Only the state to mine alluvial diamonds - says Zimbabwean minister

Jul 14, 2010, 19:01 GMT

Harare- Zimbabwe Finance Minister Tendai Biti said Wednesday that the government had agreed that all alluvial diamond mining would have to be undertaken by the state, and that all revenue would have to go into the national treasury.

Biti was referring in parliament to the controversial Chiadzwa alluvial diamond fields, regarded as the wealthiest find in a century, but shrouded in corruption, smuggling and violence.

'There is consensus in government that there has to be a new Diamond Act that says alluvial diamond mining in Zimbabwe be conducted by and through the state,' he said in a mid-term review of the national budget.

The new law would also insure that all income from diamond sales would immediately be transferred to the national coffers.

Earlier this year, a state mineral corporation sold 30 million US dollars worth of Chiadzawa diamonds, of which treasury have no record, he said.

Analysts say that his remarks indicated a dramatic change in direction in government policy over the management of Chiadzwa, whose diamonds cannot be exported under a ban imposed by the Kimberley Process, the world watchdog over blood diamonds used to finance wars and rebellions.

His remarks also came as the Kimberly Process was meeting in St Petersburg, Russia to try and settle disagreement over the report by a special KP monitor in May that recommended that Zimbabwe had met minimum conditions to start exporting.

Human rights organisations that form part of the KP warn that Zimbabwean President Robert Mugabe would use Chiadzwa's wealth to maintain his regime.

A parliamentary committee investigating Chiadzwa earlier this year unearthed secret allocations of mining rights to two South African- based companies by Mines Minister Obert Mpofu without tenders or even notifying anyone else in government. He also personally appointed the two companies' boards, and included friends and relatives.

Biti said that that the state will not allow the issuing of mining licences that would result in the proliferation of small diamond companies.

All diamond sales would have to be conducted transparently and under full parliamentary scrutiny. Until now, the management of Chiadzwa had been marked by secrecy, he said.

Biti said the new diamond measures would go a long way to resolving the country's desperate economic plight. Zimbabwe's finances were in a severe state as it struggled to recover from economic catastrophe in 2008 when inflation hit 231 million per cent and the Zimbabwean dollar plunged to 6 trillion per 1 US dollar.