UIOGS 2022
Covid-19MarketsNewsSouthern Africa

Zimbabwe’s ambitious US$12 billion mining industry may fail due to Covid-19

Government’s ambitious plans to notch a US$12 billion mining industry and increase diamond production to 10 million carats by end of 2023 are likely to fail due to the effects of the Covid-19 pandemic, an environmental rights watchdog has said.

In a statement, Centre for Natural Resources Governance (CNRG) said the pandemic has caused a sharp fall in both diamond prices and demand.

The group said US$1 billion was expected from the selling of the diamonds but the industry is already reeling under the effects of Covid-19.

CNRG said diamond mining companies such as Zimbabwe Consolidated Diamond Company (ZCDC) and Anjin continued operating during the lockdown and due to continuous production, the country will most likely have surplus stock of rough diamonds with no market to sell to.

“The Zimbabwean diamond industry is going to be affected heavily as the international diamond industry is already in a recession due to Covid-19,” said the group.

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“This year, the state-owned Zimbabwe Consolidated Diamond Company had planned 11 international gem auctions outside the country, including the Asian cities, to widen marketing options amid a market glut that has steadily made polished stones cheaper.

“The company planned to explore and penetrate the international market to boost sales volume.

“ZCDC has about 300 000 carats of diamonds which were due to be auctioned at the beginning of April but were affected by the Covid-19 pandemic, which has forced many countries to close borders and embark on lockdowns to stop the spread of the deadly virus.”

CNRG said the cancellation of the planned auctioning of diamonds by ZCDC has worsened the state-run firm’s liquidity crisis as witnessed by its failure to pay workers for more than five months now.

The NGO said the impact of Covid-19 on diamond prices has also affected local diamond prices.

“When the government announced the lockdown measures, most local diamond buyers failed to travel to Marange to buy diamond from artisanal miners.

“This affected the price of diamonds mined by artisanal miners.

“According to artisanal miners in Marange, the industrial diamond price per carat was US$2 500 before the lockdown and during the lockdown, the price has dropped to US$100 per carat.

“The fall in prices has been triggered by restrictions on movement and liquidity challenges in the market,” said CNRG.

The group, however, said whilst the pandemic posed grave threat to the value of Zimbabwean diamonds on the international market, it is also created opportunities for the local diamond industry.

“The government has to grab this break to promote value addition and beneficiation of diamonds through local diamond polishers and jewellers.

“As demand and price for diamonds on international market have slowed down due to coronavirus pandemic, the solution to a global reduction in prices lies within the country`s policies,” said the group.

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Laurence M. Stevens

Laurence M. Stevens is the African Mining Market's online content editor and media strategist.