Mpofu’s statement said that over 11 million carats of raw diamonds had been extracted from the Marange diamond fields over the past five years. Total sales were pegged at just $18 dollars per carat in 2009 which suggested that the total value of raw diamond sales was just over $200 million dollars.
The Minister further stated that total payments to the Exchequer had been just over $174 million in the same period. According to Cross, this statement imputed that the miners had paid out most of the money earned from the sale of diamonds and that the figures bore little or no relationship to reality.
Marange history
In his presentation to parliament, Cross outlined the history of the Marange diamond fields, including the formation of the London-based company, African Consolidated Resources, that registered a number of claims over a selected portion of the diamond fields in June 2006. As part of the registration process, ACR was obliged to declare their findings and, because the find included gem quality diamonds, they notified the Ministry of Mines.
Three months later, understanding the significance of the discovery, ACR proposed a similar arrangement to the Ministry of Mines for the exploitation of the fields as that used in Botswana through the Joint Venture between the State and De Beers mining company. In their proposal ACR suggested that a new company be formed with the equity held by both the government of Zimbabwe and ACR in the ratio of 50/50 – with ACR being responsible for management and all mining activities. Such an arrangement would have meant that over 70 per cent of the revenues from the diamond fields would have accrued to the government.
For unknown reasons, this proposal was rejected by the Ministry of Mines and ACR was forcibly removed from the claims which were then taken over by the Zimbabwe Mining Development Corporation, even though they had no expertise or the required capital to exploit the discovery. The Ministry immediately opened up the area to small scale miners without restriction.
Informal mining
The people of the Marange District and many others took up this opportunity, discovered that alluvial diamonds had real value and a huge expansion of informal diamond mining activity began. At one stage it was estimated that many thousands of illegal miners were operating in the Marange fields. A very substantial industry sprang up in nearby Mozambique to manage the sale and distribution of the growing supply of raw diamonds from Marange.
In late 2008, a military operation was mounted during which several hundred people were killed and thousands of local diamond miners driven off the claims. This exercise was carefully and ruthlessly carried out and was designed to restore State control over the fields.
The big six
The legal rights of ACR were brushed aside and in the ensuing period, six groups have been permitted by the authorities to start formal mining and extraction activities on the deposits. The six groups permitted on site are the following:
Mbada Diamonds
Anjin/Zimbabwe National Army
Marange Resources (ZMDC and formally Canadile)
The Zimbabwe Republic Police
The Central Intelligence Organisation
The National Prison Service
Of this list only Canadile has had its rights revoked for reasons that are still unclear. Their claims are being mined by the ZMDC under the auspices of the company, Marange Resources. All the other listed organisations are active on the diamond fields although the relative richness of the individual field allocations vary a great deal from place to place. Marange Resources and Mbada Diamond occupy the original claims registered by ACR in 2006.
The activities of these groups on site remain clouded in secrecy and it is clear that no accurate consolidated figures of production exist for the area. However, the statement by the Minister that output in 2010 rose to 8, 5 million carats gives some idea of the magnitude of this operation. That is equal to 23 000 carats a day and this confirms the view that Marange is now one of the largest finds in the global diamond industry for the past century.
Clouded in secrecy
Cross gave details of his own investigations which suggests that diamond extraction from the alluvial deposits at Marange within the area of the ACR claims are averaging approximately 20 carats per tonne of ore processed. It is estimated by seasoned observers that a million tonnes of ore had been processed by the miners in the period up to the end of 2009 and if the figure of 20 carats per tonne are extrapolated across the field, then 20 million carats have been extracted since the discovery in 2006. This is double the figure provided by Mpofu.
Data actually available suggests that output from the Mbada claims has been running at 150 tonnes of ore per hour since new equipment was installed in 2009. This amounts to over 1 million tonnes of ore per annum. At 20 carats per tonne this is equal to 20 million carats – two and half times the volume declared by the Minister for 2010 and this estimate ignores the production of the other five claims and the hundreds of informal sector miners that are still operating in the area.
Published sales figures for other diamond mining activities in the region suggest that the average value of raw diamonds extracted from Marange should be about $67 per carat, based on the actual ratio of industrial gems to gem quality stones being extracted from the claims. From the data that Cross has gathered, the Mbada claims are running at 15 per cent good quality gem stones, 85 per cent industrial diamonds. The average price achieved on gem stones was $350 in 2010 while industrial diamonds realised between $31 and $3 a carat.
Discrepancy in figures
According to Mpofu’s figures for diamonds mined in 2010 at Marange at the average price of $67 per carat rather than the figures he provided, then the actual value of raw diamond sales from Marange in 2010 were $563 million dollars, not the stated $200 million. Payments to the fiscus therefore represented only 30 per cent of the diamonds officially produced and sold in 2010. If those average prices are compared to the unofficial estimates for the Mbada claims only, then the figure for actual raw diamond sales in 2010 for Mbada is $1,4 billion. It is likely that this level of output is being maintained in 2011 and industry sources confirm this, in fact since 2010 raw diamond prices have risen 20 per cent and therefore output in the current year from the Mbada operations should be $1,7 billion dollars.
Although no accurate information is available from the other operators, it is clear that the Anjin operations are either equal to or even greater than the Mbada operations. If this is true then we could be looking at annual sales from these three operators of over $4 billion dollars at present.
Cross concluded that it was clear from these figures that the Minister of Mines had misled the government on the issue of the magnitude and value of diamond sales from the Marange fields. If it is understood that these estimates represent only the formal mining activity on site, then adding to this the estimates of informal sector activity before the March 2008 military operation and afterwards, would produce a source of funds in Zimbabwe, under Zimbabwean control and management, that is sufficient to transform State coffers and pay Civil Servants the kind of salaries they have been demanding.
Parallel govt
Instead of this, Zimbabwe has a host of illegal miners and traders operating in Mozambique and in South Africa, extracting and trading diamonds to their own benefit and to the benefit of unknown political and military figures in Zimbabwe. This is more than enough money to finance the “Parallel Government” that has been talked about in recent months.
Cross then made reference to the astonishing revelations exposed by the BBC Panorama Programme of the human rights abuses taking place at Marange. In a detailed and well researched programme they expose killings, rape and torture over the past four years. There can be little doubt that this has blown Zimbabwe’s admission to the Kimberly Process right out of the water, and we deserve to be excluded so long as we do not get our house in order.
The solution
As a solution to the Marange problem Cross said that the proposal made to Cabinet last year that the whole of the Marange deposits should be nationalised and brought under government control be enforced. He said that everyone who is currently on site extracting diamonds formally and informally must be removed, the area fenced and guarded by the armed forces.
Cross suggested that once this was achieved then the government could go out to international tender for an operator. Such a tender would state the condition of the resource, the type of geological formations that are found on site and other particulars. It would ask for offers to take over the whole operation in partnership with the government of Zimbabwe and the Marange community and put forward their proposals for operating and financial conditions.
The successful company should then be allowed on site, take over all operations and begin to extract diamonds in a transparent and properly controlled way. Such raw diamonds would be sold at public auctions and the proceeds dealt with in terms of the contracts.
In Botswana, where similar conditions prevail in the diamond industry, over two thirds of all revenue from the sale of raw diamonds accrues to the State.
Cross concluded by urging all MPs to support his motion and ensure that the Executive carries out the recommended intervention.
Post published in: News