Zimbabwe’s diamond cutting and polishing companies are struggling to make ends meet amid revelations that they are not getting adequate supplies of the mineral despite a standing provision entitling them to tender for 10% of the output.
BY TARISAI MANDIZHA
This has raised questions about government’s commitment to its policy to add value in the country’s diamonds in order to generate more revenue for the economy.
In an interview with Standardbusiness, Zimbabwe Diamond Technology Centre (ZDTC) chairperson, Lovemore Kurotwi said local diamond processors were failing because of high government licence fees and their inability to guarantee supply of diamonds.
“To me, there are so many factors which have caused the Zimbabwe diamond cutting and polishing companies to struggle but the major cause is government itself. Starting with the licence fee, a cutter is expected to pay [for a] $20 000 licence,” Kurotwi said.
“What is the point punishing a cutter who is trying to add value to our diamond, who is trying to create employment from a percentage of almost 80% of unemployment?
“If you are to go and buy diamonds for $20 000 and sell them, you go back with $50 000 or $60 000 and within a few months that person can turn around so much out of it, but our government is subjecting us to this level.”
He said neighbouring countries were charging between $200 and $300 for the same licence.
Kurotwi said the government did not allow Zimbabweans to trade rough diamonds yet they were comfortable to allow other nationals to go and trade the diamonds in their respective countries.
“There is no prejudice for mining companies if people were to be allowed to go and buy rough diamonds. As long as one has a licence, they can sell to me at a certain margin and I can also sell at a certain margin,” he said.
“So diamonds are supposed to change hands so many times before leaving the country, but in our scenario diamonds leave the country from Chiadzwa into the plane to India.
“We are being deprived of that opportunity to make money by the very same government.”
He said the current tender system in Zimbabwe did not encourage local players but instead made it difficult for the diamond cutting and polishing companies to grow.
“All mining companies together with Minerals Marketing Corporation of Zimbabwe know how much they want to sell their diamonds for and they call this a reserved price. But they subject polishers to gambling and anyone who is going to bid less than what they expect fails and after that they turn to the international market,” Kurotwi said.
“This is what polishers are subjected to, yet from our neighbouring countries, anyone who is licensed is supposed to be given a monthly allocation.”
Notwithstanding the hurdles, diamond cutting and polishing companies are expected to employ people in a factory, although there are no guarantees of getting diamonds to cut or polish.
Kurotwi said it was wrong for government to propose a mere 10% to the local industry, a decade after the discovery of the diamonds in Chiadzwa.
According to a report published by Partnership Africa Canada, Zimbabwe lost more than $770 million between 2008 and 2012 through under-valuation and transfer pricing of the diamonds.
Countries that are cutting and polishing local diamonds are making in excess of 200% profits from the industry, money that Zimbabwe could harness if it started beneficiation of the mineral.
Diamond Beneficiation Association of Zimbabwe chairperson Richard Mvududu said the cutting and polishing industry in Zimbabwe had the capacity which was hampered by lack of assurance in the supply of rough diamonds.
“The issues to do with funding are one major challenge that we have faced as an industry. The minimum 10% allocation must be gem quality only and the frequency of auctions of stones to local cutters have not been regular this year, with only one producer running monthly tenders,” Mvududu said.
He said the status quo for the diamond and cutting industry was surprisingly pro-rough export and hostile towards local beneficiation, which negated the growth of the sector.
Mvududu said DBAZ was engaging with the diamond miners and regulatory authorities to get steady supplies of the rough diamonds.