The Zimbabwe Consolidated Diamond Company (ZCDC) has
appealed to government for tax and foreign currency policy relief, warning that
worsening global market conditions have pushed the state-owned miner into a
growing viability crisis.
The diamond producer is seeking a reduction in royalties
from 10 percent to five percent of total sales, an increase in foreign currency
retention on export proceeds from 70 percent to 80 percent, and formal
confirmation of the removal of a 2,5 percent depletion fee that remains
outstanding due to the absence of a supporting statutory instrument.
ZCDC chief executive Douglas Zimbango told legislators
during a parliamentary familiarisation tour that the company is grappling with
a severe collapse in diamond prices, particularly for its rough stones.
“The international diamond market remains in a downturn, and
specifically the unique small Marange rough diamonds, which will typically
command a 2026 price of between US$22 to US$34 per carat compared to other
producers who average US$100 for their better-quality rough diamonds,” said
Zimbango.
He said Zimbabwe’s diamonds have been hit harder than the
broader global market due to a combination of structural and market-specific
pressures.
“Internationally, rough diamond prices have gone down by 26
to 35 percent but Zimbabwe goods have experienced a worse downturn, more than
72 percent from the peak of US$79 to US$22 per carat, because of product
profile, geopolitical tensions, synthetic diamonds, market collusion and an
unsatisfactory sales framework,” he said.
The appeal underscores mounting pressure on Zimbabwe’s
natural diamond sector, which is facing intensifying competition from
laboratory-grown diamonds, weaker global demand and operational cost
challenges.
Despite the difficult environment, Zimbango said the company
is pressing ahead with a turnaround plan aimed at increasing annual production
to five million carats in 2026, up from 3,8 million carats produced last year.
He said ZCDC has produced approximately 26,5 million carats
since beginning operations in 2016 and is now shifting toward a less
capital-intensive “owner mining” operating model as part of its restructuring
efforts.
The strategy is expected to be supported by a proposed
US$7,2 million capital injection, with the government, through its
shareholding, expected to provide funding for critical mining equipment.
ZCDC falls under the Mutapa Investment Fund, Zimbabwe’s
sovereign wealth fund, which oversees several strategic state enterprises.
As part of its long-term response to market volatility, the
miner is also looking beyond its current alluvial operations by pursuing
alternative mineral concessions and accelerating domestic kimberlite
exploration projects in partnership with Russian diamond producer Alrosa.
Zimbango said kimberlite deposits offer stronger long-term
prospects because they are generally cheaper to mine over time and tend to
attract better prices in international markets than alluvial stones.