EDITORIAL COMMENT: Diamond industry investment will be transformative
Asked in June 2010 to comment on the Chiadzwa diamond deposit, Mr Mark Van Bockstael, the chief officer, business intelligence at the Antwerp World Diamond Centre in Belgium said:
“This is a world-class deposit, no doubt about it. The deposit is a freak of nature.”
Around the same time, The Earth Times said of the same asset:
“The hugely prolific Chiadzwa fields are regarded as the world’s biggest diamond find in more than a century”.
The foregoing are views of global experts on the Chiadzwa gem fields alone. Yet, there are many more potential discoveries, discoveries and running diamond mines elsewhere across the country. For instance, diamonds were recently found in Chivi, Masvingo Province and Mutoko in Mashonaland East.
In addition to the unexploited claims, there are operations already running at Murowa in the Midlands. A few years ago, there was an operation in Beitbridge in Matabeleland South. These are the few places that we know to have diamonds, but Zimbabwe is basically unexplored meaning there is a high likelihood the riches are much more than that.
In terms of the national diamond potential therefore, Zimbabwe is the proverbial sleeping giant but the giant is rising from that slumber.
On Tuesday, the Zimbabwe Consolidated Diamond Company (ZCDC) signed an agreement with Russian giant, Alrosa Overseas SA for the exploration, extraction and marketing of diamonds in the country. The joint venture will be for the mining and exploration of claims and special grants already registered under ZCDC and others which may be acquired by the joint venture company in future.
Alrosa, the world’s biggest diamond producer by volume, which opened an office in Harare last December and registered Alrosa (Zimbabwe) Limited, is expected to invest at least US$12 million in exploration.
Chinese firm, Anjin Investments must have started working already; seven months after the Government picked it and the Russian conglomerate as the only two firms to partner the ZCDC in diamond exploration, mining and processing in the country. Murowa Diamonds, which has been in the business for some time, has no obligation to enter into a joint venture with the ZCDC.
Anjin mined diamonds at Chiadzwa until late in 2015 when Government did not renew operating licences for the company as well as DMC, Kusena, Mbada Diamonds, Gye Nyame and Marange Resources which operated in the same area. Therefore, it is back to familiar territory for Anjin.
“The signing of this joint venture agreement between the ZCDC and Alrosa bears testimony of the successes that this policy is yielding, to date,” said President Mnangagwa, speaking after the signing ceremony, referring to the “Zimbabwe is Open for Business Policy.”
“This is demonstrated by Government’s commitment to welcome and facilitate investments from across the world, which create mutual benefits, jobs and ultimately results in the improved quality of life of our people. After extensive negotiations, ZCDC and Alrosa have agreed to a mutually beneficial partnership in diamond exploration, mining and marketing; as well as both greenfield and brownfield exploration and mining projects.”
The Alrosa deal is critical in many ways. Alrosa is a Russian group of diamond mining companies that specialises in exploration, mining, manufacture and sale of diamonds. Formed in 1992, the company employs about 40 000 people across the globe. It generated revenue of US$4,63 billion in 2017 and accounts for 29 percent of the global diamond production by volume.
That a world class company like Alrosa has signed an agreement to be involved in the local market is a ringing endorsement of the world class nature of the local diamond potential and the industry to emerge out of it.
We are confident that with their experience, Alrosa would not have agreed to be involved in a market whose potential is questionable. They must have satisfied themselves that indeed there is a lot of high-value diamonds not only at Chiadzwa where ZCDC has special grants, but also elsewhere in the country. Alrosa must also have satisfied themselves that they can, rather, will be profitable operating in this market.
Furthermore, Alrosa must be happy with the integrity of the diamonds in the country and the absence of any impediments to their marketing worldwide.
That the chief executive of the Moscow Stock Exchange-listed company Mr Sergey Ivanov came over to Harare to sign the deal is an inspiring gesture. It demonstrates how serious the company is about their new business venture in Africa, their third on the continent after Angola and Botswana.
We expect to see a huge investment in machinery and technology for world class operations at ZCDC claims and elsewhere, not the rudimentary activity that has been since 2006 when alluvial miners were removed to make way for formal operations at Chiadzwa.
We need not emphasise the criticality of investment in security at whatever mines the partnership will establish given the history of criminal incursions into diamond fields in the country, particularly in Manicaland.
The country aspires to produce 10 million carats of diamonds and earn US$1 billion per year by 2030. We see this as a fair ambition considering the level where the industry is now but with Alrosa in the mix, plus Anjin and Murowa, we see no reason why that targeted output cannot be achieved, even surpassed. Value addition, the direction that the local industry must take seriously too, will mean much more in terms of revenues.
Chiadzwa can be instrumental in that.