Vladimir Zboykov: New times have come for jewelers

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Yesterday

Changing preconceptions in the diamond and financial markets

Eli Avidar is a man on the move…literally. In April, the former Israeli diplomat stepped away from the CEO’s office at the Israel Diamond Exchange, a position he had held for more than two years, and from the Israel Diamond Institute, where he had been...

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Chasing a dream…

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Pangolin Diamonds using termites to find kimberlite indicators in Botswana

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Within the framework of the Qatar-Russia 2018 Year of Culture, the World Diamond Museum hosts an exhibition of the Qatar Museums at the State Historical Museum in Moscow – "Pearls: Treasures of the Seas and the Rivers," that opened on 11 July...

24 july 2018

As surely as the sun rises, Anjin will resume diamond mining in Marange

04 june 2018

The mining of diamonds in Zimbabwe’s Marange area has been a subject of much controversy in the longest of time.

Many a people celebrated the discovery of the vast alluvial diamond fields in 2006 as that came at a time Zimbabwe had started experiencing economic challenges.

One cannot blame Zimbabweans for pinning their hopes on diamonds as neighbouring countries such as Botswana were raking in hundreds of millions if not billions of dollars in diamond revenue.

Politicians also didn’t help matters as they promised that the country would earn about $2 billion annually in diamond revenue.

That was a pipe dream.

Rather the country’s last two finance ministers complained that the treasury did not receive any meaningful diamond revenue from the mining companies.

Zimbabwe had licenced Mbada Diamonds, Anjin Investments, Marange Resources, Diamond Mining Company, Jinan, Kusena and Gye Nyame to mine diamonds in Marange.

Gye Nyame’s licence was later revoked.

Tendai Biti of the opposition Movement for Democratic Change (MDC), who was the country’s finance minister under the government of national unity from 2009 to early 2013, constantly clashed with the diamond mining companies whom he accused of robbing the Treasury.

He was forced to cut Zimbabwe’s budget in 2012 to $3.4 billion from $4 billion after receiving $41 million from $600 million that he expected from diamond sales.

The current finance minister Patrick Chinamasa said in November 2013 that the Treasury did not receive proceeds from diamond revenue in the nine months to September 2013.

Harare had targeted to receive $40 million from diamond sales during the period under review.

Consolidation

The ruling Zimbabwe African National Union Patriotic Front (Zanu-PF) party then resolved at its 14th National People’s Conference in December 2013 that government consider streamlining the number of diamond miners in Marange.

“[We resolved] to rationalise the number of players in the diamond mining sector to promote efficiency and transparency,” the party said at the end of the conference.

Then president Robert Mugabe also told the same conference that the inclusion of several players in the diamond mining sector had resulted in increased incidences of smuggling and government would act decisively on this.

“Diamonds, we would want to centralise that. If you look at Botswana, even in South Africa, Angola, Namibia it’s not free for all. It’s only government and partners who produce diamonds,” he said then.

He then tasked former mines minister Walter Chidhakwa to oversee the consolidation of mining in Marange.

He mercilessly executed the plan as he threatened that companies that did not want to merge would be forced to leave.

The companies rejected the consolidation plan and were indeed pushed out early 2016.

This gave birth to the Zimbabwe Consolidated Diamond Company (ZCDC).

Although I was one of the people who argued for the consolidation of mining operations in Marange, I called for caution to be exercised.

I also argued at the time that it was not clear whether the takeover of all diamond mines meant that the country would not allow new companies to prospect for diamonds.

What made sense was for Harare to allow firms operating outside Marange continue mining, but let ZCDC acquire stakes in these private entities.

However, the consolidation plan was executed, much to the disappointment of the erstwhile Marange diamond miners.

Companies like Anjin approached the court challenging the takeover of their claims.

Change in fortunes

However, the resignation of Mugabe in November last year after pressure from the military and his party saw the coming in of Emmerson Mnangagwa as the country’s new leader.

He chose the former army boss Constantino Chiwenga as one of his deputies.

The army, through its investment vehicle Matt Bronze, had an interest in Anjin and it was only a matter of time before we heard of a possible return of the company and others to Marange.

The Zimbabwe Independent reported early May that Harare was investigating the “looting and stripping” of Anjin’s assets worth millions of dollars during the two years it had not been operating in Marange.

Company general manager Shingi Manyeruke was quoted as saying that Anjin had maintained a presence in Marange since 2016 as they were not consolidated under ZCDC due to the court application it filed challenging government's decision to terminate its mining rights.

"We are still on the ground in [Marange] looking after our facilities, the only setback has been the rampant looting and stripping of production infrastructure,” he said.

“The abrupt shutdown of the mine and subsequent looting and asset stripping posed a significant risk to the investment. There are investigations on the matter by relevant government-related organs currently ongoing. We are waiting for findings from the aforesaid investigations."

Manyeruke said the resumption of production would hinge upon the outcome of the Constitutional Court case and new diamond legislation government was crafting.

Strange enough, we never heard of the company’s continued presence in Marange, when Mugabe was still in power.

The Zimbabwe Environmental Lawyers Association (Zela) recently raised suspicions that Anjin was resuming operations as its premises were being spruced up.

President Mnangagwa did not hide his government’s intentions as he recently said that Harare was working on a new diamond policy that would lead to the unbundling of the Zimbabwe Consolidated Diamond Mining Company (ZCDC) to allow more players in the sector.

“I am sure you are aware that under the old administration, we banned seven or so companies, which were mining diamonds and we created one company,” he was quoted as saying by the Herald newspaper.

“We have now realised that one company has no capacity to deal with the exploitation of this mineral, so we are in the process, with the Minister of Mines (and Mining Development Winston Chitando).”

Mnangagwa’s government had been reversing a lot of decisions made by Mugabe’s administration.

He scraped the empowerment law except for diamonds and platinum.

The talk of ZCDC lacking capacity to mine diamonds on its own could be a ploy to make way for the army’s diamond company to resume operations in Marange and other parts of the country.

As surely as the sun rises, Anjin will make a comeback in Marange.

However, it’s also refreshing that companies such as Botswana Diamonds and Vast Resources were set to prospect for diamonds in Zimbabwe.

The coming in of reputable diamond exploring and mining firms will help in as much as Harare will bring back companies that had been elbowed out of Marange.

Above all, their return should be followed by strict monitoring and improved revenue remittances to the Treasury.

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished