Beneficiation the way to go

Fortious Nhambura Senior Features Writer
Zimbabwe is on the threshold of becoming a dominant world player in the production of diamonds. Its gems have caught the eye of the world diamond market and the fact that Zimbabwe has one of the largest deposits of the precious stone, estimated to amount to 25 percent of the world’s known gems, means the world has to stand and listen.

Despite possessing such a large resource, Government is still struggling to meet its domestic and international financial commitments. The Government is struggling to pay its workers, finance the agriculture sector, resuscitate the country’s ailing industry and provide employment for thousands of young people.

Analysts say after a decade of discovering diamonds in Marange, all these woes should have been a thing of the past if Zimbabwe had embarked on the beneficiation of diamonds.

The value that would have been accrued from diamonds together with what is coming in from gold, platinum and nickel would surely have propelled the country’s economy.

Adding value to the country’s minerals particular diamonds, platinum and gold is key in unlocking Zimbabwe’s financial and unemployment logjam.

The Zimbabwe Diamond Technology Centre taking shape in Mt Hampden Harare provides an answer to the question of value addition in the diamond industry. The complex will house 500 units for cutting and polishing diamonds, each unit employing 200 people.

Upon completion the centre will provide a secure environment for auctioning the precious stones. The first six units at the centre will be completed in June this year employing 1 200 people.

ZDTC chairperson Mr Lovemore Kurotwi says the centre provides a one-stop shop for diamond processing in the country and dovetails with the Zimbabwe Agenda for Sustainable Socio-Economic Transformation.

“This is what has been lacking in the country’s diamond sector, a cutting and polishing centre of the precious stones mined in the country. I am glad that Government is now very clear on what needs to be done in the mining industry and is very supportive of the need to add value to our diamond sector,” Mr Kurotwi said.

He said it was time to put away selfish interests and support all efforts that ensure that Zimbabwe earns more from its minerals.

It is generally agreed that diamonds, although mined by private companies in some instances, remain a national product that must be managed professionally, transparently and for the benefit of the nation. Small wonder why Marange remains a subject of discussion at every economic forum.

“Other countries have done it and their economies are now dependent on the industry. Just close by we have Botswana whose economy is based on diamond mining. Zimbabwe is sitting on massive potential and should begin benefiting from its resource.

“That is the idea that is behind the construction of this facility. We are taking our part in employment creation and value addition of Zimbabwe’s resources,” Kurotwi said.

Zimbabwe has made the beneficiation of minerals top priority.

Recently Mines and Mining Development Minister Walter Chidhakwa said Government had moved from discussing merits of value addition to how this can be done quickly in line with ZimAsset.

Speaking at a value addition seminar in Victoria fall recently, Minister Chidhakwa said the country needs to identify its niche within the beneficiation value chain and concentrate on how this should be done and the cost of doing it.

“On diamond cutting and polishing, we have more than 20 cutting and polishing companies which have been waiting for a more conducive environment to progress their business.

“We are currently working on infrastructure to house the Diamond Exchange within the vicinity of the ‘new city’ in Mt Hampden,” he said.

Minister Chidhakwa said Zimbabwe has been exporting its raw diamonds, gold and semi-processed cotton and tobacco for a pittance when it could be reaping big rewards from such exports and that the situation should now end.

The ZTDC chairperson said his company was determined to take a leading position in promoting value addition in the sector and would work to ensure that Zimbabwe fully establishes the diamond industry not only as a producer but also as a marketing hub.

“The diamond school is set to provide the industry with expertise needed in value addition. The school is meant to provide the human resource needed for the diamond cutting and polishing.

“Surely with huge diamond resource, crippling cash shortage and massive unemployment, Zimbabwe cannot import skill. We have to train our own children to take up these positions. So far we have trained more than 500 diamond cutters. Some have been absorbed into the industry already and the rest we hope to employ once we start operations,” Kurotwi said.

He said the diamond school teaches a holistic curriculum that includes political, economics, geographical and social aspects of the diamond sector and focuses on understand the dynamics of the local diamond industry.

“Graduates must understand fundamentals in the diamonds sector. They must know why our diamonds are not attracting the same value as those from other countries. We want our students to understand for example why the world is paying so much for the Botswana product and less for the Zimbabwean diamond,” he added.

The recent sale of Marange diamonds in Antwerp, Belgium, was a clear indication that the diamond mining sector can reap huge benefits if the country moves away from trading in raw diamonds. The country held the first-ever diamond auction in Belgium last December realizing US$10 million from 279 723 carats. Zimbabwe could have gotten more had it cleaned and polished its diamonds.

Polished stones make more money at the auction and Zimbabwe stands to benefit more from value addition of its product.

“Zimbabweans should understand the importance of setting up a diamond centre and at the same time it should be noted that it is not the Government that needs to pour in the funds but stakeholders in the diamond industry and other interested parties in the private sector.

As it stands Zimbabwe is not benefiting much by selling rough diamonds,” Mr Kurotwi said.

Jewellery Council of Zimbabwe chairperson, Mr Fidelis Dana said value addition and beneficiation were the rock upon which economic revival hinged as outlined in the Zimbabwe Agenda for Sustainable Socio-Economic Transformation.

He said it was important for Government to walk the talk by making policies that would see the country adding value and beneficiating its precious gems.

A decision to clean the Zimbabwe diamonds sold at Antwerp saw revenue jump by over 100 percent realising US$70 million from the expected US$35 million.

“If by cleaning the diamonds we could improve the value of our stones by 100 percent, how much would we get by cutting and polishing them?” he said.

Mr Kurotwi concurred: “There is a lot of money to be made in the diamond industry and Zimbabwe needs to grab the opportunity. Why are we selling rough diamonds when we have these liquidity challenges and unemployment?

Once the value addition was possible it is also imperative that the country conduct diamond auctioning locally so that Zimbabwe reaps more from the mineral.

A simple analysis is if Zimbabwe can attract 1 000 buyers to come to the country for the diamond auctions that would mean at least US$100 000 more going to local hotels and lodges.

It will also mean $100 000 new money in the country before parting away with a single carat of our diamonds.

“That is what Zimbabwe needs now, new money. After a good buy a person may wish to visit our resort centres hence spending more in the country. Whatever is charged on the foreign buyers is new money. The art of the business is to attract as much money as you can before selling the diamonds. That is what other countries are getting from housing these diamond auction centres.

“Continuing to sell in Antwerp or India means the country is losing more in travel and subsistence and accommodation, money that should be used to develop Zimbabwe. We are the producers and we have to have to do the selling locally so that we can realise more from the mineral,” Mr Kurotwi said.

According to figures released by the Bain and Co management consulting firm, the diamond raked in US$72 billion in retail trade, while the cutting and polishing stage earned US$42 billion, as compared to the production earnings which are pegged at US$14, 2 billion.

Zimbabwe can get a better share of the US$42 billion earned on cutting and polishing stage.

With Zimbabwe accounting to 25 percent of global diamond production, Zimbabwe needs put in place mechanisms to increase revenue from the sale of the resource.