LOCALLY-OWNED diamond polishing companies have raised concerns over the quality of gems delivered by local diamond companies for value addition, blighting hopes of increasing government revenue through beneficiation, NewsDay has learnt.
Report by Victoria Mtomba
Speaking at the AMH Conversations held recently Good Crew Investments chairman Joseph Sanhanga said the company set up a diamond polishing and cutting company in Chiadzwa hoping that they would be able to make money from polishing.
“We used $180 000 to set up the plant in Chiadzwa and spent $20 000 for the licence. We waited for six months before we received the first allocation of the diamonds. We received diamonds from Mbada, but they were of poor quality and were not polishable,” he said.
Sanhanga said the company was now in a difficult position as it had hired people from South Africa to come and work in Zimbabwe, but the business had failed to take off.
“Why cannot government look at the companies that are in the polishing and cutting business and give the firms grants where diamonds are found?” he said.
Zimbabwe is believed to hold 25% of the world’s alluvial diamonds. A comparison of Zimbabwe and Botswana diamond sectors by the Centre for Natural Resource Governance has shown that the way the two countries handled diamonds was different with Botswana having more regulation on diamonds compared to Zimbabwe.
The report showed that unlike Zimbabwe, Botswana has legislation such as the Precious and Semi Precious Stones Protection Act and the Diamond Cutting Act.
The Botswana law prohibited unlawful possession of rough diamonds and required submission to the minister responsible for minerals, monthly returns detailing precious stones won, recovered and received. The Diamond Cutting Act regulates the beneficiation of diamonds. This Act sets out how diamond–cutting licences can be obtained and the conditions that go with such licences.
Holders of the diamond cutting licence have to comply with the provisions of the Precious and Semi Precious Stones Act. Zimbabwe on the other hand uses the Zimbabwe Mines and Minerals Act, (Chapter 21:05, 1961), which is the principal Act governing the mineral sector. It defines minerals as any precious metal, precious stone, coal or base metal.
Recently appointed Finance minister Patrick Chinamasa bemoaned lack of transparency in the sector saying remittances from diamond mines remained low on the back of growing government expenditure.
The Zimbabwe Revenue Authority (Zimra) missed its quarterly revenue collection target weighed down by subdued mining royalties and declining industrial output.
In its revenue performance report for the third quarter ending September, the authority reported that collections amounted to $897,3 million against a target of $904,9 million, resulting in a negative variance of 1%.
While total income has marginally missed the target, recurrent expenditure has continued to gobble the trickling revenues, further limiting fiscal space.
Turning to mining royalties, the tax collector reported that third quarter collections stood at $39 million against a target of $63,7 million due to fluctuations in international prices of minerals.
The report further stated that royalties from diamonds were negatively affected by the placing of some diamond mining companies under sanctions.
Zimra, however, expressed optimism that the lifting of sanctions imposed by the European Union on State-owned mining arm Zimbabwe Mining Development Corporation would boost mining royalties.
The issue of royalties, generally seen as too high compared with regional peers, has been widely debated in the industry forcing government to consider revising them should mining companies beneficiate the minerals.