Zim not going back on diamond merger

Zim not going back on diamond merger
Published: 23 June 2015
Government will proceed with plans to consolidate diamond mining operations in the country despite facing resistance from certain diamond mining companies who up to now are still to make a decision on the new venture.

Mines and Mining Development Minister Walter Chidhakwa last week said there was no going back on the consolidation and diamond mining companies should consider hastening their decision-making processes. He said there could be resistance and anger within the diamond mining community but the right thing must be done for the benefit of the country.

"We need huge investment in the diamond mining sector to ensure extensive mining of kimberlite but the decision-making among companies in the sub-sector is proving difficult.

"I am sure they are failing to come to terms with a situation where they will be sharing the same cake. On our part we are going to proceed with this new venture and I want it known that we are not going back and that is final," said Minister Chidhakwa.

He said consolidation ensures that the country has better capacity to explore and develop its mineral resources.

"We need to create a dominant player in the diamond sector and, more importantly, the value chain. You can never go onto the international market without a big player on your side. There are five in the world currently; we need to create our own," said Minister Chidhakwa.

Government this year instructed diamond mining companies to merge including Rio Tinto's Murowa Diamonds and form one company under a two-phased programme expected to optimise earnings by cutting the long chain of players extracting stones. The new structure will see Government controlling 50 percent of the entity while operating companies will share the remainder based on the capital they have invested.

In Botswana, the government and global mining giant De Beers operate a 50-50 joint venture, Debswana, which has grown into the world's largest diamond producer by value.

In Russia, seven companies merged under the banner of Alrosa, now the leading international diamond producer by volume. Experiences in Russia and Botswana prove that engaging fewer diamond mining players refocuses attention to production.

Alrosa comprises different shareholders including the Russian Federation. Municipal districts, individual companies and legal entities are also co-owners. The company accounts for the highest diamond volumes in the world and produced 33 million carats in 2013.

Under the new arrangement in Chiadzwa, Marange Resources, Gye Nyame and Kusena Diamonds whose single portfolio has already been created, will be the first to be amalgamated. The second stage will merge Mbada Diamonds, Anjin Investments, Jinan and Diamond Mining Corporation.

- herald
Tags: Diamonds,

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