Alrosa sticks to Zimbabwe diamond plan despite COVID-19, red tape delays

Zimbabwe Alrosa
Alrosa CEO Sergey Ivanov

Alrosa, the world’s largest diamond producer by output, says COVID-19 has not altered its exploration in Zimbabwe and the company plans additional concessions this quarter.

The Russian company entered into a joint venture with the Zimbabwe Consolidated Diamond Company (ZCDC) in 2019, forming a local unit in which Alrosa holds 70%. Under that joint venture, Alrosa has initially targeted diamond prospects in Chimanimani, on claims that were previously held by DTZ-Ozgeo, another Russian joint venture, as well as other greenfield deposits.

Last year, Alrosa cut its production by 22% to 30 million carats as it suspended mining at less profitable sites in response to weak demand, a result of COVID-19. But, despite this, Alrosa says it is continuing with its exploration plan in Zimbabwe.

The company intends to “accelerate its activities” in Zimbabwe, CEO Sergey Ivanov said Wednesday. Alrosa already holds 25 prospecting concessions in Zimbabwe, and expects to add another “15 by late February to early March,” he told Bloomberg.

Diamonds taking forever?

Alrosa’s announcement that it was investing in Zimbabwe, back in January 2019, was a major boost for investment-starved Zimbabwe. But a combination of COVID-19 and bureaucracy has delayed Alrosa’s Zimbabwe exploration.

At one of the targeted concessions, Malipati, a special grant that spans Matabeleland South and Masvingo, moves towards building a diamond washing plant were delayed last year.

On Monday, President Emmerson Mnangagwa met a delegation of executives from the local unit of Alrosa, who, according to industry sources, reportedly raised complaints around red tape in applications for exploration concessions and other authorisations.

At the signing of the joint venture in 2019, ZCDC had said it hoped the Alrosa investment would help it grow output to 10 million carats by 2023. This ambitious target would place the country among the world’s top five producers, an unlikely comeback for a country whose diamond output fell almost 75% over the past six years.

That target looks even less likely now after ZCDC was last year forced to cut output, suspend gem sales and hold off on new investment.

Alrosa reported sales revenue of US$2.8 billion in 2020.

Alrosa vaccine donations

Apart from Zimbabwe, Alrosa’s only other presence in Africa is in Angola, where it already runs a mine, the Luaxe operation in the north of that country.

According to Ivanov, Alrosa plans to donate the Sputnik V coronavirus vaccines to help the two countries roll out vaccines.

“We intend to provide dozens of thousands of vaccines to each of these countries upon their availability for exports”, he said, without detailing the amount of vaccines that will be given.

“Allowing for time needed to produce the vaccine, we expect first shipments to start from the second half of March,” Ivanov added.

Information Minister Monica Mutsvangwa on Tuesday told reporters that Zimbabwe was in talks with Russia, India and China for the purchase of vaccines.