8 November 2012

Zimbabwe: Lobbyists Push for Diamond Act Enactment

THE Government must take urgent steps to formulate the Diamond Act to achieve prudent management of the country's diamond sector and promote coherence in the laws, policies and institutions governing the sector, mining lobbyists say. "Talk over the Diamond Act has been going on in the last three years with nothing concrete on the table. We want the Government to formulate the Act as a matter of urgency to facilitate the monitoring of diamond processes such as extraction, receipting, evaluation, grading, polishing, auctioning and processing of export customs documents," said Shamiso Mtisi, a mining lobbyist with the Zimbabwe Environmental Law Association.

"We want our legislators to finalise the Diamond Act in this session to address problems related to leakages, corruption, contract negotiations, control, marketing, distribution and export of diamonds in a manner which also addresses the underlying or root causes of poor economic performance and revenue inflows."

Mining lobbyists from various organisations gathered recently to discuss various issues related to the extractive sector. The one-day meeting organised by Zela focused on mining revenue distribution and the link to poverty reduction, mining taxation, Diamond Act proposals as well as the Extractive Industries Transparency Initiative.

"Under the Diamond Policy adopted by the Government, there is a proposal to develop the Diamond Act. We want this to be fulfilled in this current session before we go to the elections. President Mugabe and Finance Minister Tendai Biti have repeatedly made calls for the speedy formulation of the Diamond Act in the past and Parliament should now move with speed to finalise this Act," said Mtisi.

Diamonds were discovered in the Marange fields in eastern Zimbabwe in 2006.

Mining analysts believe the area holds one of the world's richest deposits of alluvial diamonds. The gems lie close to the surface of the ground and there was a diamond rush that was chaotic from 2006 to around 2008 when order was restored by security forces.

Some analysts speculate that Zimbabwe produces at least 25 percent of the global diamond output but revenues remain subdued due mainly to the opaque business deals and sanctions. Critics say benefits have not trickled to affected mining communities and hence mining lobbyists have made a raft of proposals to the formulation of the Diamond Act.

All the four mining companies in Marange, namely Anjin Investments, Marange Resources, Mbada Diamonds and Pure Diamonds, have now been certified compliant by the Kimberly Process Certification Scheme.

The Ministry of Finance had anticipated some US$600 million from diamonds in 2012 but the Minister of Mines and Mining Development Dr Obert Mpofu said the country would not meet the target owing to sanctions which were hindering trade in diamonds.

When the country got a green light to sell its diamonds from the Kimberley Process Certification Scheme, optimism was high that the country could earn as much as US$2 billion from diamonds annually. However, mining lobbyists say a sizeable percentage of diamonds coming out of Marange are smuggled out of the country by syndicates depriving off the country a huge chunk of revenue.

"The Diamond Act must require all revenues and payments made by mining and diamond trading companies and received by Government to be disclosed by it or mining companies in a publicly accessible manner and in a disaggregated manner.

"All contracts signed by Government with private investors must be made public and possibly posted on a Government website for easy access to members of the public," said Mtisi.

Mining lobbyists further say that the Diamond Bill which is set to be debated in Parliament this session, must fully address problems in the diamond sector.

These include inadequate licensing and control systems, security measures, porous borders, transparency and accountability, value addition and beneficiation, artisanal alluvial diamond mining, exploration work and human rights.

They say this could be done by having specific clauses centred around diamond licensing systems and processes to curb illegal activities, security measures and declaration of protected/restricted areas, diamond marketing and sales, transparency and accountability and the responsibility of the diamond industry in national development.

"The Diamond Act should contain provisions that are aimed at promoting national economic development. In this case the law should not rely only on a command and control approach, but should include incentives that will encourage people to desist from illegal acts and that require companies to invest in community projects," said Mtisi.

"One of the incentives will be a requirement for the employment of locals and provision of services by locals or Zimbabweans. This is the situation in Namibia."

However, some lobbyists say Zimbabweans should be weary of external influence when it comes to the diamond sector in which rich and powerful countries have so much interest.

"The wider issues that worry us revolve around development," said Dr Davison Gomo, an indigenisation and development activist.

"The world is not innocent and it's clearly divided as a way of interrogating these things. All the bodies that formulate issues that affect us are done in the North and all they do cascades down to us. They are here, they are there and all they want is money."

"We are interfering with the big boys' game. I'm not sure about how we are going to fight this. The civil society sector must not be used by the powerful countries to advance their agenda. How do we get to benefit from our resources when sanctions are blocking every effort we are making to tap from our natural resources."

Another indigenisation lobbyist, Tafadzwa Musarara said western-funded NGOs are peddling the agenda of the West and were losing the plot on the diamond issue.

"Zimbabwe is being punished under Zidera and any information disclosed on our operations in Marange will be used against us. Sanctions are a huge handicap, it's a serious challenge and anyone who deals with us is punished," said Musarara.

"Lets lobby for the removal of sanctions first and in the Diamond Act we propose that there be a penalty for anyone who lobbies for sanctions to be imposed on the country."

"Who is funding the NGOs? Where do they report to? The political NGOs have overshadowed us and they wire everything abroad for their own gain. We should engage with our government first before we go outside.

"After all, why the Diamond Act? Are diamonds the only mineral? What about Platinum Act? These are some of the issues we should be debating about in addition to supporting a campaign for the lifting of sanctions," Musarara said.

Other issues that mining lobbyists are calling for in the Diamond Bill include the harmonisation of government ministries and departments dealing with diamonds, consultation with affected communities and compensation of families in cases where relocation is to take place with special reference to international protocols on human settlements.

They are also appealing for clearly defined obligations of mining companies to the communities where they operate and a legal framework for artisanal/small scale miners to curb both human rights abuses and illicit diamond deals that do not benefit the treasury.

In addition to this, lobbyists are also proposing the upholding the rule of law and respect for human rights in the diamond supply chain, beneficiation and value addition.

The are also advocating for the establishment of a diamond school to develop local expertise in diamond mining, cutting and polishing and minimum and maximum sentences for people caught in illegal possession of diamonds as well as environmental protection.

"The issue of sanctions should not stifle debate on diamonds. Whatever our opinions are, we should seek to promote transparency and open debate about diamonds.

"We can't keep quiet with the situation that is going on in Marange. If Anjin is not paying royalties, we cannot keep quiet," said Mtisi.

"Diamonds have the potential to change lives and improve livelihoods. Sanctions should be addressed at the political level and not at the Diamond Act level.

"We are not anybody's shovel and pick, we are genuine Zimbabweans fighting for the equitable distribution of our mineral resources."

Another mining lobbyist, Joshua Marufu says disclosure when the country is under sanctions will seriously undermine efforts for the country to benefit from its diamond resources.

"If we want to be fair and serious we should start by analysing contracts that were negotiated by previous regimes with companies such as Lonrho, Rio Tinto and De Beers. We should revisit contracts that were negotiated from 1965, the Rudd Concession and see the impact it is having today," he said.

"If we start with Anjin, which is barely four years in operation, then we will have problems. What about De Beers, Lonrho and other companies which were never transparent and accountable in any way.

"Let's start where we must and debate things in this context before we tackle today's companies."

The debate and the process of crafting the Diamond Act to address existing loopholes will be a contentious one and it seems much will depend on the political will to ensure that the diamond sector is managed in a transparent and accountable manner that also benefits affected mining communities.

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