Sunday, 01 December 2013 00:00
Kuda Bwititi
Zimbabwe is set to commence the sale of Marange diamonds on the Antwerp World Diamond Centre (AWDC) market in Belgium this week, with an initial consignment of 500 000 carats expected to fetch good prices.
The development, which will have a positive impact on the country’s economy, comes at a time when a cocktail of measures have been adopted to increase revenue generation in the mining sector.
AWDC is the diamond capital of the world with more than 1 800 companies and dealers and a capacity to handle 80 percent of the world’s rough diamonds and 50 percent of polished gems, guaranteeing local diamonds a diversified market.
This week’s auction is expected to see the country fetching massive returns on its diamonds unlike in the past when auctions had to be done “clandestinely” as a way of sidestepping the illegal economic sanctions.
The development will certainly come as good news to Finance and Economic Planning Minister Patrick Chinamasa who is desperately looking for revenue sources for the 2014 National Budget which must be announced before the end of next month.
Indicators from the Antwerp market last week showed that Zimbabwe’s gems are likely to attract hordes of buyers, as there is growing demand for rough diamonds.
Mines and Mining Development Minister Walter Chidhakwa last week disclosed that the inaugural sale of local diamonds on the Antwerp market will be held between 4 and11 December. Minister Chidhakwa added that an official from Antwerp, who was in the country last week to access modalities for the sale of the precious stones, had placed a seal of approval on the gems that Zimbabwe will be shipping.
“I am aware that an expert was here to assist us over the past few days and the diamond companies had an opportunity to meet him and prepare the parcels so that they are consistent with the Antwerp exchange.
“They (diamond mining companies) are trying to reach a target of 500 000 carats and I am sure they have already achieved that. This is to test the market. Hopefully, if the market is doing well, we will send more,” he said.
Minister Chidhakwa noted that the sale of diamonds on the auction market will enhance transparency, as all diamonds will be accounted for.
“We hope that the prices arising out of that first auction will encourage our companies to continue to go the auction route.
“I also think that when you compare with the tender systems that we used to have, I think that there is much greater transparency in the auctions system and we hope that system will give us the benefits that we are looking for including the issue of being transparent.
“We want to continue to move towards a transparent diamond mining system and a transparent diamond marketing system that gives Zimbabwe the best benefits available,” he said.
In a recent interview, Zimbabwe Mining Development Corporation (ZMDC) managing director Engineer Jerry Ndlovu projected that the Antwerp sales will increase revenue inflows by at least 20 percent.
“Definitely, we are most likely to see an increase of above 20 percent. Demand for our unique Marange Diamonds will definitely increase pushing prices up.
“On average we used to sell at a lowest price of US$50 per carat and a highest price of US$100 per carat for rough diamonds depending on the market forces but due to our footprint on the Antwerp market, we expect to get higher prices,” he said.
Engineer Ndlovu said the opening of the Antwerp market would see all sales concluded within two days, a major progress from the previous system that resulted in sales taking months to complete.
“Conclusion of diamond sales which was taking up to three months to complete will now take the normal 48 hours. Despite the fear on the global market that Zimbabwe is going to flood the market and lower prices, Zimbabwe will in actual fact be able to access the best market prices for its gems,” he said.
Engineer Ndlovu said the entry into the Antwerp market would help to unlock capital for ZMDC.
“ZMDC will now be able to procure inputs from EU countries. It will also be able to access foreign loans for its operations and lure investors in the diamond industry from European countries. It will also access capital to rehabilitate and re-equip existing mines as well as resuscitate closed mines.
“A vibrant Zimbabwe Mining Development Corporation will cascade into downstream industries and manufacturing services and suppliers. Supportive industry that had been negatively affected will also benefit from the lifting of sanctions” he said.
Resource Exploitation Watch Chairman Mr Tafadzwa Musarara said the Antwerp market will open massive potential benefits for Zimbabwe.
“First of all I think the Minister of Mines has to be commended for the work that he has done in this short space of time in office.
“By going to the Antwerp market, we are now playing with the big boys in the diamond industry. Before this our diamonds used to be bought by middle men who would then sale them to the same Antwerp market that we now have direct access to.
“It’s a gigantic boost to our sector because in terms of prices, we can expect to get about 100 percent more than what we were getting before. More importantly, the direct interaction that we will have with the big boys in the diamond industry means that we can create further synergies with them for the beneficiation of our diamond industry,” he said.
Meanwhile, Minister Chidhakwa disclosed that plans to clean diamonds before their sent to the market are already afoot.
“We agreed that all diamonds from Zimbabwe starting from the 1st of February 2014 will have to be cleaned. There is a deep acid cleaner that is applied to diamonds which ensures that the diamonds are clean and the valuation will then be done and the marketing will be undertaken. We agreed that they will have to bring in equipment and we will work with our companies in bringing in this equipment which is used for the cleaning of diamonds. We hope this will help us increase revenue from diamonds,” he said.
He added that the 24 hour surveillance of all diamond mines will ensure that there is full transparency in the mining of the precious mineral.
“The second thing is that in a bid to strengthen the security systems at Marange, as much for existing diamond mining companies and those that will come in the future, we expect that the entire process at the diamond mining sites as well as the marketing sites must have CCTV and that CCTV becomes available also to Government through ZMDC as a shareholder,” said Cde Chidhakwa.
Minister Chidhakwa said Government has resolved to cut down the 15 percent tax for local diamond cutters and polishers who have failed to kick off operations because of the restrictive taxes.
Other tax reforms in the mining sector are expected to be announced during the budget presentation which is due before January next year.
Zimbabwe got the green light to trade its diamonds on the Antwerp market following the lifting of sanctions on the companies mining diamonds in Marange by the European Union.
Last week, the World Federation of Diamond Bourses President Ernie Blom described Zimbabwe’s entry onto the Antwerp market as a positive step.
“I think it is a positive step and will benefit both Zimbabwe and Belgium.
“They are KP compliant and based on this should be able to trade on the world markets.
Zimbabwean diamonds are being sold in many other markets so why not in the EU (Antwerp)?
“While Zimbabwean diamonds might not always be of the highest quality they make up for this in volume which has helped sustain the demand for rough diamonds when many other mines around the world have seen a drop in production.
“In 2012 Zimbabwe generated 8 million carats and in 2013 they are expected to generate 16.9 million carats,” Mr Blom was quoted as saying by the media.
Labels: BELGIUM, DIAMONDS, MARANGE DIAMOND FIELDS
posted by MrK @ 7:27 PM
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