MAC: Mines and Communities

European Union revokes sanctions to Zimbabwe's diamond firm-report

Published by MAC on 2013-09-21
Source: Mining.com, Herald, The Standard (2013-09-17)

European Union revokes sanctions to Zimbabwe's diamond firm - report

Cecilia Jamasmie

Mining.com

17 September 2013

The European Union is withdrawing all sanctions against the state-run Zimbabwe Mining Development Corporation (ZMDC) following increasing pressure from members, especially from Belgium, the global diamond trade centre.

According to a diplomat quoted by Reuters, the EU has "begun the process of delisting" ZMDC from the list of companies affected by the body's sanctions, despite concerns over alleged fraud in the July election that kept President Robert Mugabe in power.

Zimbabwe's diamond industry has been fraught with controversy both domestically and internationally due to accusations of human rights abuses and corruption.

Last year, Zimbabwe's Deputy Mines Minister, Gift Chimanikire, confirmed an army-owned company holds a 40% stake in Anjin, one of the most lucrative diamond concessions in the country.

Days later it was reported that a Chinese diamond mogul had ploughed $100 million into the African country's Central Intelligence Organisation (CIO) to fund covert operations against the opposition.

And early this year, the country's Finance Minister Tendai Biti accused diamond firms of failure to pay tax revenues in full to the authorities, claiming only $40 million out of an expected $600 million reached government coffers in 2012.

Mugabe has repeatedly claimed the sanctions only affected ordinary people, while the EU says the embargo never meant to affect the country, only individuals responsible for human rights violations.

The U.S., Canada, Australia and New Zealand also have their own-targeted measures against the African leader and his inner circle.

ZMDC operates five joint-venture mines in the rich Marange diamond fields, producing eight million carats last year and generating $685 million in exports.

The nation's total diamond production from Marange increased from 8,7 million carats in 2011 to 12 million carats last year. This year, production is expected to rise further reaching over 17 million carats.


EU lifts sanctions on ZMDC

Hebert Zharare Political Editor

Herald (Zimbabwe)

THE European Union has agreed to lift the illegal sanctions it imposed on the Zimbabwe Mining Development Corporation, the State-enterprise in joint venture partnerships with diamond mining companies at Chiadzwa, an EU diplomat told the international media on Tuesday.

The scrapping of the sanctions followed Belgium's call for the removal of sanctions in the wake of the widely endorsed harmonised elections. Reuters yesterday quoted an unnamed diplomat as saying the EU had "begun the process of delisting" the ZMDC after senior EU diplomats discussed the issue at a meeting in Brussels in February this year.

Cracks had emerged in the EU over the bloc's illegal economic sanctions regime, with Belgium calling for the immediate lifting of the embargo.

President Mugabe and Zanu-PF romped to a crushing victory over the MDC-T in the harmonised elections. While the US, Britain and its dominions, Australia and Canada, have refused to endorse the elections, the EU as a bloc finally pronounced yesterday that it was finalising modalities to scrap the embargo.

Speaking to The Herald yesterday, the Minister of Mines and Mining Development, Cde Walter Chidhakwa, said Zimbabwe welcomed the latest EU position on the Marangwe diamonds.

"This is good news not for the ZMDC only but for Zimbabwe as a whole. It is coming so clear that the basis these countries imposed the sanctions of Zimbabwe were not solid.

"We hope they are going to take this process to the end because at this stage it's official they have made recommendations and are waiting for the ministers (foreign) to give a go-ahead," he said.

Cde Chidhakwa said it was everyone's hope that the ministers were going to meet very soon. "Naturally, for the Zimbabwe Mining Development Corporation and its partners, I am sure it was really difficult to operate," he said. Sadc has since endorsed the elections as free, peaceful, generally credible and a reflection of the will of Zimbabweans and it was the world's hope that the EU foreign ministers were going to honour their pledge.

The divisions in the EU come at a time when the Government's sanctions lawsuit against the European bloc is set for hearing in the Belgian capital by the end of this month or early October.

Brussels, the centre of the global diamond trade and home to Antwerp, the world's leading diamond trading hub, was all along pushing for the removal of the illegal sanctions on the ZMDC as it angles to tap into the country's vast reserves that are tipped to command 25 percent of the international market.

ZMDC is in partnerships with five diamond mining companies at Chiadzwa, whose operations have all been certified by the Kimberley Process Certification Scheme, a development that flies in the face of claims by the EU bloc that the Chiadzwa gems fall in the ambit of conflict diamonds.

The joint-venture mines in the Marange diamond fields produced a combined eight million carats of the gems last year and generated US$684,5 million in exports.

Of the US$684,5 million, Mbada Diamonds contributed US$308,3 million, followed by Anjin with US$209,9 million, Diamond Mining Corporation US$100,8 million and Marange Resources US$236 317.


Diamond revenue: Zimbabwe misses IMF target

Ndamu Sandu,

The Standard (Zimbabwe)

8 September 2013

Zimbabwe has missed a June deadline to ensure diamond revenue from Marange flows into Treasury as part of reforms under a supervised programme by the International Monetary Fund (IMF).

This comes at a time the country has lost three months engrossed in election-related issues that had virtually paralysed government operations.

In June, the IMF agreed to a Staff Monitored Programme (SMP) on Zimbabwe after Harare had pledged to undertake a raft of reforms as it builds bridges with the multilateral financial institutions.

The SMP, an informal agreement between country authorities and the Fund staff to monitor the implementation of the authorities' economic programmes came after intensive lobbying by the inclusive government as part of its re-engagement with the global lender.

The SMP focusses on putting public finances on a sustainable course, while protecting infrastructure investment and priority social spending, strengthening public financial management, increasing diamond revenue transparency, reducing financial sector vulnerabilities, and restructuring the central bank.

As part of the agreement, Zimbabwe said it would issue a Statutory Instrument by the end of June 2013 that would establish a clear formula for the calculation and remittance of any dividends to government from those entities it holds shares in.

"This is an important step towards ensuring that all diamond revenue is remitted to Treasury, in keeping with the government's commitment under the Diamond Policy. In addition, all rough diamonds produced shall be sold through a government-appointed agent," Zimbabwe said in a letter to the IMF managing director, Christine Lagarde.

Marange diamonds had been central to the tug of war among partners in the coalition government whose tenure ended last month. The MDC formations accused Zanu-PF of using diamond proceeds to build its war chest in the run up to the July 31 harmonised elections.

Former Finance minister, Tendai Biti complained during his tenure that Treasury was not getting enough from Marange diamonds despite producers increasing output.

Biti accused Anjin, a company in which a Chinese firm is partnering the Zimbabwe Mining Development Corporation, of not remitting dividends to the fiscus, an accusation the firm dismissed.

The measures on diamond proceeds stem from the Diamond Policy that was approved by cabinet last year giving Treasury and the Zimbabwe Revenue Authority the right to access trading and financial records of diamond companies.

The policy gave joint responsibility to the ministries of Finance and Mines and Mining Development to ensure the accurate computation, accounting and repatriation of diamond proceeds from companies in which government has a stake.

"On that basis, by end of June 2013, Treasury will produce a report accounting in detail for the diamond dividends, royalties and other diamond-related cash flows received in 2012 by Treasury from all enterprises in joint venture partnerships with ZMDC [Zimbabwe Mining Development Corporation] involved in the diamond industry," government told the IMF.

The Statutory Instrument is still to be issued two months on raising concern on whether Zimbabwe will be able to undertake the reforms before the end of the SMP tenure in December.

There are now fears that other timelines would not be met.

Government also promised IMF that by the end of September, it would submit to cabinet amendments to the Precious Stones Trade Act to incorporate the principles contained in the Diamond Policy. The amendments would be presented to Parliament by end of December.

Government told IMF it will submit a Bill before Parliament by the end of the month meant to take over the debt owed by the Reserve Bank of Zimbabwe (RBZ).

The central bank owes creditors over US$1,1 billion.

The inclusive government had been working on the draft RBZ Debt Relief Bill but seems to have abandoned the project in the run up to the July 31 harmonised elections.

Questions sent to the IMF had not been responded to by yesterday. Treasury and the central bank said they were waiting for the appointment of a new finance minister to map the way forward.

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