TAURAI MANGUDHLA/ TINASHE MAKICHI
Top diamond buyers across the world are shunning Zimbabwe due to delays emanating from a fight between the Mineral Marketing Corporation of Zimbabwe (MMCZ) and the Zimbabwe Consolidated Diamond Company (ZCDC) for control of the marketing of the country’s precious stones, Business Times has learnt.
This has dealt a huge blow to confidence in Zimbabwe’s diamond industry, which is yet to be cleaned up after a controversial consolidation that booted out seven companies that operated in the diamond-rich Marange area.
As a result of the delays, Zimbabwe is stuck with lower-end buyers, mostly from India, who have, for long, been accused of manipulating marketing flaws in the country to their benefit. For instance, most of the bids in a $28 million tender recently concluded were not followed through. Only $5 million had been paid as of last Friday, sources at MMCZ said.
Information at hand suggests that the ZCDC takes at least three weeks to release diamonds upon payment, costing clients interest charges especially in instances where they are funded by foreign banks.
Business Times has seen leaked correspondence between disgruntled buyers and the ZCDC over delayed deliveries of diamonds for the September 2018 international tender and October 2 local tender.
Buyers who had fully paid for their parcels were yet to receive their goods 28 days later.
According to one disgruntled buyer: “The invoice for the awarded parcel was issued to us and paid for by October 2, 2018. But until this day [7 November 2018], we have not received the goods that were awarded to us.”
Globally, invoicing, payment, and delivery of goods are done within three days, according to veteran diamond traders consulted by Business Times.
“When you get funds and spend a month without getting your goods and selling for a profit to pay your financiers, it is a loss for the trader,” said a foreign buyer based in Dubai. “In Zimbabwe, you are invoiced and at times it takes forever to be allowed to pay, and when you do finally pay, you can spend at least three weeks without receiving your goods. This is a cost.”
In January this year, Rapaport, the diamond watchdog, reported that the bankability of diamond projects in Zimbabwe had been suffering because global banks expected more diamond companies to close. The report said the midstream of the industry comprised of dealers and manufacturers was congested with too many players and too many stones.
Rapaport said challenges in the midstream regarding financing at a time banks were increasingly pulling out could affect miners. Because of the perceived high risk in the sector, affecting bankability, Rapaport said miners and buyers were depending on their own resources.
Although it remains unclear why ZCDC takes so long to release goods after MMCZ completes a sale, close sources say there is a lot of mistrust between ZCDC and MMCZ to a point where the former wants to scrutinise every deal.
“ZCDC is always sceptical and they fear their product will be sold for a song by MMCZ through collusion with buyers for kickbacks,” said the source.
