EDITORIAL COMMENT: Diamond mining investment good but more needed

HoH_diamonds

With the easy pickings at Chiadzwa diamond fields now over, serious investment in better technology and skills is required for the country to realise more value from the resource.

From the 2006 rush to around 2015, one needed to dig only a few metres, or centimetres into the ground, to come out with a diamond, in some cases, of gem quality at Chiadzwa.  That prospect of instant riches attracted thousands to the fields, some from as far afield as Lebanon, United Arab Emirates and Nigeria, not only as panners, but also as buyers.  Most of them were obviously locals.

As the stampede unfolded and many losing their lives in killings normally associated with uncontrolled quest for instant wealth, the Government moved in to restore order. Mbada Diamonds, DMC, Marange Resources, Anjin and others were licensed to mine the mineral.

They, like the panners before them had it easy accessing the diamonds. They made much money then, but later on the diamonds sank deeper underground in more complex formations, a development that the firms were clearly not prepared for. They started appealing to the Government for more concessions where they sought to continue digging a few centimetres or metres to extract the mineral as easily as before. They had become accustomed to a get-rich-quick modus operandi which you don’t normally associate with formal businesses.

The Government refused and encouraged the companies to invest in technology and skills to mine deeper lying and more complex kimberlite diamonds.

They procrastinated, forcing the Government to ban them from operating in Chiadzwa. There was some resistance to that, but the Government has now consolidated diamond mining at Marange under the Zimbabwe Consolidated Diamond Company (ZCDC). Everyone is hopeful that ZCDC will get down to work to extract the kimberlites, which are richer although more expensive to access and process.

ZCDC is slowly but surely moving in a positive direction. It has a treasure chest of 1,2 million carats of diamonds which it expects to put on sale next month. In addition, the company is investing in equipment worth $30 million to enable it to embark on kimberlite extraction on a much wider scale.

Installation of the plant and deployment of the machinery — earth movers, excavators and dump trucks, among others — said ZCDC chief executive officer, Dr Morris Mpofu should see the country earning more from its diamonds.

He told our Harare Bureau on Friday:

“We are over half way through the installation of the $15 million plant in Marange and we are expecting 62 truckloads of kimberlite equipment from South Africa in the next two months and the equipment will cost over $15 million.

“The state of the art kimberlite mining equipment is expected to extract 450 tonnes of ore per hour.  We have been mining alluvial diamonds in the last decade and we extracted very little value out of it.  We have moved to the next stage of high quality kimberlite diamonds, which we are mining for sustainability and growth. The sustainability type of mining will give the investors more appetite to capitalise as the underground resource will not easily deplete like the alluvial mining.”

This is a substantial investment that will help the company and the country at large to mine more seriously, not the rudimentary operations that characterised work at Chiadzwa before concessions that were held by Mbada Diamonds, Marange Resources, Anjin Investments, Diamond Mining Company (DMC), Jinan, Rera, Kusena and Gye Nyame were consolidated last year. This equips ZCDC to deepen its search for the valuable diamonds for higher returns.

We have every reason to be optimistic now given that the Government is centrally involved. We had a bitter lesson between 2006 and 2016 when established companies operated in a laissez-faire atmosphere. The separate activities created disorder which some of them or their workers took advantage of to loot diamonds for sale for their personal benefit.

The economy did not benefit from the revenue generated the opaque system, only a few people in strategic positions. The $15 billion worth of diamonds that the Government says was carted off from Marange to Antwerp, Hong Kong, Dubai, Johannesburg, London and other foreign capitals cannot be an inaccurate proposition considering the uncoordinated nature of the work at the fields before 2016. That cannot be allowed to continue, hence we are one with the Government in centralising the mining and marketing of the gems from Marange.

We should see more judicious marketing of the mineral, not the bulk trade we saw in the past, that which showed no understanding of market dynamics.

The private companies appeared to be happy just pumping the diamonds everywhere with no due regard to the prevailing prices or the level of supply on the market at given times. As if they were mining and marketing coal, iron or chrome.

Now ZCDC has 1,2 million carats ready to hit the market probably next month, the company’s first foray into the market with such a big amount of goods.

Dr Mpofu expects a maximum of $100 per carat, double the $50 per carat we got in the past. We are confident that with the experience ZCDC now has compared to the little that Mbada Diamonds, Marange Resources et al had during the formative years, the skills the company has, the technology being used and investment in processing, though still admittedly developing, diamonds will soon make a positive impact on the economy.

It is noteworthy, however, that the $30 million investment only represents the country’s small presence on the diamond pipeline. We need to invest more in other activities along the value addition chain — polishing, sorting, and cutting and jewellery businesses.

You Might Also Like

Comments