MUTARE — The business community in Manicaland province has said the US$50 000 diamond beneficiation fee announced by the government recently was still far beyond the reach of locals who wanted to venture into diamond cutting and polishing business.
BY OUR CORRESPONDENT
The government increased the beneficiation licensing fees from US$20 000 in 2011 to US$100 000.
After a public outcry, the government was recently forced to make a U-turn and further reduced it to US$50 000 in May 2013.
However, the announcement did not make the situation any better, as the local business community felt the charges were meant to push aside locals from fully realising their potential in diamond beneficiation.
Zimbabwe National Chamber of Commerce (ZNCC) national deputy president, Hlanganiso Matangaidze, described the new fees as “too restrictive and discouraging”.
“The reduced fee of US$50 000 is still too much for our people. Why do you punish local people for starting a project that creates employment,” said Matangaidze during a business consultation stakeholders meeting held in the city recently.
Zimbabwe’s diamonds are reported to have created employment for over 60 000 people in Surat, India, Matangaidze said.
He added that the local industry had potential to do the same, given a level business playing field as their counterparts in the world.
A local diamond consultant, Trevor Hamandishe said diamonds should be treated as a strategic mineral that creates employment for locals.
“The fees are just too much for the new players. Government should adjust the fees downwards,” he said.
Zimbabwe, however, has the ability to generate more revenue from diamonds if it courts investors for the purposes of beneficiation, he added.
Hamandishe said while beneficiation was yet to succeed in Africa, Zimbabwe could play a leading role through building skills and partnering investors.
According to Diamond Beneficiation Association of Zimbabwe chairperson, Richard Mvududu, beneficiation in the country was still in its infancy.
He said there are a few companies that were registered and licensed to cut and polish diamonds.
Mvududu said licence fees were the major challenges for companies that had already acquired cutting and polishing equipment.
“The fees are too high, such that they actually contribute to cost of production per carat. The operation costs were US$100 per carat,” he said.
Experts say the fees make local products uncompetitive when you compare them with international markets like China, where cost of production is US$15 per carat, in India it is US$8-10 per carat.
This makes local product or exports expensive, they said.
The business community proposed that the country should match regional counterparts like Botswana and South Africa, who charge about US$11 and US$485 per carat respectively.