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Next year Zimbabwe takes over the rotational chair of the Kimberley Process Certification Scheme, a sign that our fellow major diamond producers plus the major buyers reckon we have clean hands, a clean industry, and are a fitting public face of the global industry for 12 months.
Appropriately next year is also the year when we move into two rather exclusive clubs, with production over one tonne in mass and over US$1 billion in value, and we are only the sixth country that will achieve that double, behind Botswana, Russia, Angola, Canada and South Africa.
DRC is well up in the mass club, and Namibia is close to the US$1 billion, but neither will be in the other club so Zimbabwe is already seventh on both lists and might move to sixth on the value list.
The difference in order on the mass lists, where Russia is easily number one, and the value list, where Botswana is comfortably first, reflect the mix of gem quality and industrial diamonds in each national production. Zimbabwe’s mix is fairly average.
The Kimberley Process was set up in 2003, with Zimbabwe as one of the founder members, to prevent the sale of conflict diamonds, those used to finance rebel movements and other unpleasantness and ensure that all diamonds reaching the world markets came from legitimate licensed sources.
Obviously the effects go further. If all sales are accounted for as legitimate then the producing countries are able to ensure that proper labour and other rights are followed by the mining companies, and very importantly the set taxes are paid.
As Zimbabwe charges a royalty of 10 percent on diamonds, hitting the US$1 billion mark means the taxes hit the US$100 million mark, and the Ministry of Finance and Economic Planning can certainly find a good use for that. In practice the royalties on gold, platinum, diamonds and lithium will be paid half in cash and half in metal or stones, which mining companies have no problem with.
This means that the Government will be building up some solid reserves should there be some sort of emergency, and in any case can choose when to sell some of this wealth, such as when prices appear to be high. Among the achievements of the Second Republic was sorting out the whole diamond sector in Zimbabwe, which had been a bit rough and ready in the early days.
Production was chugging along at around 2 million carats a year when the new dispensation was sworn in, with value far too close to US$100 million a year, useful, but nothing like the potential.
Getting everything organised, sorting out the required investment and generally providing the proper business environment saw production reach 2,7 million carats in 2020, with a value of US$153 million, showing the high percentage of industrial diamonds.
Last year we did a lot better as the fixed up production surged, with 4,2 million carats worth US$670 million.
There is still a reasonable expectation that we will hit the 5 million carat mark this year, and as a carat is one fifth of a gramme, that means we make the 1 tonne club.
Next year production is expected to reach 6 million carats, or 1,2 million tonnes, Mines and Mining Development Minister Winston Chitando told The Sunday Mail last week in an interview, and the gem-quality to industrial stone mix should mean that this will hit the US$1 billion in value.
One factor in the upturn in diamond production has been Zimbabwe’s ability to attract and harness investors. Minister Chitando specially mentioned two expanding their investment and thus their production: Alrosa of Russia in Masvingo, and Rio Tinto operating at Murowa in Midlands.
Other respectable investors are involved, and all this is a straight forward result of major global companies accepting Zimbabwe’s pro-investment and pro-business models. No one spends hundreds of millions of US dollars unless they are certain that this investment is safe, meaning the only risk they run is geological.
Minister Chitando is now concerned about security, ensuring that our diamonds do go through the business channels. Here the Kimberley Process must have been a major help in preventing the scourge of illegal diamond buying that had bedevilled the industry for well over a century
With the sort of conflict that was once financed by illegal diamonds now dying right back across the world, the Kimberley Process could also take a more positive role in beating back the illegal and stolen diamonds as well.
It fits in with the whole desire to make sure every diamond, wherever it is mined or sold, can be accounted for, and with Kimberley we have the major producers and the major buyers sitting in the same room.
If it is difficult to mine diamonds illegally and impossible to sell them then criminals need to find honest work.
Zimbabwe still needs to make more of its diamonds, with at least some value added inside the country. We have taken steps but we need to keep up the work and the pressure so that more is done locally. This is very skilled work, by highly paid and exceptionally well-trained people, and these are the sort of extra jobs we need.
Minister Chitando was also looking at our other gemstones and semi-precious stones, and here he felt that small-scale artisanal miners coupled with illegal buyers and smugglers could be costing Zimbabwe up to US$2 billion a year.
For much of this production there is nothing like the Kimberley Process and the non-diamond stones and the fancy semi-precious stones can be easily sold anywhere.
The Minister wants to keep the opening for the artisanal and small-scale miners to earn a reasonable living but also wants the business properly overseen and regulated.
Once again, as with “conflict” and stolen diamonds it appears the stress must be on those who buy the things. If there is no market then no one breaks the rules.
We can, as he suggests, set up proper regulated markets for these gemstones, but with this we also need some way of ensuring the dubious buyers and the smugglers are either excluded, or turned into honest businesses that deal in the open.
This is now a major challenge, but we have shown a lot of ingenuity in sorting out the diamond business and fulfilling our commitments to the Kimberley Process that we should be able to adapt some of what we have learned to other stones.
We can have it both ways, regulations and control on one side and people with some basic geological knowledge able to earn a reasonable living. The important point is that a legal and regulated market usually offers better prices, since no one has to pay bribes or give huge discounts to smugglers, and so proper marketing is something that should attract the gemstone miners.
Online Reporter