Saturday, August 30, 2014 Local time: 10:09

News / Economy

Zimbabwe Minister Revises Diamond Earnings as Prices Fall

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Sandra Nyaira
Mines Minister Obert Mpofu says it is highly unlikely that Harare will earn the projected $600 million from diamond sales this year due to a price decline in the international market that he believes has forced miners to cut production.

Mpofu also attributed the downward revision of diamond earnings to the negative impact of United States sanctions on firms mining in Marange in the eastern part of the country, among them Mbada Diamonds and Marange Resources.

The U.S. Treasury’s Office of Foreign Assets Control (OFAC) last year sanctioned the companies following a decision by the Kimberley Process to allow diamond exports from Marange Resources and Mbada Diamonds.

The two companies operate their Marange mines in a joint venture with the Zimbabwe Mining Development Corporation (ZMDC), a state-owned firm which was already on the OFAC list.

Mpofu was not specific about the amount of money that Harare is losing to the so-called targeted measures.

In July, Finance Minister Tendai Biti complained about low revenues trickling from diamond sales and this forced him to slash the 2012 budget from $4 billion to $3.6 billion.

Diamond mining companies remitted only $41.6 million between January and June instead of $123 million largely due to what Biti said was lack of transparency and accountability in Marange.

Biti complained earnings from key minerals such as gold and diamonds were not making it into state coffers.

Mpofu said diamond prices have gone down in the past three to four months, dealing Harare a huge blow.

Radio