India turns to Zim for diamond supplies
HARARE – GEM processors in India’s Surat — the world’s biggest diamond cutting and polishing centre — are looking at Zimbabwe for supplies as production of mining companies like De Beers has decreased phenomenally.
Two of the largest diamond mines in the world — Canada’s Ekati and Diavik mines — have exhausted open pit resources and are now both underground mines.
Converting a mine from an open pit operation to an underground operation typically results in curtailed production given the geology of Kimberlite pipes — the geologic formation of the resource is shaped like a carrot and gets narrower at depth.
Ekati’s production declined 28 percent year-on-year in 2012 while Diavik’s output is estimated to fall 17 percent year-over-year this year.
Three more of the world’s largest mines are set to go underground over the next few years as Russia’s Udachny mine is expected to be converted to an underground operation in the next two to four years with Botswana’s Jwaneng and Orapa mines expected to follow suit.
However, Zimbabwe’s mining and economic analysts say the supply gap can only be a boon for the southern African country if necessary legislation is put in place to ensure transparency and beneficiation.
“The move does not necessarily translate into a fiscal boom for national coffers.
“Marange diamonds have always been shrouded in opaqueness so the necessary step is to enact a Diamond Act as the diamond policy adopted by the government dictates,” said Takura Mugaga, an independent economic analyst.
Shamiso Mtisi, a mining lobbyist with the Zimbabwe Environmental Law Association, concurred with Mugaga.
According to Mtisi, government must take urgent steps to formulate the Diamond Act to achieve prudent management and avoid exploitation.
“Talk over the Diamond Act has been going on in the last three years with nothing concrete on the table.
We want 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.”
Rough diamonds achieved record prices in the summer of 2011, but have since slipped back to 2010 levels on global macroeconomic worries.
But, current prices are still higher than historic levels of summer 2008, and supply is estimated to fall short of new demand over the next two decades, which could take prices back to new highs.
The rough diamond demand in India is pegged at $15 billion per annum since the last three years with the increased production following the rising demand of polished diamonds.
According to a recent government report Zimbabwe expects diamond production from its Marange fields to double to 16,9 million carats in 2013 as the mining companies’ ramp up production in the region where human rights groups have flagged concerns over rights abuses.
The government through its mining firm Zimbabwe Mining Development Corporation (ZMDC) operates five joint venture mines in Marange, which produced eight million carats in 2012 and generated $685 million in exports.
Diamond analyst Aniruddha Lidbide said: “As the rough diamond production in world’s leading mines are on a decline, Zimbabwe is the only hope for Indian diamantaires. It is only Surat, which has the skill to cut and polish the Zimbabwe stones.” — Business Writer/India Times