonds. Sometimes we do that because we want money during these difficult times and this benefits some other countries. It’s better to leave our diamonds underground than to flood the market, at times it is like producers are dumping.
TM: Have you formally engaged government to address this problem of rough diamond supply and cost?
LK: Yes we have and we are actually going to meet with them again soon so that we can try and see how much we are losing under the current scenario because it’s not beneficial to anyone to continue selling rough diamonds.
TM: Does local industry have capacity to polish diamonds locally and what is your capacity as ZDC?
LK: According to what we have as ZDC and the other machinery which is also coming, we can do 1000 carats per week but that can only be possible if we have guaranteed supply.
Our idea is to try and polish all the diamonds we are mining as local industry because we are developing a center where we are also inviting other industry players to come on board.
TM: You previously spoke about your discussions to offer cutting and polishing training to Botswana, was this at government level?
LK: I signed an MOU with our neigbouring country where first of all they are actually sending their people for training and they also asked us to come to Botswana so that we can start training their local people.
The biggest challenge which some of the countries have experienced is that they have depended too much on foreigners so they are not in control and you know what happens when you invest in a foreign country; you have a bias towards your home and these countries are now realising the benefits of training their own locals so that they lead the way. They were actually here last week.
TM: Are these trainings at government level or individual companies?
LK: The arrangements are between our company and the Botswana diamond industry. Botswana has also realised the need for local polishing and building local capacity.
We are saying if Europe can be a major trade center for diamonds when they don’t produce diamonds, what stops us from mobilising them to come to Zimbabwe?
What we want is to work as a region and have Chiadzwa diamonds, Botswana diamonds, DRC and Angola diamonds or instance.