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24 november 2014

walter_chidhakwa_fullsize3.jpgZimbabwe said recently that it had started merging diamond mining firms in Marange to streamline their operations and ensure accountability of proceeds.

Rough & Polished’s Mathew Nyaungwa caught up with the country’s Mines and Mining Development Minister Walter Chidhakwa on the sidelines of a diamond conference held early this month in Harare and asked him about the latest on this development.

He said the first stage involved the consolidation of Marange Resources, which is wholly-owned by government and struggling Kusena as well as Gye Nyame, whose licence was suspended.

Chidhakwa revealed that Harare would set up a company called Zimbabwe Diamond Mining Company that would house Marange Resources, as a strategic business unit (SBU).  Gye Nyame and Kusena would also fall under Marange.

He also noted that government was still negotiating with other mining companies currently operating in Marange, Anjin, Mbada and DMC over the rationalisation of their operations.

He, however, noted that the discussions were intricate and it should be considered that Harare had signed agreements with these investors and would not want to be seen as it was nationalising operations in Marange.

Below are the excerpts.

What is the latest on the streamlining of operations in Marange?

The latest is that they are now finishing the legal framework, they have finished doing the assessment of the labour force in the various companies: [Marange Resources], Kusena and Gye Nyame. [They are] now trying to integrate into one work force. We think that it’s the financial accounts which now need to be intergrated and once that happens they will then have one company and SBUs (strategic business units).

How will this work out?

Marange [will operate] as an SBU and of course Gye Nyame and Kusena will not call them SBUs of Marange resources. In fact what we are trying to do is to say that at the top is a company that we call the Zimbabwe Diamond Mining Company and below it you then have Marange Resources, which takes care of the Marange area because the question is if you call the national company Marange and you discover more diamonds in Beitbridge is it going to be Marange? It has to be Zimbabwe Diamond Mining Company and below it will be the Beitbridge Resources or something like that and if you went to Mwenezi the same thing and so on and so forth. So basically that’s what we have been working on. I have not been able to get the final report now but am sure they should be finalising the financial accounts in which case once the financial accounts are ready we will then bring everybody together and move forward.

So just to confirm, this does not involve Anjin, Mbada and DMC?

We are just talking about Marange Resources; I haven’t spoken about Mbada, Anjin and DMC, am just talking about Marange. The first stage is actually to sort Marange Resources, bring in the ones that are not operating – Kusena and Chinyame – we will then see what happens next. We will tell you, we are still discussing. You have to realise that the discussions are not easy discussions because we have signed investment agreements and we still want to promote investments and we can’t be seen to be nationalising, we have to find a way that ensures that our partners are not unhappy but at the same time that we achieve the objective that we want to achieve.

What is your assessment on the local diamond auction that took place in Harare recently?

I think the first thing is the assessment on the facilities, I think the facilities are good and up to standard, in fact in some cases beyond the international standards. I have seen diamond auctions in other countries, the facilities offered there were not as good as the ones that we have. The second thing is that the number of buyers that have been coming, I understand…about 200 people…viewed our diamonds and that is international. That’s how it is, if you were to go to Antwerp or Dubai, you will get 160 to 200 viewers coming through.

How many carats were put under the hammer?

Not many, just above 200 000 carats.

What was the anticipated average diamond prices achieved?

Not an easy one, I haven’t seen the profile of the diamonds, I haven’t seen the foot print, you can only estimate if you know the percentage of gem, the percentage of near gem and the percentage of industrial diamonds. I can’t say at the moment what the price will be, I do not want to create an impression of a lot of noise and the outcome is different.

What is the future of diamond mining in Zimbabwe?

The future of diamond mining in Zimbabwe is bright, you heard speaker after speaker talking about the need to do exploration, much more exploration. The 100 to 150 kimberlites which still exist need to be discovered and the more exploration we do the more discoveries we make, the broader or the bigger the mining sector will be and there is estimation that over the next 10 years the growth in demand will outstrip the growth in supply. The growth in demand is expected to be about 6 percent and yet the growth in supply is going to be about 2 percent and so that gap speaks of the need for us to prepare for the next 10 years so that when there is that gap in supply we are able to meet it and therefore make money in the process.  

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