Russia’s Alrosa, the world’s largest diamond company by volume, has signed an MoU with state-owned Zimbabwe Consolidated Diamond Company (ZCDC) for exploration and development of diamond deposits in the country.
Under the agreement, Alrosa is to get a 70% controlling stake in the development of greenfield projects, while ZCDC will control the remaining 30%. The split is a concession, as, under the diamond policy announced last December, the Zimbabwe government gets to hold 46% of all diamond mining in the country, while local investors own 5% of any new operations.
Alrosa will release an initial US$12 million for exploration under the agreement.
“Our specialists have been working in Zimbabwe for more than three months now, and the national authorities have been of great support to them. We have chosen various projects for the joint venture, and part of them is to be launched this autumn. Of the existing fields for development, we are preliminary considering the areas located in the Chimanimani region,” said Alrosa Deputy CEO Vladimir Marchenko.
The Chimanimani claims were previously held by DTZ-Ozgeo, another Russian joint venture, but ceded to ZCDC in 2018.
Initially, the joint venture will be engaged in geological exploration of greenfield deposits, before extending into diamond mining and the independent sale of rough diamonds.
President Emmerson Mnangagwa presided over the signing ceremony of the MoU in Harare on Tuesday with the Russian company’s CEO, Sergey Ivanov.
The MoU for the joint venture follows meetings held in January between Mnangagwa, Alrosa and Russian president Vladimir Putin in Moscow. Alrosa announced its plans to enter Zimbabwe in January.
“We do not only produce diamonds, but we bring value and mechanisms of sorting, marketing of diamonds from different areas of the Russian federation, and we are absolutely sure that we will be able to bring the same value to Zimbabwean diamonds,” Ivanov said.
Mnangagwa said the joint venture is the fruit of his government’s new diamond policy, announced last December, which partially lifted the State’s monopoly over the diamond industry.
“This is a further demonstration of my government’s commitment to welcome and facilitate investment from across the world which produces mutual benefits, jobs, and ultimately results in the improved quality of life for our people,” Mnangagwa said.
He added: “The company is one of the leading diamond companies in the world, accounting for about 30% of global diamond production by volume and reputed for cutting edge technology for all processes along the diamond value chain.”
Reflecting the lofty ambitions that Zimbabwe has for diamonds, ZCDC chairman Killian Ukama, speaking at the MoU signing, says the country hopes to grow output to 10 million carats by 2023. This figure would place the country among the world’s top five producers, an unlikely comeback for a country whose diamond output went down almost 75% over the past five years.
In 2018, Zimbabwe produced 2.4 million carats.
“Zimbabwe has vas diamond resources, on the other Alrosa has a wealth of experience and skills in diamond exploration, processing and marketing. They have a track record of joint ventures in the region,” said Ukama.
Alrosa first showed interest in Zimbabwe in 2014, but the company dropped its plans two years later and let go of its exploration licences in the country.
According to Rappaport, which tracks the diamond industry, Alrosa’s diamond sales reached $4.5 billion in 2018, after selling 36.6 million carats, making it the world’s leading producer. The company itself says it accounts for 27% of global rough diamond production in terms of carats.
Up to now, Alrosa has not ventured far from Russia with its investments. The company’s only other operation in the region is a stake in Angola’s Catoca, the world’s fourth largest diamond mine. In November, Alrosa exited an exploration joint venture in Botswana with Botswana Diamonds. Interestingly, this was just a month after Botswana Diamonds partnered with UK-listed firm Vast Resources to develop a diamond concession in Marange. Vast is also now partnering with ZCDC to develop its Marange claims.
Alrosa’s entry bolsters Russia’s presence in Zimbabwean mining. Russia is also in a joint venture for the development of a platinum mine at Darwendale.
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