Diamond Miners in Zimbabwe on Looting Spree

diamondsHarare: Diamond mining companies operating in Zimbabwe’s Marange diamond fields are reportedly on a last minute looting spree ahead of a loathed mandatory consolidation exercise.

As government peruses through various consolidation proposals submitted by seven companies operating in Marange and prepares for an audit, miners are reportedly exploiting the existing loopholes as they await their fate under the new structure. Highly-placed sources in the diamond industry told businessdigest this week that mines that are not “under government’s grip” yet were the biggest culprits, taking advantage of monitoring loopholes under the existing system.

“It’s like a free for all now,” said an industry source who requested not to be named, adding “Marange companies are looting diamonds and government is just quiet. They have aircraft flying in and out of the country and some of them have actually taken part of their equipment to the DRC (the Democratic Republic of Congo).”

There are five mines operating in Marange — Anjin. Diamond Mining Corporation (DMC), Jinan Mining Private Ltd, Marange Resources and Mbada Diamonds — after Gye Nyame and Kusena went under. Gye Nyame and Kusena will be taken over by wholly government-owned Marange Resources.

Anjin is a joint venture between China’s Anhui Foreign Economic Construction Co and Zimbabwean state entities. State mining vehicle, ZMDC, has joint ventures with Lebanese investors in DMC and Chinese investors in Jinan. Mbada is 50% owned by ZMDC and South Africa’s New Reclamation Group owned Grandwell Holdings.

According to sources, the Chinese in particular feel they stand to get very little benefit in the new company which, according to proposals, will be owned 50% by government while investors in the mines operating in the Marange fields will share the remaining half amongst them.

“These companies have not been declaring everything they produced and that is how they made lots of money, now they feel there is no point in investing because they will be unable to siphon diamonds and money out of the country in the new structure because it will be more state-controlled and heavily monitored,” added the source.

It is understood some of the companies could have closed their books when Mines minister Walter Chidhakwa announced in parliament early March there was no turning back on the proposed merging of operations in Marange, resulting in some kind of a “blackout” in terms of their financials.

Ironically, the consolidation is being done as part of efforts to plug diamond leakages and ensure transparency and accountability, according to Chidhakwa.

This follows a June 2014 report by campaign group Partnership Africa Canada that Zimbabwe lost about US$770 million in potential revenue between 2008 and 2012 through undervaluation and transfer-pricing of its gems from the Marange diamond fields.

“Perhaps one of the countries worst affected by transfer-pricing and under-valuation of diamonds is Zimbabwe, which lost an estimated US$770 million in taxable revenues on exports to UAE between 2008 and 2012 due to an average 50% undervaluation of its diamonds,” read part of the report.