Zimbabwe Looks to Reform Marange Sales

RAPAPORT...Zimbabwe's state diamond company is planning to introducecontract sales as part of a strategy to revive operations and bring greatertransparency at the controversial Marange fields. The Zimbabwe Consolidated Diamond Company (ZCDC) resumedits tender sales in the first quarter of this year after suspending trading fornine months to get its house in order. While periodic tenders are planned for the remainder of 2018 and next year, the ZCDC will move toward a contract sales model in line with the general trend in diamond marketing, CEO Moris Mpofu said in an email to Rapaport News.Mpofu took over as ZCDC CEO in March 2017, a year after the government cancelled the licenses of foreign companies mining the seven concessions that make up the diamond fields. Today, there are no other companies operating in Marange, he stressed. "[The] government, on realizing that there was lack oftransparency and accountability in the operations of former mining companies inChiadzwa, did not renew the special grants of mining companies operating inChiadzwa and Chimanimani," Mpofu explained. "Chief among [the] government'sconcerns was the failure of diamond mining companies to fully declare andaccount for diamond revenues and profits." Former Zimbabwe President Robert Mugabe, who was oustedin November, claimed government had received little more than $2 billion in diamond revenue, whereas an estimated $15billion was generated while those companiesoperated at Marange. The ZCDC consequently carried out a review of thecountry's diamond production, concluding that the sector was undervalued due toinefficiencies in post-mining stages such as diamond cleaning, sorting,valuation and sales. While addressing those issues, the ZCDC recovered 1.8million carats of rough diamonds from Marange in 2017. It started selling its 1.6million carat stockpile via tenders in Harare, with the goodsvalued at between $50 and $75 per carat, Mpofu added. The company is planningproduction of 3 million carats in 2018.Zimbabwe's diamond exports have fluctuated in the past decade as the country battled sanctions and allegations that its diamond production was stained by human-rights violations. Security forces killed more than 200 illegal workers at Marange in 2008, when the government first took control of the fields, according to a Human Rights Watch report at the time.That led the Kimberley Process to suspend its certification of exports from the area, although the ban was lifted in 2011. The US and the European Union continue to boycott diamonds from the deposit.Mpofu said the ZCDC was established in July 2015 to achieve better responsibility, accountability and transparency at its operations. In addition to Marange, which is located in the Chioadzwa region, the ZCDC operates Portal E in Chimanimani, and is carrying out exploration in other areas around the country, the company explained. The ZCDC aims to increase its investment in mining, and seek new sources of diamonds, since its alluvial deposits at Marange have largely been depleted. The company's focus at the fields is currently on "conglomerate" mining - a higher-value operation that involves treating hard rock, and it has invested in a new processing plant that, it expects, will enable it to mine a larger volume of ore per hour, Mpofu said.