Cecil John Rhodes, Rhodesia and the Great Zimbabwe: privatising a country's mineral wealth

The history of mining in Zimbabwe goes back hundreds of years before the advent of inter-continental trade that became more dominant in the recent years. In the central parts of Africa, it is evident from archeological data that mining and beneficiation of iron and gold ores was taking place even before the arrival of Arab and Indian merchants (Kuhn 1987). Trade during this era was characterized by barter exchange between these merchants who wove rich fabric and exchanged it for the minerals of the State of Munhumutapa/Monomotapa/Mwenemutapa. On arrival in Africa in the early parts of the 1700s, the voyaging Portuguese noted the relative sophistication of the economic system of the Mutapa State and the way it conducted its social affairs and commerce, this was largely on equal terms with their partners who were Middle Eastern and or Oriental merchants (Kuhn 1987).

However, the arrival of Europeans coincided with the decline of the extant legislative and administrative authority which had began an gradual outward migration from the hinterland further North in search of the elusive and prized salt fields. Taking advantage of this apparent retreat, the recent arrivals asserted their own nationalistic intentions and subsequently either fully drove out or subjugated the remaining inhabitants of the land. Albeit initially on the back of negotiated and uneasy peace/truce/détente, and consequently more aggressively through the use of organized military firepower. Their relatively advanced weaponry took the battles and they began setting up local administrative systems modeled along the lines of their home countries. These nascent investments in political infrastructure did not escape the notice of marauding colonists in the mould of Cecil John Rhodes. With a Royal Charter in hand he earnestly set out on his Cape to Cairo mission where he intended to extend British influence across the length and breadth of Africa.

It is abundantly evident that on arrival Rhodes was preoccupied and obsessed with the mineral wealth and riches of the newly found colony state. From the first instance he began and executed a conceited plan to conceal the true mineral wealth of the new colony. As the accomplished politician that he was, he used the propaganda skills he acquired as Prime Minister of the Cape Colony to hoodwink not only the locals but the issuer of his Mining Charter, the British Monarch, into believing that the new colony was a barren wasteland not worth the ink on which the Charter was written. However, Rhodes on the other hand was privately enchanted by the extensive riches in this part of the world and he set in motion to christen the colony into his name. By secretly investing in the colony and at the same time discounting and underreporting its true value and wealth to the monarch, Rhodes went about setting up the country that what was to be later called by his own name, Rhodesia. So enchanted was Rhodes he also chose the country as his final resting place of choice, where he lies to date.

…………….to be continued

ZIMASSET – Prospects for Mineral Value Addition and Beneficiation in Zimbabwe: Benefiting from our minerals

06 May 2015

ZIMASSET – Prospects for Mineral Value Addition and Beneficiation in Zimbabwe: Benefiting from our minerals

The resources of African countries have attracted the attention of Multinational Corporations (MNCs) from across the worlds, who have continued to rip huge benefits and make rich pickings from the same. However, there is very little to show for these resource riches in the host countries, to the extent that some have begun alluding to a “resource curse’’ of sorts that has been cast upon them. In the recent past most of these developing countries have awoken to the reality that these resources must bring benefits and economic development to the inhabitants of the host countries as a result of civil protest and lobbies that have emerged from the population. Minerals as valuable as diamond, platinum, gold, topaz, nickel, coal, gas, oil, chrome, iron, zinc are in abundance in poorer countries but foreign companies continue to get benefits unduly at the expense of locals.

Resource dependency has been the downfall of most developing economies as they are heavily reliant on the one major mineral that earns foreign currency and export receipts for the country. This concentration is evident in the economies of Botswana reliant on diamond, Zambia dependent on copper, Namibia on zinc exports, Nigeria and Angola reliant on crude oil exports. The same story is replicated across the whole of Sub Saharan Africa from Ghana, Tanzania, and Equatorial Guinea, where these economies are heavily reliant on one product, crop or mineral.

The dominant paradigm in minerals exploitation is that only foreign companies have the financial wherewithal to invest in huge capital intensive resources exploration and exploitation to the detriment of local investors. The government also on the other hand is more willing to support MNCs by giving them huge tax incentives and other exemptions without due regard to the fact that the same support granted to local indigenous companies holds for better sustainable developmental prospects in the long run. Stories abound of MNCs who after enjoying long tax holidays chose to dump their local operations citing viability problems without giving credence or adequate evidence to that effect. 

However, on close analysis it is clear that the relevant policy communities’ in the specific policy sector would not have been consulted on their inputs. This usually leads to accusations being traded of public officials and local civil/traditional leaderships being bought off in the signing of these lucrative mining contracts. Cases abound of these instances. Other cases also are evident of executives of State Organisations who are entrusted with the responsibility to represent the interest of the State losing relevance as they would have been co-opted into the operations of the MNCs and they end up serving their own interests instead of behaving according to their mandate. A paradigmatic shift is therefore required in the way mineral resources and mining claims are managed. The principal objective being to put in place safe guards to ensure that local communities and the national economy benefit more, ahead of the MNCs.

The Community Share Ownership Scheme model of the Zimbabwean indigenisation policy needs refashioning in order for it to be more robust in the way it ensures the resources are harnessed for the benefit of the host country, which has these minerals. The example of more developed economies like China, Japan, India, Russia, Venezuela, Norway, and the Oil and Petroleum Exporting Countries (OPEC) of the Middle East should be learnt from. These countries have harnessed their natural resource endowments to bring about socio-economic development and rapid advancements to the wellbeing of their citizens. The cases in point here are of the Emirates which have transformed the hitherto desert City-States areas into metropolitan trade centres with thriving local economies. Another case in point for example, is that of the Norwegian Sovereign Wealth Fund which has accumulated US$1 trillion, (a mean sum) from prudent management of non-renewable resources, principally oil and fisheries.

These enviable success stories can and must be translated to the African continent. Some African countries have come on board and crafted similar programmes. Zimbabwe holds great potential of growing such a fund through mining in and on the Great Dyke and other resource rich areas around the country, chiefly Marange, Chimanimani amongst others. More still needs to be done for this to be a reality.

However, without the adept political maneuvering that is characteristic of the negotiations in the huge mining contracts, developing countries still stand to lose out on getting the full benefits from the exploitation of their mineral resources. What is needed are knowledgeable experts with the requisite skill, tact and passion to negotiate (in good faith) for the nation at large. The selfish ways of the past must be discarded and a more pragmatic approach adopted. This writer envisages not individuals taking upon themselves this task, but a group of experts called upon occasionally to thoroughly interrogate all new mining deals with the aim of getting the best from our resource riches.

The need for local minerals beneficiation and value addition is now more imperative than ever before. There is absolutely no reason why Zimbabwe should not shine among the best nations in this world, and in our lifetime. It has all the necessary prerequisites to achieve success; all that’s left is for the country to connect the dots.

The significance of diamond beneficiation to Zimbabwe, Part 1: Definitions and Statistics

The significance of diamond beneficiation to Zimbabwe

By Ngonidzashe Nzenzema

Part 1: Definitions and Statistics

Introduction

Beneficiation and value addition have become topics of increasing importance for mineral producing countries, especially in Africa. There are growing calls not only for increased revenue generation through sustainable natural resource exploitation, but also for more local benefits to accrue before export. The anticipated benefits include employment creation, skills transfer and technology development among others. This has meant setting up export barriers and tariffs to compel adoption of local processing by mining companies. Precious minerals among them gold, platinum, chrome, silver and the famed diamond lead the pack as the prime candidates for local beneficiation, largely because of their unique qualities and peculiar characteristics.

Analyzing the diamond and its beneficiation

The term diamond conjures up, evokes and elicits various images. These images range from the positively envisioned opulent displays of magnificent wealth and luxurious indulgence; to the detestable devastating images of war, hunger, disease and death. All these word associations hold true for various situations. Meanwhile, the diamond’s inherent value lies largely in perceptions. Apart from its industrial applications, a diamond has come to symbolize various other things like love, wealth, luxury, strength, purity and at one time diamonds were used for religious, spiritual and even medicinal purposes. However, for the avoidance of doubt the diamonds which we are interested in are the “conflict-free” variety found in locations such as Zimbabwe amongst the major sources, which can be used for industrial applications and jewellery manufacturing.

In expert parlance or techno-speak a diamond is a hard collection of pure carbon atoms bound together by the strongest connections known on earth.  Traditionally, the greatest economic attribute of the diamond has been its ability to quickly and easily move large sums of monetary value concealed in so inconspicuous a stone. This attribute has led to eminent diamond industry players to refer to it as a “refugee’s best friend.” However, on its own the rough diamond only consists of part of the full story. Subsequent value addition through beneficiation of the mineral transforms it into more valuable configurations.

In Zimbabwe, both the terms diamond and beneficiation have taken cultic status. Minerals have taken centre stage as a potential driver of economic development. Despite this, a search for the meaning of the phrase “Diamond Beneficiation” on the other hand still draws blank faces amongst most citizens, ordinary folk and the sophisticates alike. Regardless, both words used together are now venerated as potential saviors for the local economy; an improbable task for such an unassuming mineral.  The Central Government authorities in Zimbabwe see an opportunity even though there is still no agreed definition or legal framework for concerted minerals beneficiation. For academics, the term beneficiation has brought about restless nights to even the most studious scholars. The biggest challenge being that it refers to an intangible concept. An extra-ordinary understanding of novelty. It requires looking beyond the obvious and mentally arranging old ideas in new ways. To date there is still contention and contestation as to the true meaning of the term more so in Zimbabwe. Therefore, the challenge lies in conceptualizing what it involves and what it means for the mining sector and related industry players.

For this writer, beneficiation refers to any subsequent processing undertaken on a mineral or primary product post extraction. It is the process of further manipulating a mineral’s innate properties in new and innovative ways into useful finished products that can be commercially sold for a monetary consideration. This implies that some value is added to the final product, transforming the mineral or combining the various minerals in new and innovative ways to produce a more valuable final product. This final product is worth significantly more than the constituent minerals. The key to beneficiation is the utility of the final product, for example a loaf of bread made of clay powder finds no utility in metabolic nutrition. However, perhaps it is more useful in a museum as a model depicting the types of loaves of bread produced by a bakery over the years.

Diamond beneficiation holds great promise for Zimbabwe. However, while the country can produce 

in excess of 25% of the worlds demand in rough diamonds it has not achieved any visible significant benefits. This is despite the discovery of the first commercial diamond claims in the country in 1997 at Rio Tinto’s Murowa and the 2001, 2003 and 2006 alluvial finds in the Marange and 2013 conglomerate find in Chimanimani areas. Prior to this, DeBeers the only company ever to conduct extensive exploration for diamonds locally concluded that there were no commercially viable deposits of the mineral. The company went on to give up its Exclusive Prospecting Order (EPO), but ensuing events have adequately disproved its claims. Since then, Chiadzwa is considered to be the largest find of alluvial diamonds and to have the world’s largest deposits valued at over US$800 billion. Confirmation of these estimates is pending thorough exploration which is still outstanding to date.

In order to extract the maximum possible value from diamonds, the missing piece in the puzzle is a local beneficiation strategy. This will allow the country to tap as much of the value of the diamond locally and retain the same before the deposits run out. Exporting the rough diamond through maximum extraction and exports has not achieved its stated objectives of improving the livelihoods of the locals or transforming the economy, as expected of such a valuable mineral.

Diamond industry quick facts

The global diamond jewellery industry was worth an estimated US$79 billion as of 2013 (DeBeers 2014). This translates from just over 146 million carats of rough diamonds produced in 2013. However, not all diamonds produced end up in jewellery. Meanwhile, according to the International Monetary Fund (IMF) Zimbabwe is reported to have the highest minerals per capita indices. Its Chiadzwa fields have the potential to produce 12 million carats of rough diamonds per year to beyond the year 2020. Given that the price of a carat of rough diamond varies between US$30.00 and US$18,000.00 it is of worth to pay attention to developments emanating from this industry. Zimbabwe’s diamonds are however being sold at a discount because of the country’s desperation to raise fiscal revenues due to liquidity challenges brought about by the restrictive measures put up by the foreign governments making it tough to trade freely. This means diamond are underperforming and the country is losing value to middle-men and precious jobs to foreign countries. However, by locally adding value the country could multiply what it is currently earning many times over. The simple statistics below demonstrate this.

Globally, producers were reported to have shared just US$18 billion in 2013 from 146 million rough diamond carats sold. Of this figure Zimbabwe reported a gross value of US$664 million from the sale of its diamonds, an amount that still needs to be shared between the government and its Joint Venture partners after paying off operational costs. In the final analysis, the government makes a paltry amount, meaning the State is still left holding the short end of the stick. This has to be compared against estimated earnings of US$79 billion for the global jewellery industry. Comparably easy, rich pickings made by a coterie of downstream players who usually do not even have diamond mines in their own countries. There is thus need for increased advocacy to locally beneficiate diamonds by setting up facilities modeled along the lines of the Zimbabwe Diamond Center so as to capture most of the value locally, since the most money stands to be made at the subsequent stages of diamond beneficiation.

While DeBeers still dominates the market, it is closely followed by producers like Russia’s Alrosa and new kids on the block like Zimbabwe which is still relatively in the early stages of developing the diamond mining industry. Figures for Rio Tinto might be contaminated since it also mines diamonds in Zimbabwe and its data has not been disaggregated for this purpose. However, despite this, the very fact that Zimbabwe’s Chiadzwa diamonds have been disaggregated and considered 4% of total global production is not a mere feat.

The diagram below shows the 2013 consolidated percentage production figures for each source:

Figure 1

Source: The Diamond Insight Report (DeBeers 2014: 38)

Developments along the diamond value chain

The diamond value chain refers to the various processes through which the diamond passes  until it reaches the market. It consists of six stages: exploration and production; rough diamond sales; cutting and polishing; polished diamond sales; jewellery manufacturing and finally retail jewellery sales. The greatest value addition and growth in value comes at the jewellery manufacturing and retail sales stages.

The diagram below show the value trends as the diamond passes through various stages of processing:

Figure 2: The diamond value chain

Source: Bain and Company (2013: 5)

Clearly, there is more value to be gained from diamond beneficiation through jewellery manufacturing and retail sales, than simply selling in the rough. There is also a growing recognition that diamond jewellery is considered valuable if it is made by reputable jewelers and sold from famous luxurious shops. Therefore, branding is everything in the industry. Locally there in now need to grow good brands building on the advantage the country has in controlling supply. In the USA a diamond ring sells for an average cost of US$3,700.00 in the up market retailers, at least two months’ salary for middle class white collar workers.

This illustrates that a diamonds’ value increases significantly as it passes through the value chain. Bain & Company report that it nearly quintuples as it passes through the value chain. However, the greatest value of up to US$50 billion is added at two stages: the jewellery manufacturing and retail stages (Bain & Company 2013: 4). However, critically they also report that diamond mining alone still achieves the highest profit margins of up to 20%. This presents numerous opportunities for Zimbabwe to pursue along the entire value chain, from the mine to the market since it possesses significant quantities of diamond deposits.

References

Bain & Company Incorporated and Antwerp World Diamond Centre. 2013. “Journey through the Value Chain,” The Global Diamond Report. Bain and Company Inc.: Boston.

Chininga, C. 2013. “First Report on the Portfolio Committee on Mines and Energy on Diamond Mining (with special reference to Marange Diamond Fields) 2009-2013.” Parliament of Zimbabwe Portfolio Committee on Mines and Energy. Presented to the Fifth Session of the Seventh Parliament of Zimbabwe on June 2013. S.C.4, 2012. Parliamentary Monitoring Trust of Zimbabwe: Harare.

DeBeers Incorporated. 2014. “The Diamond Insight Report” Available at   http://www.debeers.com/

http://www.debeersgroup.com/en/news/company-news/company-news/global-diamond-demand-reaches-record-levels.html,

Kimberley Process Certification Scheme. “Kimberly Process Statistics 2012.” 19 June 2013. Viewed on 16 September from https://kimberleyprocessstatistics.org/static/pdfs/public_statistics/2012/2012GlobalSummary.pdf.

McKinsey &Company. 2014. “Perspectives on the diamond industry” White Paper. Available at http://www.mckinsey.com/

Government of Zimbabwe. 2013. National Budget 2014. Printflow: Harare

Sunday Times (SA). “Fabulous wealth in Marange Diamonds” 8 August 2010.

The significance of diamond beneficiation to Zimbabwe Part 2: Potential benefits and prospects

The significance of diamond beneficiation to Zimbabwe

Part 2: Potential benefits and prospects

There are numerous benefits that can accrue from local diamond beneficiation which could help with the envisaged economic transformation of Zimbabwe. These include all of the following: Most of these entail more job creation, skills acquisition, modernization of the local economy, technological advancement, better performance of taxes, more revenue collection for the fiscus, inclusion of the informal SMEs sector, increase in the sophistication of local economy through diversification, widening of government tax base, increased tourist arrivals, increased visibility of the country leading to improved country perceptions/images, re-integration of the country into the global village through trade, industrialization and resuscitation of industry, infrastructure developments and improved standards of living for locals.

Many countries including Belgium, India, USA, Israel, China and Japan have successfully introduced beneficiation reaping benefits along the way. This is in-spite of the fact that most of these countries do not traditionally mine most of the minerals that they beneficiate locally. Rather they source them from producing countries at significantly lower prices than those at which they sell the finished fully beneficiated products. The industrialized nations in the West and East have grown their economies building on these models, cheap raw material imports from least developed nations and expensive finished exports to the same lowly developed countries. Critically, the industrialized countries have robust internal markets for their manufactured products.

Zimbabwe currently suffers from high levels of un-employment and under-employment. This is despite the country having a highly educated population and boasting the highest literacy rates in Africa (92%), competing directly with developed nations. Un-employment can be defined as a high number of people actively seeking employment or high number of employable people out of formal employment; while under-employment implies the under utilization of available skills. By investing into the infrastructure required for diamond value addition activities through more local beneficiation, the country stands to benefit from increased employment creation. More varied jobs are developed together with the introduction and growth of globally competitive modern industries. The Zimbabwe Diamond Centre plans to set up over 500 minerals beneficiation factories each directly employing 240 cutting, polishing and jewellery manufacturing experts. These jobs are usually the very specialized types which concurrently lead to skills development. However, the big employment creation benefits lie in the multiplier effects through growth of linkages with both upstream and downstream industries.

The industries and economies of the future are not only based on a knowledge worker, but also one with relevant skills and abilities in high value industries. One such industry is the jewellery manufacturing industry. Through concerted training skills development programme as part of the framework for minerals beneficiation the Zimbabwe could accrue these benefits. For example initiatives like the Diamond Education Center have significantly impacted on improved skills in minerals value addition through beneficiation in jewellery manufacturing.

Most importantly there are benefits to be made from economic modernization through technology transfer. Most of the equipment currently in use in minerals processing is patented by the inventors and thus becomes expensive to import under licence. However, adopting the minerals beneficiation strategy makes it easier for local fabrication experts to adapt the equipment for local use. This may entail reverse engineering of sophisticated equipment to reduce over reliance on expensive imported equipment. Given that initially the industry will be labour intensive with minimum automation, there will also be need for simplification of complex but relatively routine procedures.

The biggest benefits that come from diamond beneficiation lie in its ability to mobilize huge amounts of financial resources in a relatively short space of time. For a country like Zimbabwe that needs rehabilitation of old infrastructure and the development of new ones, this is a brilliant opportunity. Investments in infrastructure development, like better roads and facilities, are currently lagging and suffer from a dearth of resources. Instead of the country being loaned money by bilateral or multilateral institutions that levy punitive interest rates, we could encourage the development of a local savings fund for providing this financing at concessionary rates ensuring most of the benefits are internalized. The government envisaged Sovereign Wealth Fund could play as leading role in this while all companies involved in the diamond industry would be compelled to engage in extensive Corporate Social Responsibility (CSR) programmes that benefit local communities.

In all of this the livelihoods and standards of living improve from better jobs with more income. The diamond industry is amongst the highest paying in the world. Zimbabwe stands to benefit significantly if it can develop and adopt

Zimbabwe is a country of many “bests” from the best sight-seeing events, resorts and wildlife sanctuaries, weather and climatic conditions, hospitality and cultural heritage sites, to possessing some of the worlds bests in minerals exploitation (think platinum, gold, diamonds, asbestos, nickel, chrome, tungsten, coal, natural gas, iron over and above the some of the world’s most literate and easily trainable workforce. Useful side-stream benefits to a robust local diamond beneficiation industry would be increased international visibility of the country as it gains prominence as a safe tourist destination. This could lead to a rise in “Economic-tourism” whereby there are increased tourist arrivals by buyers. Concurrently there will be a growth of valuable local brands since most people in the world associate diamonds and diamond jewellery as the embodiment of wealth and luxurious living.

On the other hand, while the mining sector gives many tax incentives in order to encourage investments in this capital intensive industry, the government still stands to benefit from improved performance of various other fiscal measures. The government can better collect more taxes from numerous tax heads thereby widening the tax base; rather than over reliance on mineral royalties and licencing fees which constitute an important but minor contribution to State revenue. The following are the various taxes: Value Added Tax (VAT) from manufacturing value addition (MVA) processes; Pay-As-Earn (PAYE) and Social Security Contributions like NSSA and the AIDS levy which stand to benefit positively from the anticipated increased employment levels. The government also stands to benefit from various other income taxes e.g. corporate tax, capital gains tax, windfall tax, improved reported profits and dividends coming from enhanced profitability of local companies. This not only increases retention of more value locally but also leads to higher forex earnings from export of more valuable products.

Other downstream industries that will also grow in tandem with local minerals beneficiation include real estate, financial services, retail shops, motor vehicle manufacturing and sales, education, construction, research and development industries.  This entails useful parallel developments like the inclusion of the informal sector into mainstream economy due to companies increasingly sourcing for services locally, thereby improving sustainability of SMEs.

The table list below demonstrates diamond industry value sharing ratios:

Diamond industry value sharing ratios

Segment of Value Chain	Approx. value of global industry as at 2013	Zimbabwe makes	Total value added for stage (globally)
Rough diamond	US$18 billion	US$664 million	---
Jewellery making	US$54 billion	Unknown	US$25 billion
Retail sales	US$79 billion	Unknown	US$25 billion

Source: Adapted from DeBeers (2014), McKinsey & Company (2014), Bain and Company (2013) and National Budget (2014)

The table above shows that while diamond producing companies globally shared only US$18 billion that was made from the sale of rough diamonds, those countries which engaged in diamond jewellery manufacturing and retail shared a windfall of over US$50 billion. This aptly  demonstrates that the while possession of the diamond mining claims and producing the actual rough diamonds counts for a lot, it does not come close in terms of earnings potential to manufacturing value added jewellery. The critical two most valuable stages which produce the greatest value are the diamond jewellery making and retail segments, the subsequent value addition stages in the diamond value chain. The tragedy for Zimbabwe is also that the worth of its jewellery industry is unknown, leaving room open to under declaration of production.

In conclusion, it can be seen that although producing rough diamonds is an important source of competitive advantage, on its own it is inadequate to harness the full value of the diamond. It becomes necessary to add value to the raw mineral through beneficiating it into other useful finished products and goods. These finished goods are more valuable than the primary mineral, accounting for over 60 per cent of the global value added in the whole process. Therefore, beneficiation is seen to have significance for Zimbabwe. It helps the country earn the maximum obtainable value of the diamond and retain the same locally through various interventions like increased employment, higher tax collections, skills development, technology transfer, infrastructural developments, intergenerational wealth transfer and finally improved standards of living through sustainable natural resource exploitation.

The Prospects for Zimbabwe

Fortunately, private sector companies like the Zimbabwe Diamond Center have demonstrated leadership and visionary foresight by making headway to initiate diamond beneficiation in Zimbabwe. The Centre has developed a model which can both be adopted and adapted by government authorities when they consider it prudent to take up the issue seriously. The Center   proposes to set up a world class and outward focused export oriented diamond cutting and polishing industry in Zimbabwe. Initially it has planned a rollout of 500 factories countrywide, each with the potential to employ upwards of 240 staff of cutters and polishers, translating to 120,000 direct jobs created by one organisation focusing on one mineral alone. The multiplier effect scenarios mean a potential full employment situation in Zimbabwe, a feat that can be easily achieved given the relatively high levels of education of its labour force and economic sophistication.

On the ground currently the Center has both infrastructure and equipment that can be used to initiate a comprehensively robust beneficiation strategy. There is factory and office space adequate to accommodate 38 companies at any one time for the purposes of conducting viewing and auctioning of diamonds and diamond products. The Diamond Center also boasts of a secure multi-purpose self contained business center with all the required amenities associated with diamond trading: banking halls, insurance facilities, courier services, office space, jewellery retail space, convenience stores, and leisure facilities.

Zimbabwean diamond mines consolidation and the impact on accountability, transparency, shareholding and government revenue

Zimbabwe continues to face unique challenges in its diamond mining sector. Presently serious challenges pertaining to falling productivity have been haunting government until it resolved to consolidate the six or so diamond mining companies in the country into one. Other more important challenges include the lack of clear, transparent and accountable mining and revenue reporting practices. Hence government is now demanding more from diamond miners than before.

I would expect that the move to consolidate diamond mining companies into one will bring about numerous benefits to both the government and to the diamond miners.

Accountability and transparency, would naturally improve because monitoring would be simplified, since there will be one company which will be responsible and answerable to government for diamond mining productivity and revenues. The current situation where each company has its own separate and independent accountability mechanisms (principally to its shareholders - whomever they may be) means that the government and the general public cannot keep track of the goings on in these companies. This is despite the fact that government typically owns more than 50% of the shares in each of these companies, through its ZMDC, by virtue of its ownership of the minerals (which it holds in trust and on behalf of the generality of Zimbabweans).

The multiplicity of players in the diamond mining sector makes it difficult to keep track of each of them, or to exact effective productivity and performance demands/targets from them. The easiest excuses which can be given for low/poor productivity or the low revenue remittances to government would be that: "our mining claim has run out of rich veins of diamond ore (hence our low productivity), we do not have access to capital to do deep hard rock underground mining, or that our revenues are tied up (just like what recently happened after the diamond seizure fiasco in Belgium).

On the issue of shareholding, I would not expect much to change since the law says that government or indigenous Zimbabweans "MUST OWN AT LEAST 51%" of any company involved in or intending to do diamond mining in the country. Perhaps the only issue may be that pertaining to how the various former foreign owners will share their 49% (the maximum which foreigners can own in the mining sector anyway). However, this could be resolved easily by first ascertaining the actual value of investments made, knowledge contributed, equipment at hand and other unique assets held (e.g. intellectual property and or patented technologies/procedures) and then incorporating these values into the final ownership formula (which can typically be computed easily through standard/normal business accounting methods). 

However, the issue of shareholding formulas is (should not be) not the most challenging proposition if the various companies/investors are genuinely interested in diamond mining or mining of any sort in Zimbabwe, because its not really about the percentage of the company they own but rather the value of whatever shares they do hold. For example owning 1% of a very big company is much better than owning 30% of a very small company (I would expect this to be common sense to a serious miner).

The consolidation exercise will also reveal the genuine miners and expose those who have for long been holding on to mining and mineral rights for principally speculative purposes. The speculators would lose out because if you have not put in any money, you must not expect anything in turn (this is a sensible and simple proposition - NO TO SPECULATION).

Then on the final matter of revenue collection (I am assuming this relates to government revenues), the current review of the Zimbabwean mining and minerals tax regime can go a long way in resolving just how the Zimbabwean government van benefit by way of both tax revenues as well as proceeds from the equity held. The Mines and Minerals Act amendment can also go a long way to highlighting just what the government expects from the diamond mining (and by extension precious minerals sector) by way of revenues, in a legal format. The piece meal approach of commandeering revenues from the Zimbabwe Minerals Development Corporation and the Minerals Marketing Corporation of Zimbabwe (i.e. ZMDC and MMCZ) proved inefficient and inadequate to resolve, with finality, issues to do with government revenue needs from the diamond minerals resource (an indeed from the mining sector in general).

Opportunities and Prospects from the Diamond Sector

There are many opportunities which the Zimbabwean Government can harness with respect to revenue collection in the diamond sector. Particularly by advocating for, legislating for and actually conducting more MINERALS BENEFICIATION in the diamond sector government can radically increase the revenues collected from diamonds. Government need not necessarily do this by itself, but rather it must provide a conducive environment in which private players can exploit the potentially lucrative investment options. At the very least government can partner with private players, especially given that the Joint Ventures Bill has been finalised. The much famed 3Ps (i.e. Public--Private-Partnerships) can be used for this worthy cause. Government should give space to serious investors who intend to grow the value from diamond through investing in beneficiation processes. It must also provide legislation protecting and supporting those wishing to invest in these typically capital and knowledge intensive ventures.

There are also many other positive spin-offs which can be acquired from this simple tactic - such as introduction of improved technologies, skills development, economic tourism, infrastructure development, modernization of legislation and human capacity development. More importantly, opportunities abound in industrialization and growth of high tech industries in the country and generally an improvement in the standards of living of the local population.

In the final analysis, diamond mining should not really be the only problem which we should be focusing on, rather we should concentrate in building our capacities so that we would continue to have revenue flows from the country's rich mineral endowment into the future and to achieve inter-generational equity through savings in the Sovereign Wealth Fund (i.e. even many more years after the mineral has been exhausted).