Of Gemstones leakages and what should be done
Zimbabwe has been losing a lot of its coloured gemstones through smuggling with the Minerals Marketing Corporation of Zimbabwe (MMCZ) estimating that 90 per cent of the stones are not benefiting the country.
Rudairo Mapuranga
According to MMCZ General Manager Mr Tongai Muzenda, although there has been a growth in the coloured gemstones industry, the country was not benefiting because the industry is infiltrated by unlicensed dealers who smuggle most of the stones at the same time under paying miners.
He said it was of importance for the government to extend its helping hand to the Artisanal and Small Scale Miners (ASM) through formalization. He also said that various initiatives were being carried out by MMCZ to see that the growth of the gemstone industry is realized.
“The growth is not what we are expecting but there is a lot of mining of gemstones but most of them are being exported illegally, so the country is not benefiting and miners are getting paid very little, they can do much much better. I would want to think that people are getting only 10 per cent of what they can get. To grow this business the government needs to help the ASM grow. There are many initiatives to see the growth of the ASM in gemstones mining, MMCZ has actually visited some of the areas to buy gemstones at a fair value.” Muzenda said.
What’s causing Gemstone smuggling?
The Centre for Natural Resource Governance (CNRG) through a research study titled ‘The Political Economy of the illicit Coloured gemstone industry in Zimbabwe ‘ said much of Zimbabwe’s coloured gemstones are smuggled out of the country because most of the gemstone dealers are unlicensed.
The research also attributed corruption and poor governance as major causes of illicit gemstone trading.
Much of Zimbabwe’s coloured gemstones are smuggled out of the country while most of the gemstone dealers are unlicensed,” CNRG said.
_“The illicit mining and trade of gemstones is attributed to corruption and poor regulation of the sector which is governed under the Precious Stones Trade Act.
_“The Minerals Marketing Corporation of Zimbabwe, which is mandated to regulate the marketing of gemstones, has been far less efficient compared to gemstone marketing systems in neighbouring countries such as Zambia.
_“The authorities have been reluctant to close the loopholes and review the regulatory framework as the current weaknesses benefit those with access to mining and export licences who are invariably politically connected.
_The dealers that are protected by politically connected miners with licences supply foreign buyers who come through Zambia and Mozambique._
_“These actors form part of the international syndicates that supply gemstones to destinations in Asian countries.”
_Foreign illegal dealers mostly from Zambia, DRC, South Africa, Pakistan, China and India are buying the gemstones at a price far below the international market price._
_These gemstone dealers are organised with networks from the communities, borders, and up to the final destination despite the existence of online companies who are registered under Global Online.
_“When compared with gold, gemstones are difficult to value at community or mine level because their value is based on perception; the price is negotiable depending on stone quality, market and the buyer,” the report added.
_“Artisanal miners, who dig for the stones, have little knowledge on the grading of the stones.
_“Valuing requires expertise, and this is lacking among the people who pick these stones.
_“Buyers exploit those who pick these stones by buying at very low prices, for instance, US$3 per kilogramme of aquamarine.
_“Some buyers offer US$500 for a cupful of gemstones._
_“One key informant revealed that once there was a coloured gemstone which was bought for $50 in Karoi and resold for US$12000 in Mozambique.”
“Despite hosting deposits for more than 90% of coloured gemstones found in the region, Zimbabwe has not been able to establish a robust market for the stones.
“Some of the agents withhold the stones and sell to illegal dealers, who provide immediate cash,” the report reads in part.
MMCZ has been accused of being lax in service delivery and processes exports at a snail’s pace which increasingly alienates it from miners and dealers.
In an interview with Mining Zimbabwe, we asked the Portfolio Committee on Mines and Mining Development Chairman Hon Edmond Mkaratigwa if the slow processing of export licenses wasn’t a catalyst for smuggling and what the parliament was doing to ensure MMCZ speeds up the process.
“That is a catalyst for smuggling, opting for other alternative countries by investors and discouragement of investment in those minerals locally. The Committee has not shied away from interrogating those issues. We actually set as our first priority, ensuring efficiency and effectiveness in the sector and we have really surfaced most of these issues, including after getting hard evidence from private practitioners in the sector. It is still appalling to note that there are still such delays as in our approach, those are part of the fundamentals that can be dealt with internally without the need for external resources. A change in work culture is key for national development and that has been emphasised at the outset of the New Dispensation led by H. E. the President Cde. Dr. E. D. Mnangagwa. In our committee following its reconstitution, we identified such gaps and tried much to address that including cutting unnecessary time wasted in some procedures as well as through reduction of over-centralisation and increasing on recruitment. Much has been done in that regard, to the extent of being granted a budget allocation through our intervention.
What should be done?
According to mineral Economist Lyman Mlambo, the following six points are critical in reducing gemstone smuggling in Zimbabwe~
(1) We need to have a gemstone sector policy that covers all gemstones (both precious and semi-precious stones). We only have a diamond policy which leaves out 3 precious and more than 33 semi-precious stones. Policy guides the formulation of legal and regulatory instruments.
(2) We need legal reforms: (a) For a start we need the diamond policy to give birth to the Diamond Act, this has not happened – that would codify KPCS and make the implementation of the diamond policy effective, for example, we have positive provisions such as the Diamond Value Management Centre and the Gemology which were supposed to have been established by end of 2019; (b) we need a whole Gemstone Act – the Precious Stones Trade Act only regulates the trade of two gemstones (diamonds and emeralds) leaving out the rest.
(3) Improve our immigration, customs and port of exit controls. There is too much reliance on the human interface which results in many cases of bribery, exemptions of the VIPs, diplomats, and other politically exposed people, and manipulation of the manual systems. Increased automation will improve checks and tracking, and hence security. We need to improve our surveillance systems at the airports do that planes do not land and take off without detection as has been reported.
(4) Improve transparency and accountability in the sector.
(5) Formalization the ASM sector, in which much extraction and illicit trade of most gemstones other than diamonds are concentrated.
(6) Improve diamond valuation skills in the country and local value addition of gemstones.
What is being done to curb smuggling?
Zimbabwe Miners Federation (ZMF) Secretary for Semi-Precious and Gemstones Mr Privelage Moyo said as formalisation is being done, ZMF and its partners will open up markets in the country’s all provinces.
He said they intend to conduct awareness campaigns to encourage miners to sell their gemstones through the correct channels.
Moyo also said that the Federation has resolved to work on the expedition of the export process and reduce the turnaround time on exports.
“The issue is to have provincial and regional markets being opened. The first one will be opened in the Karoi, Hurungwe area. Then awareness campaigns will be also done concurrently with the opening of the markets,”
“So that at the end of the year sales will be recorded then at the same time, whilst production is optimized then marketing is established. Then also the need for the ease of export, so the turnaround on exports needs to be reduced so that we can see inflows of revenue so that we can surpass a US$50 million mark for the gemstones,” said Moyo.