Political row to intensify over diamond sale profits
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From: as on 13 Aug 2010 04:51 Political row to intensify over diamond sale profits http://www.swradioafrica.com/ By Alex Bell 12 August 2010 A political row over control of the country's diamond revenue is expected to intensify, after Wednesday's multi-million dollar sale of the controversial Chiadzwa stones. Buyers from the US, Israel, Russia, Lebanon and India jetted into Zimbabwe this week for the auction, which saw 900 000 carats of Chiadzwa diamonds go on sale. The stones were certified for legal trade by the Kimberley Process monitor Abbey Chikane, but represent only an estimated quarter of the stockpile the Mines Ministry has been waiting to sell. The auction nonetheless still brought in about $70 million, but who the profits will benefit is still of concern. Speaking at the auction, Prime Minister Morgan Tsvangirai said the government was working on 'modalities' to ensure that Zimbabweans benefited from diamond trade. "I am pleased to note that the Minister of Finance, in consultation with the Minister of Mines and Mining Development and other stakeholders, is working on a framework of determining how the revenues from this supervised sale are applied for the benefit of the generality of the people of Zimbabwe through the fiscus," he said. These 'modalities' have not been made clear, although it's reported that the government will get 10% from the sales as royalties. The Minerals Marketing Corporation of Zimbabwe is set to get 0.8% while the government owned Zimbabwe Mining Development Corporation (ZMDC) will get 2.5% from the proceeds. The ZMDC's joint venture partners, who have been illegally mining the Chiadzwa claim in contempt of a Supreme Court Order, will apparently get up to 5% percent each in management fees. The remaining 79% percent is reportedly going to cover 'production costs' while the balance will go to the government through the ZMDC and its investment partners. Quite how this has been worked out and who is behind the agreed formulas is unclear, although Mines Minister Obert Mpofu has insisted that the ZMDC will only pay the government 'dividends' from the revenue it gets from the sales. Economist Tony Hawkins pointed out that the ZMDC, as a government owned entity, should not be dictating how much profit it hands over to the Treasury. He said that Mpofu's comments are a direct contradiction of proposals by Finance Minister Tendai Biti, who wants the ZMDC to hand over its full share. "Biti should be in a higher position of power, but clearly Mpofu seems to think he has the upper hand," Hawkins said. "As a result of this, there are accusations flying that ZANU PF plans to use the ZMDC revenue to finance its election campaign." Biti said last week in Parliament that he wants a Diamond Act in place to ensure that all diamond proceeds benefit Zimbabweans. He admitted that the Treasury had not seen any profits from diamond sales made in the past year, which amounted to an estimated $30 million. The Finance Minister has also indicated that he wants all mining operations to be under government control to ensure the profits benefit Zimbabwe, after previously saying that the mining licenses given to the current firms at Chiadzwa were obtained 'unlawfully'. The two firms, Mbada and Canadile, have been mining in direct contravention of the Supreme Court, which in February ordered that all mining activities cease until the ownership wrangle of the site was sorted out. A UK based mining firm, African Consolidated Resources (ACR), holds the legal title to the claim that they were forced off at gunpoint in 2006. The parastatal ZMDC moved in instead and joined forces with Mbada and Canadile. The firms, regardless of the contempt of court accusations and ongoing worries about their involvement in smuggling and human rights abuses, will still benefit from Wednesday's sale. As title holders, however illegitimate, they are entitled to profits. "It's all a bit of a farce," said Hawkins, adding; "It is difficult now to predict what is going to happen and how the political row is going to play out." The diamond auction was the result of a last-minute deal reached between the Kimberley Process and the Mines Ministry last month, and one more auction is expected before September. Experts are then set to visit the country and review its progress with meeting international trade standards, potentially paving the way for a full resumption of exports. Diamond sales had been suspended last year because of human rights atrocities at the military controlled diamond fields, including murder and forced labour. But the Kimberley Process, instead of banning Zimbabwe from trade, gave the Mines Ministry six months to fall in line with international standards. Chikane, the Kimberley Process monitor, has since said that these minimum standards have been met, despite reports of ongoing abuse, smuggling, and the blatant contempt of the Supreme Court. |