By Lucy Tandi – Wednesday 29 July 2020
MUTARE (Mining Index) – PRICES have fallen but illegal diamond trade has continued as usual in Zimbabwe during the COVID-19 pandemic, according to industry analysts who say authorities are distracted by a disease wrecking economies worldwide.
Although the law holds out heavy fines and long prison sentences of up to 25 years for illegal trade in gold and diamonds, business is thriving in Zimbabwe’s eastern Manicaland province which borders Mozambique.
Potentially diamonds could contribute 10 percent to Zimbabwe’s foreign exchange income, but figures are way below this.
Losses from the underhand deals in the precious gems sector are further hurting the southern African state’s already sickly economy whose condition has been worsened by the disruption in global trade due to COVID-19 lockdowns.
Zimbabwe Environmental Lawyers Association (ZELA) Executive Director, Shamiso Mtisi, in unpacking unscrupulous diamond traders, fingered syndicates, employees in the sector, artisanal miners, and buyers, as part of the rot.
An analysis conducted by the Centre for Natural Justice and Governance (CNRG) revealed the effects of COVID-19 on the price of artisanally mined diamonds which tumbled to US$10 per carat.
“According to an artisanal miner in Marange, the industrial diamond price per carat was US$25 before the lockdown and during the lockdown, the price has dropped to US$10 per carat. The fall in prices has been triggered by restrictions on movement and liquidity challenges in the market,” said CNRG Public Relations Manager Simiso Mlevu.
Lack of knowledge on the pricing of diamonds has also been cited as one of the reasons why Zimbabwe is losing revenue, as the diamonds are not sold through formal channels for proper grading and evaluation, thereby fetching lower prices.
“We have realized that the nation has been losing a lot of money through selling rough diamonds on the international market, mainly because of lack of knowledge on diamonds, especially on the pricing of the diamonds,” said Zimbabwe Diamond Education College (ZDEC) lecturer Tendai Mtoko.
A lack of transparency in the diamond sector led former President Robert Mugabe to speculate six years ago that Zimbabwe had lost US$15 billion in diamond revenue — a figure exaggerated to dramatise corruption in the industry. After his retirement, Mugabe told a press conference in 2018 the US$$15 billion figure was an estimate not backed by any calculations.
ZELA Executive Director Shamiso Mtisi said it is difficult to quantify the amount of diamond revenue Zimbabwe is losing.
“It is difficult to quantify without all statistics of the potential of Marange areas being mined, and traded. Lack of information disclosure is a problem on production figures, and geological data,” said Mtisi.
Diamonds produced by the Zimbabwe Consolidated Diamond Company (ZCDC) are sold at auctions by the Minerals Marketing Corporation of Zimbabwe (MMCZ), but none has been conducted this year due to COVID-19.
Zimbabwe Consolidated Diamond Company CEO Robert de Pretto said the state-owned firm had planned 11 international gem auctions abroad, including in Asian cities, to widen options amid a market glut that has steadily made polished stones cheaper. “The company planned to explore and penetrate the international market to boost sales volumes.”
The 500,000 Carat stockpile that was scheduled to be auctioned in December 2019, plus the 2020 ZCDC production from January to date, could potentially generate Zimbabwe revenue for economic development for its reportedly 14.8 million people.
Commenting on the legality of diamond mining in Zimbabwe, ZELA Executive Director Shamiso Mtisi said any mining or trade of diamonds outside the global rules called Kimberley Process (KP), or without a mining license was illegal or illicit. “Illegal traders may be taking advantage of the lockdown and COVID— 19 to continue their under-hand trade.”
However, Mines and Mining Development Minister Winston Chitando said he had no evidence to back up reports of any illegal diamond activities in Zimbabwe.
“I have heard of illegal smuggling of diamonds. But I have no evidence on that. If anyone has evidence, let them bring it forward to pave way for investigations,” he said.
Mtisi said Zimbabwe could curb illegal trade in diamonds through strong political will, improving security around mines, including fencing of concessions, strict internal controls, arresting illegal traders and buyers and working closely with neighbouring Mozambique.
Mozambique is used as a main smuggling conduit of diamonds from Chiadzwa.
With a population of approximately 1.7 million people, Manicaland remains underdeveloped, with poor infrastructure, from roads to clinics.
Over 500,000 people living in the Marange community are yet to benefit from diamond sales, a decade after the discovery of diamonds in Chiadzwa.
Locals have to walk longer distances, on diamond-rich fields, to access ill-equipped education and healthcare facilities. ENDS// www.miningndex.co.zw
Twitter @IndexMining Facebook @MiningIndexNews LinkedIn @MiningIndex
This story was produced by The Business Connect. It was written as part of Wealth of Nations, a media skills development programme run by the Thomson Reuters Foundation. More information at www.wealth-of-nations.org. The content is the sole responsibility of the author and the publisher.