Developments in Zimbabwe’s fledgling diamond sector are a real circus and it continues to surprise many who would want to see its epilogue soon. Recent events that unfolded in the southern African country are a clear indication that something is terribly wrong with the way the diamond sector is being handled and for one to equate it to a circus is by no means mischievous.
First we were told that the Zimbabwean government had asked Mbada Diamond Mining Company and Canadile to stop mining operations at the controversial Marange diamond fields until they regularised their environmental issues. These firms were recently granted rights to mine the controversial diamonds in partnership with the government-owned Zimbabwe Mining Development Corporation (ZMDC).
This, of course, was in contempt of a High Court ruling that confirmed African Consolidated Resources (ACR), a London-listed company, as the rightful owner of the claims to Marange diamonds. Harare cancelled ACR’s concession in 2006, accusing it of having "improperly pegged and registered on land that had been reserved against prospecting and pegging."
Enough drama already! Before we even heard that Mbada and Canadile had been given the imprimatur to resume operations after regularizing their environmental issues, the world woke up to news (or should I say another circus) that Mbada was planning to auction 300 000 carats of diamonds it had mined from Marange.
The company’s chairman Robert Mhlanga even had the temerity to say that the sales were in compliance with the Kimberley Process Certification Scheme (KPCS). He went on to say that the Minerals Marketing Corporation of Zimbabwe (MMCZ), its partner, ZMDC and the police were involved in the sale.
“The entire process of mining, transportation to marketing is being done in compliance with the requirements of the Kimberley Process Certification Scheme. The sales and marketing offices are jointly manned and controlled by teams from both government and Mbada Diamonds,” he claimed.
However, controversy (reads circus) came as it emerged that the company had not adequately informed its partners, government officials and even KPCS about the planned auction. It also emerged that no diamond export monitor was available to oversee the auctioning of the gems as required by KPCS regulations. Media reports quoted Mines secretary Thankful Musukutwa as saying that the Zimbabwean government was not happy with the auction debacle. MMCZ, ZMDC, and the police also said they were surprised when they learned of the intended sale in a newspaper article.
As if that was not enough, the then acting Mines minister Emmerson Mnangagwa said he had learnt of the diamond sale like the rest of the public –– through media.
So the question left lingering in most people’s minds was who sanctioned the auction?
Getting that question answered proved difficult, as Mbada’s chairman had this to say to the inquisitive journalists: “I cannot comment after the permanent secretary has spoken.” Musukutwa who addressed the same press conference with Mbada’s chairman said the government, did not sanction the auction, adding that the announcement had caused “anxieties in various stakeholder communities”.
“The due process for selling diamonds produced in Zimbabwe involves the MMCZ, ZRP Minerals Unit, Ministry of Mines and Mining Development, and ZMDC where diamonds from Marange are concerned. In the case of Mbada Diamonds, this process is yet to happen,” he said.
So should one say Mbada was a delinquent child here? Of course, on face value it points out to that. How could it nakedly falsify information like that? How could Mbada made the world believe that the planned auction had met KPCS accepted standards? It is worth noting that Mbada is linked to South Africa’s New Reclamation, which is no stranger to controversy, the Zimbabwe Independent reports.
The weekly-tabloid noted that the scrap metal company (New Reclamation) was fined 146 million ZAR (19, 2 million USD) for its role in a national cartel, which allegedly fixed the price of ferrous and non-ferrous scrap metal products much to their benefit. New Reclamation was also linked to shady scrap metal deals at Zimbabwe Iron and Steel Company.
Media reports say if Mbada was allowed to go ahead with the auction, its valuations of the diamonds could have applied. This, the reports say, could have seen diamonds sold for trifle. Concerns were also raised over the security of the diamonds as they were flown in to the Harare International Airport from Chiadzwa without police supervision. Fears were that this created room for corruption by having some of the load diverted to other destinations before they reached the capital. Surely, the circus on Marange is yet to reach its epilogue. ACR has now been reduced to a reactionary force, as the Zimbabwean government and its Marange partners continues to mine the diamonds.
The firm has desperately approached Interpol to block the selling of the diamonds saying it was illegal. But the question is who is willing to listen to ACR? Even the European Union is said to have seconded a British diamond export monitor to Zimbabwe, who was however rejected by Harare. Forget the Zimbabwean government’s reaction to the European Union’s cherry-picked man, the fact that they were willing to send their person for six months to oversee the selling of Zimbabwe’s diamonds shows that it was legitimizing the mining and trading of gems from Marange, despite ACR’s growing tired cry for foul play.
It had also been of late trying to shrug-off reports by a web-based daily, The Insider, suggesting that its story had all the “ingredients of the murky world of diamonds”. The Insider claimed that diamonds in Marange were not discovered in 2006 when the chaos started as was widely touted, but were discovered four years earlier by De Beers. It argued that De Beers started prospecting for diamonds in Marange in 2001 through its subsidiary, which discovered alluvial diamonds in 2002. De Beers’ spokesman Tom Tweedy was quoted as saying that the company did not exploit the diamonds because it was interested in kimberlites not in alluvial diamonds.
“The highly unusual nature of this deposit (geologically) together with the presence of these alluvial diamonds in the Exclusive Prospecting Order (EPO) 1523 suggested that it would be prudent to understand the deposit geologically and investigate possible sources of these diamonds with reference to DEBZIM’s prospecting activities for kimberlites (not alluvial) in this EPO,” Tweedy was quoted as saying. The Insider went on to say that it appeared as if ACR kept an eagle eye on De Beers’ adventure in Zimbabwe, as it recruited a former De Beers geologist in October of the same year, who had had left the diamond giant in February 2006.
Struck with the fear of getting embroiled in the Marange scandal , Tweedy told The Insider that De Beers notified the Zimbabwean government in July 2006 that it was relinquishing its EPO though its license was due to expire in March 2007.
“The government put a reservation on the area and the ground reverted to the government,” Tweedy said. That was the end of their involvement with the EPO. So the departure of De Beers on the scene left ACR with a “free reign”, claimed the Insider.
ACR then went on to list on the London Stock Exchange’s Alternative Investment Market in June 2006 and then announced the “discovery” of Marange diamonds the following September, but lady lucky did not smile at them as the Zimbabwean government revoked their claim. To maintain the controversy high, ACR refuted the allegations made by The Insider regarding its involvement in the Marange diamond saga. ACR’s chief executive Andrew Cranswick maintained that their subsidiary discovered diamonds in Marange in 2006 and announced the discovery to both the Zimbabwe Mining Commissioner and to the LSE as required by law and regulations. “Were we the first to discover diamonds there? – I cannot make that assertion either way but at the time (September 2006) I certainly believed that De Beers’ Zimbabwe exploration subsidiary was Kimberlitic Searches.
They were active from the early 1990’s throughout Zim…as far as I am aware, such a discovery was not announced by De Beers…,” he said. “…I have no idea why De Beers did not develop the Marange Resource if they indeed knew about it…?” So the controversy continues, and it is not clear who indeed first discovered diamonds in Marange for De Beers and ACR seem to claim that they both made the discovery. Surely, one wonders what is yet to come as this circus unfolds. However, a solution should be found to the Zimbabwe diamonds, which have the potential to help end the country’s years of economic malaise. ACR’s boss made a very interesting revelation regarding the Marange diamonds. He said Marange was 37 times richer compared to Letsing mine in Lesotho. Cranswick added that the value of Letsing was 2 000 USD per 100 tonnes or 20 USD per tonne of ore, while that of Marange was 75 000 USD per 100 tonnes or 750 USD per tonne of ore.
So, with Marange promising, it would help if this circus reaches an epilogue soon. There is need for a clear way of handling the diamonds, for this madness of a company announcing an auction without the relevant authorities being adequately informed should be taken to the museum of shame and never should it be dusted back to life. The diamond industry deserves better.