British investors interested in the local diamond industry have to consult the embassy in Harare for advice as the sector is politically sensitive, a new report has warned.
Zimbabwe is scrounging for investors in the diamond sector to do cutting and polishing of the gems as part of its value addition thrust.
In a monthly report for June, the British Embassy in Harare said while the country has offered a favourable investment climate, potential investors in the diamond sector needed to contact the embassy first.
“The diamond sector is particularly politically sensitive, within Zimbabwe and internationally. Investors interested in the sector are advised to contact our embassy in Harare to discuss the issues,” the embassy said.
It said annual diamond output eased to 9,6 million carats in 2013 from 12 million carats in 2012.
Zimbabwe’s diamonds were in two forms — kimberlite and alluvial.
The World Bank 2012 scenario study estimated that with no major investment, kimberlite production was expected to remain at the current level of 565 000 carats to 2018. However, in more favourable policy conditions, an investment of $100 million could result in production of 1 million carats per year, the World Bank said. It said investment in the sector was expected to reduce operating costs to $60 from $100 per carat.
The embassy said the discovery of alluvial diamonds in Marange in 2006 led to a chaotic “diamond rush”.
This was followed by controversial State involvement to regularise extraction through the creation of joint ventures with the Zimbabwe Mining Development Corporation.
“This period was tarnished by widespread allegations of human rights abuses (more information available on request). Due to secrecy around Marange mining, production figures could be higher than the official figures,” it said.
Despite high output from Marange diamonds, no revenue trickled into Treasury coffers. During the tenure of the inclusive government, then Finance minister Tendai Biti accused a coterie of individuals of helping themselves to the Marange diamonds.
Mines and Mining Development minister Walter Chidakwa has proposed the amalgamation of the country’s diamond producers to bring transparency in the sector.