Zimbabwe's opposition party claims that illegal trading is costing the country billions.
Campaigns to nationalise Zimbabwe’s resources are normally associated with Zanu-PF. But amid a spike in foreign interest in the country’s diamond wealth, it is the opposition Movement for Democratic Change (MDC) that now wants alluvial diamonds nationalised to protect the industry from looters.
Eddie Cross, a senior economic adviser to Prime Minister Morgan Tsvangirai and an MDC MP, has controversially proposed that all alluvial diamond deposits be taken from private, mainly Chinese, investors and handed to the state.
Zimbabwe’s diamond wealth could be worth as much as $70-billion and, his party estimates, is able to produce $4-billion each year. But the country is receiving only a fraction of this as the companies licensed to mine diamonds in the Marange fields are declaring much less than they are making, according to Cross.
The MDC has control of most economic ministries, including the treasury, but it has been kept in the dark about how the diamond money is being handled.
“The solution to all of this is a proposal made to Cabinet last year that the whole of the Marange deposits should be nationalised formally and brought under government control,” said Cross. “Everyone who is currently on site extracting diamonds formally and informally must be removed, the area fenced and guarded by the armed forces.”
Zanu-PF has reacted angrily to the proposal. “I will not allow him to destroy the mining sector with such strange ideas,” Mines Minister Obert Mpofu said. If the MDC persisted with it, he said, Zanu-PF would push for the nationalisation of the entire mining industry.
The MDC said senior Zanu-PF officials were opposed to the proposal because they were enriching themselves by making private deals with foreign miners in exchange for rights to the fields and protection.
The government has controversially granted licences to at least three companies owned by the country’s intelligence agency, the police force and the prisons service. The companies were formed specifically to extract diamonds from Marange.
State of the coalition
In a recent report to South African President Jacob Zuma on the state of the coalition, the party said it feared the security forces were using diamond money to fund repression.
Since a decision by the Kimberley Process certification scheme allowing trade in Marange diamonds, Indian buyers and miners from China have been descending on Zimbabwe.
Prince Mupazviriho, secretary for mines, said fresh groups of foreign investors had recently signed agreements for access to diamond mining and processing.
“We signed transactions estimated at between $700-million and $750-million with investors eager to do mineral extraction and beneficiation,” he said.
But Western buyers remain opposed to the Marange diamonds, which, they claim, are tainted by rights abuses. Global diamond trade network RapNet has warned its members against buying Marange diamonds, and De Beers has said it will not buy the stones, which, it says, are of poor quality.
The government admits it is still to secure the fields, which have been overrun by thousands of illegal miners and dealers.
“There are massive leakages at the border posts, but policing of the border is not the responsibility of the mines ministry. We believe our diamonds are being clandestinely smuggled out of the country,” Mpofu said.
Following the Kimberley decision Mpofu declared that Zimbabwe would never beg again. “We are going to shock the world. We are going to unleash our worth.”
But critics say the country is not realising the full potential of its diamond wealth.
Finance Minister Tendai Biti has complained that a total of $300-million from diamond sales remains missing. Zimbabwe has a diamond stockpile of 4.5-million carats, worth $2-billion, that is ready for sale. Biti has had to revise the $3.4-billion budget for 2012 to account for the potential diamond windfall. But the cloud over the accounting of the diamonds puts this in doubt.
An auction of 900 000 carats, worth $45-million, that attracted buyers from around the world last year, had left the government with only a third of the proceeds, said Biti.
Moses Mare, a member of a Parliament committee on mines, said the state-run Zimbabwe Mining Development Corporation, one of several state companies mining the 600 000 hectare fields, was remitting just 10% of its Marange revenues.
“In some cases, the companies operating in Marange are in the hands of security forces and, therefore, it is impossible to have any kind of transparency and accountability,” said Mare.