Government is looking to hold its own diamond auctions for international buyers later this year, in a move aimed at cutting out expensive middle-men.
The Zimbabwean government is looking to hold its own diamond auctions for international buyers later this year, in a move aimed at cutting out the need to hire expensive middlemen.
The Mail & Guardian has information from authoritative sources in the diamond industry that anxiety gripped government and mines ministry officials in March after Global Diamond Tenders, a Dubai-based company hired to facilitate the sale of Zimbabwe’s diamonds, failed to timeously remit revenue generated from the sale of diamonds at the Dubai Diamond Exchange.
Official government figures show that the country was to pocket nearly $29.3-million from the sale of its Marange gemstones, but only received the total payment at the end of April – nearly 30 days after the auction was held.
The sources also said the delay in payment was because of a three-day delay in announcing the tender process.
“This delay has had a negative effect on companies because they were expecting payment immediately after the sale,” said Mark Mabhudhu, the acting chief executive of Marange Resources. “Usually the payments should come after a few days like what happened with the Antwerp, Belgium tenders, but this one took a month.”
In its official response, Global Diamond Tenders apologised to the state and diamond mining companies in Marange, explaining that it had problems in transferring the funds.
Unhappiness with Dubai-based company
The response, however, has not soothed the government’s anger over the auctioneer’s conduct, and there are strong indications from top government mining officials that Global Diamond Tenders may not be hired to conduct future auctions on Zimbabwe’s behalf in Dubai.
In an interview with the M&G this week, Walter Chidakwha, the mines and mining development minister, confirmed his ministry’s unhappiness with Global Diamond Tenders.
“As things stand we are going to be doing a rethink of whether we will use that company or not [again],” said Chidakwha.
On its website, Global Diamond Tenders prides itself on managing director Neil Haddock’s 25 years of experience in the diamond industry and says it has a strong business portfolio in diamond-trading nations such as Namibia, Botswana, Angola and the Democratic Republic of Congo.
A source in Dubai said Haddock had allegedly been paid $580 000 for handling Zimbabwe’s diamond auction in Dubai. Chidakwha would not reveal the exact amount paid to Haddock, but said the contract involved 1% from the buyer and 1% from the seller being remitted to Global Diamond Tenders.
“In the long run the idea is to do away with these middlemen, as they charge us a handling fee. The Antwerp fees were more expensive than Dubai, but we need a facilitator to help with securing dates on the international calendar for a slot when it is less busy,” said Chidakwha.
“The route that we want to take is having our own auctions, which will probably be [held] around July or August. The auctions in Dubai and possibly Shanghai will continue, and these for us will be a learning curve as to how to build capacity for our own auctions.”
In December last year and February this year, Zimbabwe held diamond auctions in Antwerp that were facilitated by First Element, a diamond trading company registered in Botswana.
With the ongoing displeasure with Global Diamond Tenders, Saidex Belgium, which has operations in South Africa, Belgium and Dubai, is now understood to be angling to replace the company as the facilitator for Zimbabwe’s future diamond auctions in Dubai. Saidex has also mooted plans to set up a diamond exchange in Harare.
In a proposal letter written to Francis Gudyanga, the permanent secretary in the mines ministry, by Frits Visser, the director of Saidex Belgium, which the M&G has seen, the diamond trading firm outlined its vision to establish a diamond exchange in Harare.
This will include running a dual tender system in Antwerp and Dubai handled by the Saidex Belgium subsidiaries every fortnight so as to market Harare’s gems, and switching the tender process to Harare after six to eight months to woo regional and international contacts made at the Antwerp and Dubai auctions.