AFRICANGLOBE – Diamond firms are today expected to respond to an ultimatum by Zimbabwe’s Government to merge into a conglomerate in a move economic analysts have said should promote accountability and transparency in their operations.
Analysts said the development would enable the companies to mine kimberlite diamonds, which are capital intensive.
Most of the companies in Zimbabwe concentrate on alluvial diamond mining which requires less capital.
There are indications alluvial diamonds at Marange are getting exhausted.
Government last week gave all diamond companies up to today to be part of a consolidated company with Mines and Mining Development Minister Walter Chidhakwa saying those against the amalgamation would cease operations.
All the diamond mining firms in Chiadzwa, DTZ Ozgeo in Chimanimani and Murowa Diamonds in Zvishavane are expected to form one big company with a combined 50 percent shareholding in diamonds with Government owning the other half.
Diamond mining companies have been accused of understating what is due to the State, getting a huge chunk from the sale of the gems.
According to Minister Chidhakwa, the merger will see diamond firms getting different percentages depending on their investment.
Government would own 50 percent by virtue of owning an equivalent stake in Chiadzwa diamond companies while Murowa would contribute as part of its compliance with the Indigenisation and Economic Empowerment Act.
Economist Mr. Witness Chinyama said the move was a step in the right direction as diamond mining was a contested area.
“With the contestation we have in diamonds, this is a way for Government to monitor the companies’ operations closely,” he said.
“We should have one company to reduce leakages. Government is using a lot of resources to monitor the companies and it cannot be everywhere, every time. With one board director, one management team, it is going to be easy.”
Another economist Mr Christopher Mugaga said the merger was long overdue.
“Zimbabwe does not even need those companies because there is a huge gap between comprehensive exploration and the establishment of those companies,” he said.
“This should have come a long way because some companies have disappointed Government by giving it a raw deal while they remain with huge proportions.”
Mr. Terrence Mukupe said there was nothing sinister with the move as other countries in the region were benefiting from such arrangements.
“In Angola they are doing well with Endiama, the national diamond company while in Botswana and Namibia they have done the same,” he said.
“Exploration is capital intensive and most companies have been going for alluvial diamonds and the moment they hit kimberlites, they go bankrupt. But with this one company, Government can create reserves which will enable us to go for the kimberlites which are more sustainable.
“A diamond mining company that is provident should mine both the alluvial and kimberlites. The fact that they might have exhausted the alluvial deposits does not mean diamonds have run out.”
Another economist Mr. Joseph Sagwati said full exploration of the resource might not be achieved as most State entities “exuded some elements of inefficiency.”
“Check on the so-called cutting and polishing — we are still pontificating on the formation of these companies and nothing has taken off,” he said.
By: Felex Share