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Will Zimbabwe enable ALROSA help local diamond industry sparkle?

28 january 2019

I argued in July 2013 that Zimbabwe should work with Russia’s ALROSA to find more diamond deposits not only in Marange, but across the country.

This was after reports that the Russians were planning to set up ventures in Botswana and Zimbabwe.

ALROSA moved with speed and established a joint venture company with Botswana Diamonds called Sunland Minerals, which operated an exploration programme on PL117 in Orapa.

The JV, which sadly collapsed last year following the exit of ALROSA, carried out detailed ground geophysics programme in the area of anomaly AN117-1 to target drill sites.

The Sunland JV had no instant success, but made progress toward the target of a commercial discovery.

It was also reported in Sept 2014 that ALROSA was set to prospect for diamonds in Zimbabwe with DTZ-OZGEO, a joint venture company between the Development Trust of Zimbabwe and a Russian company, Econedra.

The Russian trade and industry minister was quoted by Reuters as saying then that ALROSA and DTZ-OZGEO would prospect for diamonds throughout Zimbabwe.

ALROSA was said to have dropped the Zimbabwe exploration licences two years ago.

Its partner in the country, DTZ-OZGEO, lost its mining licence following Harare’s move to consolidate diamond mining operations.

The diamond companies were ordered to stop mining early 2016 after their special grants had expired and also for refusing to support the consolidation plan.

Although, Botswana Diamonds said changes that took place at board and top management level in ALROSA between 2016 and 2017 caused a change in emphasis, it was interesting that the company recently announced plans to return to Zimbabwe.

The impression given was that ALROSA had shelved plans to conduct diamond exploration activities in Botswana and any African country apart from Angola where they have a stake in Catoca.

ALROSA chief executive Sergey Ivanov said details of the company’s projects in Zimbabwe would be negotiated in the near future, although reports suggested that the diamond giant would continue exploration with the support of the Zimbabwean government.

“I’m sure we’ll be able to discuss prospects of our participation in the sphere of geologic exploration activities and development of deposit with a high degree of exploration maturity,” Ivanov was quoted as saying by Russia Television.

“We are ready to share all of Alrosa's technology when it comes to grading and preparing diamonds for sale, as well as the necessary know-how so that Zimbabwe could get back the position the country had on the global diamond mining market for several years.”

The company was said to have set up its subsidiary, ALROSA Zimbabwe last month in Harare and its geologists as well as mining engineers were expected in the country next month to start operations.

Ivanov was impressed by Zimbabwe’s implementation of a wide range of legislative changes that would allow ALROSA enter the country’s market and negotiate more serious projects with Zimbabwean partners.

Zimbabwe announced its long-awaited new diamond policy late last year, which limited diamond exploration and mining in the country to only four companies.

The state-owned Zimbabwe Consolidated Diamond Company (ZCDC) and Murowa Diamonds are the companies, which are currently mining diamonds in the country.

ALROSA and the Chinese partly-owned Anjin were selected by Zimbabwe’s government as the two foreign companies to partner the state-diamond firm in exploring and mining diamonds.

Mines minister Winston Chitando said Harare settled for only four players for easy monitoring of the mining and selling of diamonds.

Anjin previously mined diamonds in the country until 2015 when former President Robert Mugabe’s government decided not to renew operating licences of mining companies that operated in Marange, which led to the formation of ZCDC.

Anjin was jointly owned by Chinese companies Anhui Foreign Economic Construction Company and Matt Bronze — an investment arm of the Zimbabwe Defence Forces.

Zimbabwe had a previously history of not respecting property rights and the law.

One hopes that the previous treatment of DTZ-OZGEO was a thing of the past and the Russians would be treated with respect as they return to Zimbabwe and hopefully help the diamond industry sparkle.

As I argued half a decade ago, ALROSA’s presence in Zimbabwe can be a boon for the country’s diamond industry, but only if the operating environment was conducive for business to flourish.

The Russians have the technology that Harare needs to look for new diamond deposits and they are the world’s largest diamond producer because they are doing something right.

Angola had been benefiting from ALROSA’s technology, let alone expertise.

Zimbabwe, if not controlled by demons of the past, can also grow its diamond output with the help of ALROSA.

The country’s diamond output, which the World Bank projected in 2013 to reach 15,2 million carats a year by 2018 with an investment of $150 million, was only 2.8 million carats last year.

Marange produced 12 million carats at its peak in 2012.

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