Zimbabwean Govt to Assume Control of Marange Diamonds

Davik diamond mine

The Zimbabwean government has passed a resolution for the State to assume control of the country’s alluvial diamonds in Marange, The Financial Gazette can exclusively reveal.

The decision to nationalise the gems followed intense bickering over diamond revenues, with Finance Minister, Tendai Biti, saying derisory amounts were being remitted to Treasury, charges denied by the Mines Ministry.

Sharp differences had also erupted between Biti and Obert Mpofu, the Mines Minister, over the control of the lucrative diamond sub-sector after the former crafted a proposed law that was meant to ensure that diamond revenues reach Treasury.

Biti’s proposed law is now dead in the water as the Mines Ministry has since been given the mandate to craft legislation governing the diamond industry.

This week, Deputy Minister of Mines and Mining Development, Gift Chimanikire, confirmed that Cabinet had indeed passed the nationalisation resolution, adding that his ministry was now working on modalities to bring to life the declaration.

“Yes, Cabinet passed a resolution to that effect. But nationalisation of diamonds does not mean that it would be Chimanikire or Mpofu who would be mining: It is the Zimbabwe Mining Development Corporation (ZMDC),” he said.

He could not immediately say what would be the fate of companies currently operating in Chiadzwa in the wake of the nationalisation resolution.

The resolution does not come as a complete surprise. During the presentation of the 2010 Mid-Term Fiscal Policy Review Statement in July last year, Biti revealed there was consensus in the inclusive government that Marange diamonds should be nationalised.

“Mr Speaker, Sir, there is broad consensus in government that there should be a new diamond Act that requires that all alluvial diamond mining be conducted by and through the State,” Biti said. “This will be in recognition that it would not be business as usual at Marange and that the State will not allow issuance of multiple mining licenses that facilitate proliferation of small diamond mining operations.”

Two weeks ago, there were divisions among Members of Parliament from ZANU-PF and both formations of the Movement for Democratic Change (MDC), with the latter calling for nationalisation of the alluvial diamonds.

MDC MPs argued that diamonds were a strategic mineral and cited Botswana where the mineral belongs to the State.

Parallels were also drawn with Arab countries were oil belongs to the State.

ZANU-PF lawmakers were, however, opposed to the idea, with some questioning whether ZMDC would be up to the task when the fields are nationalised against the background of the poor performance of parastatals.

“Parastatals are quasi-government entities. Some of them are owned 100 percent by government and some are not owned 100 percent by government. There is a general consensus among members that the record of government in acquitting itself in terms of managing these very important business institutions has not been very encouraging,” said ZANU-PF Mberengwa East MP, Makhosini Hlongwane.

Mpofu last week said the government has the potential of earning at least US$2 billion from the sale of diamonds from Marange annually after the Kimberley Process authorised the country to sell the gems on the international market.

Recently, Chimanikire revealed in Parliament the shareholding structure of companies extracting diamonds in Chiadzwa that had hitherto been kept under a tight lid.

The structure, it would appear, violates the country’s Indigenisation and Empowerment Act, which stipulates that foreign firms must own 49 percent shareholding in local companies, with black Zimbabweans holding the majority 51 percent.

The structure shows that ZMDC and the Chinese have 50 percent each in Anjin, with the 50:50 shareholding replicated in Purediam and Mbada Holdings.

The companies operating in Marange have also not embraced the community share ownership trusts being encouraged by the government as part of empowering local communities.