GOLDNET.MARKET - “We want and are working to provide business with the opportunity to develop a lot of activity areas”

Today, almost all jewellery companies have their own wholesale websites, online stores, and social media pages. But a year ago, GOLDNET.MARKET, the first jewellery wholesale marketplace appeared in Russia, a new effective tool for the jewellery market...

20 september 2021

Platinum’s rare nature gives it additional value and appeal

Huw Daniel is the CEO of Platinum Guild International, overseeing market development activities in China, Japan, India and the USA, on behalf of the platinum producers of South Africa. Before taking up this role in 2015, Huw ran PGI USA for 12 years...

13 september 2021

Marco Carniello: We want to continue to be the engine boosting the jewellery industry

Italian Exhibition Group (IEG) is a leader in Italy in the organisation of trade fairs and one of the main operators in the trade fair and conference sector at European level, with structures in Rimini and Vicenza, as well as further sites in...

06 september 2021

There is a significant need for smart and technological financial solutions in the diamond industry

MDPS, the Israeli start-up Fintech company from the Mazalit Group is gearing up to enter the diamond industry soon. Zeev Maimon, the CEO of MDPS is also the Founder / CEO of MAZALIT, a B2B payment platform designed and dedicated to the global diamond...

30 august 2021

The future for synthetics lies in that it has become possible to grow a stone you want and make what you want out of it

Alex Popov, President of the Moscow Diamond Exchange and head of the Âme jewelry brand, which uses lab-grown diamonds to produce jewelry, sat for an interview with Rough&Polished sharing his views on the coexistence of natural and man-made diamonds in...

23 august 2021

ZMDC Lacks Technical and Financial Capacity to Mine Marange Diamonds

13 april 2009

There were reports recently that Harare was planning to assist the Zimbabwe Mining Development Corporation (ZMDC) to start commercial mining of gems at the troubled Marange diamond fields in Manicaland province, which the government is said to have seized from the British-based Africa Consolidated Resources in 2007 and set off a diamond rush.

"I commend efforts by ZMDC so far but the government would soon allocate funds to buy machinery required to expand operations," the Herald recently quoted Mines and Mining Development minister Obert Mpofu as saying.

Mpofu also said that investors were welcome but government would be already a gear up. Oh really, cde minister?

These reckless and tabloid-smelling comments made by the minister were quite interesting as one would be tempted to ask Mpofu where the hell our bankrupt government will get that money to finance ZMDC’s operations?

It is on record that the government’s coffers are dry, dry, dry, and there is nothing that can be expended to jump-start ZMDC.

Finance Minister Tendai Biti who recently cut the 2009 budget revenue estimate to USD1 billion from USD1.7 billion was quite candid with the state of the government’s treasury.

Biti revealed that government revenue had come in at USD25 million in February and USD30 million in March, against projections of USD140 million per month (made by then acting Finance minister Chinamasa who was so romantic with the country’s financial inflows) because taxes were truncated given the high unemployment rate believed to be above 90 percent and also the closure of several firms as the economic malaise characterized by price controls and unfavorable forex exchange regimes heavily affected their profitability.

“No ministry or public agency should expect to eat beyond what we have gathered through collection of taxes, fees and any other legitimate sources of revenue,” Biti said.

“What we gather is what we eat’ unambiguously defines the priority not just in the Ministry of Finance but throughout all arms of government. If we want to continue eating, we must all focus our minds and energies on maximizing the revenues that are needed first to get those of us in the public sector back to work and then to implement all of the pressing issues.”

I wonder what minister Mpofu makes out of this, perhaps he is quite optimistic that the government will gather more, but as the situation on the ground reflects the government still has a long way to go before it starts realizing revenue that can help it finance projects such as the one minister Mpofu told us.

Surely you cannot throw stones at Jonathan Moyo when he vomits.

“What the hell does the minister mean that ‘we should gather what we eat or eat what we kill’? Is this an economic principle or is it just primitive mambo jumbo whose ‘kiya-kiya’ (joining things) logic is to subvert the essence of good economics, namely savings?” questioned the wordsmith.

“Minister Biti needs to understand that an economy that eats what it gathers or kills is just a primitive economy that cannot grow. The only consolation from this is that we at least now know that Biti’s ‘kiya-kiya’ approach which he has also labeled as creative fundraising is a hunter-gatherer concept.”

Enough of Jonathan’s verbal gymnastics, it should be noted that in the short term it is somewhat difficult for the government operating on a shoe-string budget to expend money on expensive diamond mining machinery, given the prevailing weak gems market as a result of the global credit crunch.

Surely this is a point minister Mpofu should have also considered before he made such statements and I wonder which world he is living. A number of diamond mining firms have been placed on care and maintenance as there is no much business to talk about.

Recently De Beers’ Joint Venture with the Namibian government, Namdeb, announced that it would go on a production holiday for three months starting from April 1.

Its Joint Venture in Botswana, Debswana also suspend operations.

The global demand for rough diamonds was expected to drop by 60 percent as the global recession had caused a weaker demand for luxury goods.

The demand for polished diamonds was also expected to fall by 33 percent while diamond sales dropped by USD20 billion in 2008.

“Our industry has survived previous downturns, including the Great Depression. However long the recovery may take to arrive, recoveries will inevitably follow a downturn. The industry only survived because we were willing to be courageous in the face of those uncertainties,” De Beers Group chairperson Nicky Oppenheimer said.

“Make no mistake, the near-term will be difficult,” De Beers Group managing director Gareth Penny reiterated.

“Nobody knows how long the recession will last or how deep it will go. But it will be difficult for nearly every industry the world over, and, if given the choice, I know what product and which partners I’d bet on for the long-term.”

Already demand for rough diamonds has been projected to drop next year by at least 50 percent.

A diamond market analyst Even-Zohar warns: “The cutting centers will take the greatest hit, but they will also experience the fastest growth in an upturn. If mining production and sales from inventory totaled USD14.5 billion in 2008, they will be around USD7.5 billion in 2009. Some mines will close down while others will reduce production.”

Several diamond miners including BRC Diamond, DiamonEx, Pangea Diamonds, Kopane Diamond, DiamondCorp, Namakwa Diamonds, Namdeb, Debswana, Rockwell Diamonds and Rio Tinto have either placed their diamond mining projects on care-and-maintenance or suspend their operations completely.

With this background one wonders where minister Mpofu is getting the imprimatur to kick-start ZMDC’s diamond mining operations.

Am not saying that the government should not commercially mine Marange diamonds, but what am simply saying is that, is the timing of the government correct? What benefit will ZMDC have when they just simply mine stones that would be under priced? What benefit will ZMDC have when they mine and stockpile their rough stones at a time seasoned diamond mining companies are cutting back on operations?

Minister Mpofu, the diamond mining industry is in trouble, period.

Besides, I wonder if there was any serious pre-feasibility study to commercially mine diamonds in Marange.

ACR, which announced in September 2006 the discovery of the Marange diamonds said though they were hosted within a cemented, Precambrian alluvial deposit, and secondary alluvial deposits that were likely to have formed from erosion of ancient gravels, the extent of the alluvial host formation, was unknown, as the formation was partially concealed by younger rock formations and recent alluvium.

It also indicated that by the time it received a notice of intent to cancel the license it had been unable to carry out a thorough evaluation and testing program on the area.

Mines permanent secretary, Thabani Ndlovu, was once quoted in press reports as saying that the ground was now being set for "large-scale commercial mining".

"Nothing has been sold because exploration work to establish the quantity and occurrence of the diamonds in the area is underway. We need to know the exact source of the diamonds because we believe there is a high concentration of diamonds. Marange diamonds are a matter of national interest and Zimbabwe must derive full benefits from this resource," Ndlovu was quoted as saying.

Diamond mining is not a zero sum-game, and it is true indeed that a lot of pre-feasibility studies have to be done to determine if the mining of the diamonds would be commercially viable or not.

I, however, don’t recall ZMDC announcing its sample results of the Marange/Chiadzwa diamond area, but what we only heard was that it had commenced small scale mining of the gems in the area, and the government would not solely rely on investors to kick start large scale mining.

Central bank governor Gideon Gono is said to have noted in 2007 that ZMDC had no technical and financial capacity to mine diamonds and it needed to form a Joint Venture partnership, but one wonders when they have suddenly built that capacity?

"I have always been saying that what the parastatal is simply doing is mechanised panning, it has no capacity to mine diamonds," Gono said after it emerged that the parastatal had only managed to raise USD15 million from its diamond mining activities between December 2006 and August 2007.

The proceeds from ZMDC's operations were a far cry from about USD50 million dealers earned on a monthly basis.

Zimbabwe claimed that the smuggling of the precious stones was costing the country USD1, 2-billion a month.

It is quite clear that ZMDC does not have the technical and financial capacity to embark on any commercial diamond mining project in Marange and minister Mpofu should never fool us, for the government is stone broke, period.

Worse still the diamond market does not allow him to entertain any thoughts of financing this project for it would be just flushing money down the drain.

Mathew Nyaungwa, Rough&Polished expert, from Zimbabwe