HARARE – Zimbabwe has slashed royalties for its diamond mines to 10 percent of gross revenue, from 15 percent, as it moves to encourage higher output.
The southern African country is targeting to ramp up diamond production from 3,2 million carats to 6 million carats by end of 2023 after the country launched a diamond mining policy recently.
Diamonds are a critical component of Zimbabwe’s plans to grow the mining sector into a US$12 billion industry by 2023 with revenue from exporting the precious mineral set to hit US$1 billion.
The diamond industry has since the turn of the century been characterised by mining, organised or informally, of alluvial gems in the Chiadzwa area of Manicaland Province.
Following the diamond rush of 2006, the Government moved in to restore order using then State-owned Zimbabwe Mining Development Corporation (ZMDC) to partner private players.
A total of seven companies, namely Marange Resources, Anjin Investments, Diamond Mining Company, Gyn Nyame Resources, Jinan Mining, Kusena Diamonds and Mbada Diamonds were given licences.
ZMDC was then renamed Zimbabwe Consolidated Diamond Company (ZCDC) in 2016 after Government consolidated the mines amid serious concerns over transparency in the mining of diamonds in Chiadzwa with Treasury receiving paltry inflows.
This was despite the fact that the Government was an equal shareholder in each of the diamond mining entities, but after consolidation of the mines, most surface diamonds got depleted and whoever mines gems in the area must invest in deep mining.
Presenting the 2020 National Budget, Finance and Economic Development Minister Professor Mthuli Ncube said that diamond miners are now exploiting deep-lying conglomerate deposits, hence the cost of extraction has significantly increased.
“In order to promote investment in exploration and extraction, I propose to review the royalty on diamond from 15 percent to 10 percent of gross revenue, with effective from 1 January, 2020,” he said.
Following the consolidation of the seven companies in 2006, and two consecutive years of exclusively Government-dominated diamond mining, the Government completed a diamond mining policy this year and re- opened the sector to private players.
The new policy streamlined the mining of diamonds to only four players, namely State-owned ZCDC, Russia and global diamond mining giant Alrosa, Chinese firm Anjin and gold miner RioZim’s Murowa.
However, two additional diamond miners are expected to be announced by December this year that will undertake gem production in partnership with ZCDC.
In terms of those that have already been licensed, Anjin is expected to start production by December this year while Alrosa will commence exploration by January 2020. A roadmap for the growth of Zimbabwe’s US$12 billion mining industry says the country will establish a gemmology centre for cutting and polishing diamonds and a value management centre for cleaning and sorting the gems to enhance their market value.