UPDATED: Zim commits 2mln carat diamonds to local industry, considers tax cuts for cooperating miners

UPDATED: Zim commits 2mln carat diamonds to local industry, considers tax cuts for cooperating miners

HARARE, November 6 (The Source) – Zimbabwe will set aside up to two million carat of diamonds, 10 percent of its annual production, for local industry to help grow its value addition and beneficiation services, Mines and Mining Development Minister Walter Chidakwa has said.

Addressing Zimbabwe’s second Diamond Conference which opened in Harare on Thursday, Chidakwa said government recently gazetted a statutory instrument that rationalises the diamond cutting and polishing licensing system in a way that benefits both the government and private companies.

“Today we seek to develop robust mining activities which will become the backbone of our own growth and development,” Chidakwa said.

“Issues of licensing, tenure and access to rough diamonds have clearly been dealt with this process. 10 percent of production is reserved for local cutters and polishers,” he said, adding that given the footprint of Marange diamonds, about 10-15 percent of the diamond are gems or near gems.

“This translates into about 1,5 million to 2 million carats of gems or near gems to local cutters and polishers, presenting huge opportunities for investment into the sector,” said Chidakwa.

The government is also exploring the potential of graduating to jewellery manufacturing, product branding and international marketing and distribution.

Chidakwa said government is considering reducing taxes of diamond companies that channel their products to the local industry.

“We are looking at the possibility of reducing or eliminating royalties for those diamonds that are destined for local diamond cutting and polishing including the removal of 15 percent value added tax as part of efforts to improve the environment,” he said.

President Robert Mugabe, who addressed the conference later, said lack of electricity and new technologies were hampering development in the mining sector.

“In spite of mining being an important contributor to the country’s economy, the mining sector has been limited to extraction and exportation of minerals in their raw or semi-processed form, without due care taken to beneficiation and value addition.  The finite resources should be made to remain competitive, in both regional and global markets,” said President Mugabe.

“But, so far, despite this huge mineral endowment, exploitation of the country’s minerals in general, upstream, side stream and downstream, have been limited by factors that include power shortages, technology gap and uneven market conditions.”

Zimbabwe, he said, can only benefit from its minerals through investment in appropriate technologies and undertaking new exploration projects to discover new mines and ramping up production on existing mines among other measures.

The mining sector had been the most dynamic sector of Zimbabwe’s economy over the last five years, with an average annualised growth of 35 percent.