Mining Company Mbada Adds Rough Pricing Scandal to Zimbabwe Diamond Woes

Mining and Exploration
16/01/2017 22:04

Mbada Diamonds could have denied Zimbabwe of millions of dollars in revenue by under-declaring its diamond sales over the years after it emerged that its average price per carat was about three times lower than that of other firms extracting gems from Chiadzwa, writes The Herald. The Zimbabwe government ordered seven mining firms, including Mbada, to cease operations in March 2016 as the State consolidated the companies into the Zimbabwe Consolidated Diamond Company (ZCDC). Mbada was then among three firms that resisted a forensic audit of its Chiadzwa diamond mining operations, forcing the State to invoke the Auditor-General's powers to proceed. Officials indicated that Mbada's average price was $23 per carat although the company was awarded claims with the best gems, while Jinan (another company that resisted audits) sold diamonds for an average of $89 per carat.

ZCDC acting CEO Dr. Ridge Nyashanu, was quoted as saying: "Anjin, when they sold, their average price per carat was $44, DMC (Diamond Mining Company) $46,66, DTZ (OZGEO) was at $49,42 and Jinan had the highest which is almost $89 per carat followed by Marange at $67,60 and the worst performer was Mbada at $23. When you look at Mbada, it had the highest gem and concentration ... which resulted in them having an average price of $23." He added, "To me, probably it's good reason for consolidation. You need transparency and you need to monitor what happens to your diamonds. It's the best concession yet with the worst result."

The underpricing scandal emerged during a tour of Marange diamond fields by the Parliamentary Portfolio Committee on Mines and Energy chaired by Cde Daniel Shumba. Cde Shumba said the committee's oversight function was not a witch-hunt, but sought to enhance opportunities for the country to benefit from its God-given resources. "In our oversight, our objective is not to witch-hunt but to further unlock value for Zimbabwe." 

In a related article, it is reported that outgoing United States President Barack Obama has extended sanctions against Zimbabwe by at least another year. This came as reports on Friday indicated that Obama's administration was set to ease sanctions against Sudan and broaden now limited talks with the long estranged African government. However, sanctions against Zimbabwe were to continue in "conformity with the Washington's national emergency policies". The US imposed sanctions against Zimbabwe in 2000, after they accused President Robert Mugabe of trampling on human rights, rigging elections and repression of press freedom - accusations that the veteran leader denied.