ZIMBABWE is losing gemstones through illicit trade and undervaluation necessitated by a close-knit ecosystem of panners, security services and runners of merchants from Pakistan, Lebanon, China and India.
NATHAN GUMA
The country boasts more than 30 semi-precious stones, most of which are mined by informal foreign prospectors from India, Mozambique and other countries.
Cartels implicated in the illicit flows have also been using well-traversed channels opened up by couriers of second-hand clothing bales on farms within the Penhalonga area, according to a report titled “Scope and Nature of Illicit Flows in Zimbabwe’s Gemstone Sector” by Lyman Mlambo, a mining economist.
The smuggled minerals are then traded in Chimoio, Mozambique, an area that is dominated by Asian nationals who operate grocery shops, before they are transported to Dubai and other destinations.
In 2011, the United Arab Emirates imported US$408 million worth of (rough) diamonds from Zimbabwe, making it the largest diamond market.
Experts say the undervaluation and illicit trade have been worsened by Zimbabwe’s failure to set up a gemology centre for the processing of gemstones into finished products.
The Zimbabwe Diamonds Policy (ZDP) crafted in 2018 provides that the country establish a gemology centre by 2019, which would feature a school of gemology both aimed at promoting local value addition of the country’s gemstones.
The centre is projected to cater for the precious stone value chain which includes; a cutting, polishing and lapidary area for all diamonds and other coloured gemstones, a jewelry manufacturing and retail section, and an ancillary section that offers support and regulates the activities of the diamond industry.
While the extraction process has largely been informal, research in gemstone extraction reveals that there is little knowledge of the quantity and quality of stones being extracted.
Mining operations in the gemstone industry, besides diamonds and to some extent emeralds, have been largely dominated by artisanal miners and informal foreign dealers.
The existing diamond policy restricts exploration and mining of diamonds to four entities, including the Zimbabwe Consolidated Diamond Company (ZCDC), Murowa Diamonds, and any other two companies approved by the government.
Some of the companies have been implicated in mineral leakages.
The ZCDC failed to account for the use of money exceeding US$400 million, and could not properly account for 352 583.11 diamond carats worth about US$146.3 million that were in stock, according to the 2019 Auditor-General’s report.
Mlambo says the gemology school would help curb undervaluation by teaching miners “how to identify the stones, which is not a simple task”.
“This ignorance leaves miners at the mercy of illegal dealers who could easily misrepresent to the former what they are buying,” Mlambo said.
The total value of semi-precious stone deposits in the country is estimated at US$20 billion, which clearly is an underestimate given that the sub-sector has not been formally explored and developed, reads the report.
Exploitation of the gemstones is predicted to surpass US$1 billion by 2023, should the diamonds be formally exploited.
Mlambo says the school would also help miners to formalise their operations.
“Learning how to conduct operations optimally and formally would also encourage all players throughout the gemstone value chain to get formalised, from exploration, mine development, mining, processing (cleaning and sorting), primary trading of rough stones, beneficiation (cutting, polishing and enhancement), secondary marketing of beneficiated products, manufacturing of end-user products like jewelry and their (tertiary) marketing.
“A gemology school curriculum would go beyond technical issues and teach entrepreneurship skills (finance, management and other business skills) and further orient trainees to be formal business operators as they realise the benefits of being formal operators from financing opportunities, accessing equipment, exposure to the global market, existence of continuing technical support through the school’s extension and continuing education services,” he said.
He said the establishment of value addition facilities would directly provide a ready formal and local market for the precious and semi-precious rough stones, which would pay fair value for the stones.
“All these will reduce illicit flows in the gemstone sector. Thus, failure to build this centre has maintained conditions that promote illicit trade of the stones,” Mlambo said.
