LEADING global diamond producer, Alrosa, will hold a 70 percent controlling stake in the newly agreed joint venture with State owned Zimbabwe Consolidated Diamond Company (ZCDC), as Harare bids to boost mineral exports and reboot the sluggish economy.
The coming in of Alrosa further entrenches participation and return of private players to diamond mining in Zimbabwe following the expulsion of non-state miners in 2016 amid fears the country was being prejudiced of significant potential diamond revenue.
Since assuming the reins in November 2017 President Mnangagwa has been in overdrive mode to attract foreign direct investment and the latest diamond joint venture is testimony of the success of his rallying call "Zimbabwe is Open for Business".
As such, Russia's Alrosa Overseas SA and national diamond company ZCDC inked a joint venture agreement on Tuesday this week to develop diamond deposits in Zimbabwe.
The joint venture agreement was signed in Harare at a glittering ceremony by Alrosa deputy chief executive Vladimir Marchenko and ZCDC non-executive board chairman Killian Ukama.
President Mnangagwa and ALROSA chief executive Sergey Ivanov attended the grand signing ceremony. The southern African country is seeking to revive its economy after a decade of turmoil in mining in general and diamonds in particular, as considered strategic areas to that end.
Zimbabwe is targeting to grow its diamond industry from 3,4 million carats in 2018 to 10 million carats by 2023. The mineral-rich southern African country is also looking to grow its mining industry from 4,8 billion in 2018 to US$12 billion by 2023.
Mining is strategic to Zimbabwe's economy and accounts for over 60 percent of the country's annual foreign exchange earnings. Major minerals include platinum, gold, diamonds, nickel, chrome and coal.
Alrosa has reportedly already advanced US$1,6 million towards operationalisation of the joint venture with the country's stated diamond miner amid plans to invest more capital.
Alrosa CEO Mr Ivanov said his company planned to start exploration in Zimbabwe in September this year and will invest an initial US$12 million in the venture.
Only tobacco generates exports work comparing with mining, at about US$1 billion annually, although agriculture in general is a key pillar of the domestic economy. Alrosa said in a statement that it will hold controlling interest.
"According to the terms of the agreement, Alrosa gets a 70 percent controlling stake for the development of Greenfield projects, ZCDC - 30 percent. First of all, the joint venture will be engaged in geological exploration of Greenfield deposits," Alrosa said.
This will be the first time ZCDC will enter a diamond joint venture arrangement in which it holds lesser shares. In all other previous joint venture arrangements, ZDC was an equal partner at 50 percent.
Further objectives of cooperation entail diamond mining and independent sale of rough diamonds in external markets. The joint venture will be able to work not only with the licences ZCDC has today, but also in the territory of the whole country.
In case a new prospective area is discovered, the company will contact directly the Zimbabwe Ministry of Mines and Mining Development requesting a new licence for this area.
"Creation of a joint venture is a major step in the cooperation with our partners in Zimbabwe. We are committed to productive work in the exploration of new promising areas and subsequent diamond mining.
"Our specialists have been working in Zimbabwe for more than three months now, and the national authorities have been of great support to them. We have chosen various projects for the joint venture, and part of them is to be launched this autumn.
"Of the existing fields for development, we are preliminarily considering the areas located in the Chimanimani region," commented Alrosa's deputy CEO Marchenko.
In December 2018, ALROSA established an affiliated company in Zimbabwe, Alrosa (Zimbabwe) Limited, for the implementation of projects in mineral prospecting, exploration and mining operations with a view to creating joint diamond-mining and other mining enterprises.
Zimbabwe is believed to have potential to account for 25 percent of global diamond trade. In 2016, the Government consolidated the diamond industry following concerns over issues of transparency.
Six firms that mined diamonds in Marange and other areas had their licences withdrawn and operations consolidated under ZCDC.
But following the finalisation of the diamond industry policy early this year, Government reopened the diamond mining industry to private players who now include Russia's Alrosa, Anjin of China and London Junior market listed entity, Vast Resources.