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Zimbabwe Looks to Reform Marange Sales

State mining company revamps operations at controversial deposit.
Apr 10, 2018 7:30 AM   By Joshua Freedman
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RAPAPORT...
Zimbabwe’s state diamond company is planning to introduce contract sales as part of a strategy to revive operations and bring greater transparency at the controversial Marange fields.

The Zimbabwe Consolidated Diamond Company (ZCDC) resumed its tender sales in the first quarter of this year after suspending trading for nine 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 of transparency and accountability in the operations of former mining companies in Chiadzwa, did not renew the special grants of mining companies operating in Chiadzwa and Chimanimani,” Mpofu explained. “Chief among [the] government’s concerns was the failure of diamond mining companies to fully declare and account for diamond revenues and profits.”

Former Zimbabwe President Robert Mugabe, who was ousted in November, claimed government had received little more than $2 billion in diamond revenue, whereas an estimated $15 billion was generated while those companies operated at Marange.

The ZCDC consequently carried out a review of the country’s diamond production, concluding that the sector was undervalued due to inefficiencies in post-mining stages such as diamond cleaning, sorting, valuation and sales.

While addressing those issues, the ZCDC recovered 1.8 million carats of rough diamonds from Marange in 2017. It started selling its 1.6 million carat stockpile via tenders in Harare, with the goods valued at between $50 and $75 per carat, Mpofu added. The company is planning production 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 continues 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.
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Tags: Alrosa, Chiadzwa, Chimanimani, De Beers, Joshua Freedman, Marange, mining, Moris Mpofu, Rapaport News, ZCDC, Zimbabwe, Zimbabwe Consolidated Diamond Company
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