Zimbabwe Independent: "Diamond Mines Merger a Mess"

Compliance
15/07/2016 09:39

The Zimbabwe Independent today published an opinion piece accusing the government and the Zimbabwe Consolidated Diamond Company (ZCDC) of everything from violation of property rights to compliance failures, lack of transparency and failing to meet promised revenue targets due to the very low prices received for their diamonds. Zimbabwe's, "ill-advised forced consolidation of Chiadzwa diamond mines in a brazen violation of property rights under the Zimbabwe Consolidated Diamond Company (ZCDC) is proving to be a fiasco as the new entity is making as low as $2.5 million a month instead of the promised $25 million, thus paltry remittances to government," writes the newspaper. "Informed sources said ZCDC is currently producing just 20% of its ambitious 500,000 carats monthly output target, bringing into sharp focus First Element Diamond Services which is marketing the country’s diamonds. This comes at a time recent diamond tenders are raising eyebrows because of uneconomically low prices of the gems."

The newspaper reports, "In May, Zimbabwe sold 140,000 carats for only $5 million amid claims Mines Minister Walter Chidhakwa and his permanent secretary Francis Gudyanga approved sales of the precious stones for as little as $25 per carat. The situation worsened in June as government sold 71,000 carats of diamonds for $1 million, averaging $14 per carat. The low prices being fetched by Zimbabwe’s Marange diamonds on the market remains questionable at a time global rough diamond prices have been steady after a 2015 slump." The accusations leveled against First Element, a company registered in Belgium, Botswana, South Africa and Dubai that cleans, markets and tenders Zimbabwe diamonds, are even sharper. "Sources close to the Botswana intelligence agency, the Directorate of Intelligence and Security Services, say First Element smuggled and undervalued millions worth of diamonds, prompting the Botswana government officials to end the company’s operations in the country. “It (First Element’s exit) was because of undervaluation and smuggling of diamonds, but the official word is they ran out of diamonds,” a Botswana intelligence source said.