Diamonds in exchange of illegal arms and hard currency

By Owen Sithole

MUTARE – In 2018 campaign group Global Witness has said the report of Zimbabwe’s parliamentary enquiry into missing Chiadzwa diamond revenues detailed some of the hidden interests in the country’s multi-billion dollar diamond industry. Notably they said security services, had fundamental gaps but hinted that the mineral was being exchange for hard currency to strengthen the military and ruling party.

In a statement, Global Witness said despite the parliamentary committee hearing testimony from a procession of former government and security officials, there were serious gaps in the final report.

A document seen by Global Witness which campaigns against natural resource-related conflict, corruption and associated abuse said it  indicates that a company named “National Reconstruction Group (NRG) hid a stake, held by the ruling  Zanu PF in one of the diamond companies. Yet no mention was made of this during the enquiry.”

In September 2017, Global Witness reported that the Central Intelligence Organisation Zimbabwe’s spying agency held a secret stake in a diamond mining company named Kusena Diamonds.

The Chiadzwa diamond fields in Marange are located in the eastern part of Zimbabwe could be the country’s salvation.

Often described as the biggest diamond discovery of a generation in Zimbabwe – Chiadzwa undoubtedly put the country on the diamond map with market watching projecting that the country’s economy could be recording double digit growth had the mineral been mined in a transparent manner.

Chiadzwa, could have been the transformational vehicle through which the country turns around its failing economic fortunes, while also serving as an example to other African countries blessed with mineral riches.

But since its discovery in 2006, Marange’s potential has been overshadowed by violence, smuggling, corruption, and most of all, lost opportunity.

The scale of illegality is mind blowing. One confidential geologist report cited by the

August 2010 Kimberley Process Review Mission to Zimbabwe claimed “in excess of 10 000 000 carats have been removed by artisanal effort over the last three years”—an amount worth almost $600 000 000 at today’s depressed prices. The Review Mission also estimated illegal mining at 60,000 carats a month, ranking the illicit Marange trade at between 7th and 10th in overall world diamond production4

Hundreds of millions of dollars owed to Zimbabwe’s treasury have been lost in both illegal and legal trades. Determining the actual amount is impossible, but in February 2011 fiscal update the Finance Minister Tendai Biti complained US$300 million collected by Zimbabwean Minerals Development Corporation (ZMDC) and the Mineral Marketing Commission of Zimbabwe (MMCZ)—two parastatals had not arrived in state coffers.

Then there is the mysterious whereabouts of a 2,5 million carat stockpile that apparently disappeared following the controversial “Kinshasa Agreement” undertaken by the

Kimberley Process in November 2011. At least two KP sources admit the stockpile conservatively valued at almost $200 million was traded during the embargoed period.

Former Minister of mines Obert Mpofu was quoted saying: “We want to shock the world

with our stockpiles. We are going to unleash our worth to the world and Zimbabwe will not be asking for anything from anyone.

Former president Robert Mugabe in 2016 said that the country had lost diamonds worth $15 billion, a revelation that rattled a country whose government is entirely funded by taxes and is struggling to provide basic services while millions of its population are jobless.

Despite frequent reports of smuggling from the vast Chiadzwa fields where institutions such as the police, army and some Chinese firms were involved in the mining activities, the value of the loss had never been quantified since operations began in 2006.

But how did the chaos start?

In June 2006, one of the world’s largest alluvial diamond deposits was discovered at Chiadzwa in Marange. Estimated to yield between US$1 to US$1,7 billion dollars per annum, the revenue from these diamonds had the potential to breathe new life into Zimbabwe s ailing economy.

Farai Maguwu of the Centre for Natural Resource Governance appearing in front of the Parliamentary Portfolio Committee of mines chaired by Temba Mliswa attempted to shed more light on how the diamonds were looted by politicians and their friends.

“The issue of diamonds in Zimbabwe dates back to 1993 when De Beers got an exclusive prospecting order for Marange, not that they wanted to explore anything they had need there before they knew what was in the ground. De Beers illegally extended its EPO against the laws of this country beyond 1999 to 2006.” Maguwu was quoted saying.

During their time De Beers were not exploring they were mining. A processing plant was set up at Bezel Bridge by De Beers in a business compound.

They will take the ore from Marange to Beitbridge. Some of the diamonds were exported through Beitbridge using security company vehicles.

Villagers from Marange inquired from new Mines minister Amos Midzi who is now late that they were seeing suspicious activities happening. They were told that De Beers was doing exploration for fertiliser manufacturing. After that some Members of Parliament then began to push for an investigation into De Beers activities in Marange.

It is at that point that De Beers did not renew its EPO in 2006. But even then, the Minister of Mines was actually fighting in DeBeers corners that he is only going to give a license to anyone else only in the case that De Beers does not submit an application for renewal.

From 2009 government approached individuals from the middle East and gave them licenses to come and mine diamonds in Marange. They then got into partnership with Zimbabwe Mining Development Cooperation to form what was called Diamond Mining Corporation.

Official reports say since then, diamonds from Chiadzwa has benefitted a few people who were politically linked at the expense of the country’s economy.

In February 2016 ordered seven companies operating in the Marange fields Anjin, Mbada Diamonds, Marange Resources, Diamond Mining Company (DMC), Jinan, Gye Nyame and Kusena to stop all mining activities and leave immediately ostensibly because their licences had expired. The State-run Zimbabwe Consolidated Diamond Company (ZCDC) formed in March 2016 took over all diamond mining after government had evicted all the firms operating in the Marange fields in the east of the country.