Diamond Production
[Image Courtesy: The South Australian Globalist]

Zimbabwe is among the top diamond producers in the world and currently holds 25% of the world’s opencast diamond reserves. Despite having huge natural wealth, Zimbabwe has been struggling with unemployment and poverty due to corruption and exploitation by diamond mining companies.

Diamond Production
[Image Courtesy: New Zimbabwe, MBADA Diamonds]
MBADA diamonds – a joint venture between Grandwell Holdings and Zimbabwe Government, dismissed 240 employees last week. The dismissed workers were on strike demanding their unpaid eight months’ salary and better working conditions. MBADA had also fired hundreds of workers and slashed salary of others by 50% last year as a part of cost cutting initiative, as a result of drop in diamond production.

MBADA and other Marange diamond miners who are working in shallow lying alluvial soil deposits since 2009, have now exhausted the deposits and are in need to undertake expensive deep ground mining to continue operating. As a result Zimbabwe’s diamond production has been tumbling down for the past two years and diamond exports fell by 34% percent to 5.9 million carats.

The drop in production has also affected local diamond cutting industry workers. More than ten Zimbabwean diamond cutting and polishing companies have ceased operations because diamond miners didn’t supply them the promised rough diamonds. Diamond miners prefer foreign diamond processing centers over local players and export valuable diamonds to other destinations for valuation, grading and cutting. Local players are only supplied low grade diamonds which is not profitable to operate. To protect the interest of local players, Government had formulated a policy regulating diamond miners to process 10% of the diamonds mined by companies operating in Zimbabwe. But the policy can’t be enforced as the quantity of diamonds mined by companies is not known due to lack of transparency. According to a report published by Partnership Africa Canada, Zimbabwe had lost more than USD 770 million between 2008 to 2012 because of under-valuation and transfer pricing of diamonds.

The Zimbabwe Diamond Miners Workers Union (ZDMWU) which represents workers at the MBADA mine calls this dismissal as unlawful and has appealed to the National Employment Council for the mining industry. ZDMWU general secretary Justice Chinhema in an interview said “These companies are also trying to create commotion to use it as an excuse so that government abandons its plans to consolidate diamond mines”.

Diamond Production
[Source: http://www.kas.de/simbabwe/en/publications/41227/]
Since Zimbabwe Mine Minister Walter Chidhakwa assumed office, government is planning to consolidate country’s eight diamond companies into one organisation in which government would hold 51% share. The move is targeted to promote transparency, improve condition of workers and reduce widespread corruption which has been plaguing the Zimbabwe diamond industry. A recent investigation has revealed that senior government officers have looted over USD 3 billion worth of diamonds over the past years.

IMF has demoted Zimbabwe’s growth forecast to 2.8% from 3.2% due to underperformance in mining and agricultural sectors. Better governance is the need of the hour for Zimbabwe to realize the potential of its natural resources and improve its struggling economy.

 

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