March 1 (Bloomberg) -- Zimbabwe needs to set up a sovereign wealth fund for revenue from its Marange diamond fields, Finance Minister Tendai Biti said.
There is a “clear gap” between gems being sold in Zimbabwe and the amount of money reaching government, Biti told a conference in Johannesburg today. He said it wasn’t “proper” for Zimbabwe’s state-owned mining company, the Zimbabwe Mining Development Corp., to manage the southern African nation’s diamond production.
“It’s quite clear that we urgently need a new diamond act,” he said. “This act would establish a stand-alone diamond agency.”
The ZMDC has registered 45 million carats, which Biti described as “minute” for such a “massive” mining operation. The nation also needs to set up a diamond exploration company and a “diamond agency,” which would help market the gems, he said.
Zimbabwe’s diamonds are mainly mined in Marange in Manicaland province where the country’s military and police have been accused of human-rights abuses. Global Witness, a London-based human rights body, withdrew from a Kimberley Process monitoring group in Zimbabwe, saying corruption remained a problem in Marange.
$200 Million for Fund
The Kimberley Process, which monitors the trade of conflict gems, has allowed Zimbabwe to sell its Marange stones.
Zimbabwe “can be happy” if it raises $200 million for its wealth fund from its diamond revenue, which is projected to grow more than ninefold to $700 million this year, Biti said separately in an interview today.
The government is also planning a separate sovereign wealth fund of more than $1 billion with proceeds from the rest of the economy, Biti said.
The ZMDC operates Marange in joint ventures with closely held South African, Chinese and Dubai-based companies that aren’t obliged by law to release production data.
The Marange diamond fields were seized from U.K.-based African Consolidated Resources Plc under unclear circumstances in 2006. The fields were subsequently divided between Mbada Mining (Pvt) Ltd., Canadile Mining (Pvt) Ltd. and China’s Anjin, all of which have joint-ventures with the ZMDC.
The Rio Tinto Plc-owned Murowa diamond mine and closely held River Ranch Mine (Pvt) Ltd. in Zimbabwe aren’t subject to Kimberley Process scrutiny because accusations haven’t been made against them.
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