Open up diamond sector for efficiency, Govt told

Zimbabwe’s diamond sector has faced challenges ranging from lacklustre performance to allegations of mismanagement and toxic corruption.

To revitalise this crucial industry and unlock its true potential, there is a growing consensus among experts that Zimbabwe should open up its diamond sector to private players, ushering in efficiency and the benefits of healthy competition.

In 2022, Zimbabwe’s diamond production amounted to 4,5 million carats and this was an increase of around 7,14 percent compared to the previous year. In the same year, the country ranked seventh among the world’s largest diamond producers by volume.

Zimbabwe expected to increase diamond production to 11 million carats by 2023 from 3,2 million carats in 2021, which was part of an ambitious plan to raise mining output and earn the country US$12 billion a year.

However, the country by third quarter 2023 it had produced only 3,83 million carats falling way below the 11 million carats mark, which has led analysts to prop up opening the sector beyond the four companies currently mining.

Engineer Tashinga Muzangwa, a seasoned professional with years of experience in the mining sector, emphasises the need for reform.

“Zimbabwe’s diamond industry has been hampered by inefficiencies and a lack of innovation. Opening it up to private players will inject fresh perspectives and much-needed capital, paving the way for modernisation and growth,” she said.

In terms of policy, new entrants into Zimbabwe are not allowed to apply for licences for the exploration and development of diamond resources and must joint venture with one of the following four companies: Zimbabwe Consolidated Diamond Company (ZCDC), Alrosa, Anjin or Rio Zim.

ZCDC was formed in March 2016, after the previous administration evicted all diamond mining firms in the Marange fields in the east of the country, saying their licences had expired.

The main reason behind this was to form a wholly-owned government entity.

Mining expert, Stephen Chifamba, echoes Muzangwa’s sentiments, highlighting the importance of competition in driving performance.

“Competition breeds efficiency. By allowing multiple players to enter the diamond sector, Zimbabwe can foster a dynamic environment where companies strive to improve their operations, leading to increased productivity and profitability,” he added.

“It is hoped that the sector will soon open up,” Botswana Diamonds (BOD) said in a statement accompanying its 2023 annual report.

BOD, an exploration and mining development company that holds licences in Botswana and South Africa, is focused on short-term production targets at Marange and advanced kimberlite pipe projects elsewhere, in partnership with Vast Resources.

The two companies would be exchanging past exploration information and forming a special-purpose vehicle to jointly develop the diamond potential of Zimbabwe.

BOD spent £113 904 in exploration expenditure for the year ended June 30, 2023 as the explorer keeps looking for ventures that might be profitable.

Previously, BOD incurred expenditures totalling £58 815 solely for the purpose of exploring new licences in Zimbabwe. This came as it awaited the granting of a permit to Vast Resources to progress the Marange project, to which the miner was a party to.

Dr Prosper Chitambara, an economist, underscores the benefits of liberalising the diamond sector.

He opined, “Privatisation encourages investment and stimulates economic activity. With more players in the market, Zimbabwe can attract both domestic and foreign investment, creating jobs and driving economic growth.”

Tinevimbo Shava, an advocate for market-driven policies, emphasises the advantages of competition in enhancing transparency and accountability.

“Competition fosters transparency as companies vie for market share. With multiple players in the diamond sector, there will be greater scrutiny, reducing the risk of corruption and ensuring that revenues are fairly distributed,” he concluded.

Opening Zimbabwe’s diamond sector to private players holds immense potential for the nation’s economic development. By leveraging the expertise and resources of private companies, the country can modernise its diamond industry, improve efficiency, and maximise the benefits for its people.-ebusinessweekly