Compiled by ZELA’s Deputy Director Shamiso Mtisi
Speech at the 8th Ordinary Meeting of the African Diamond Producers Association (ADPA) Committee of Experts and Council of Ministers: 23 March 2023- Elephant Hills, Victoria Falls
- Your Excellency, the President of the Republic of Zimbabwe, Dr. E.D. Mnangagwa
- Hon Vice-President of the Republic of Zimbabwe, Rtd. Gen. Dr. C.D.G.N. Chiwenga
- Hon. W. Chitando, Minister of Mines and Mining Development and KP Chair 2023
- Hon.E D. Biteko (MP), Minister of Minerals of the United Republic of Tanzania
- Minister of State for Matebeleland North, Hon. R. Moyo
- Hon Ministers from different African countries,
- World Diamond Council President, Mr. Edward Asscher
- Diamantaires, Ladies and Gentlemen
Your Excellency, I want to firstly thank the Ministry of Mines and Mining Development and the African Diamond Producers Association (ADPA) for inviting me to this very important meeting, here in beautiful Victoria Falls. I would also like to thank the Ministry of Mines for working closely with Parliament to establish a National Tripartite Taskforce that worked tirelessly to establish contact with civil society, communities, and mining companies during Zimbabwe’s Self-Assessment, the KP Review Visit in 2022 and current KP Chairmanship. All these processes leading to where we are today.
The 8th Ordinary Meeting of the African Diamond Producers Association Committee of Experts and Council of Ministers is an important event in the diamond mining, trade and export sector in Africa. ADPA constitutes the voice of African states in the diamond value chain.
I work with the Zimbabwe Environmental Law Association (ZELA) which researches and provides policy and legal advice on natural resources to communities, policy makers and engages with the private sector in Zimbabwe and Southern Africa for improved management and use of mineral resources wealth for the benefit of the people. ZELA is a member of the Kimberly Process Civil Society Coalition (KPCSC), the first African group to Coordinate the global KP Civil Society Coalition until 2022.
Today I will briefly talk about ‘Opportunities and Threats on Advancing Investments and Economic Benefits from Africa’s Diamonds. My presentation is based on my experience, research and participation in many Kimberley Process Review Visits, meetings and engagements with the diamond industry, Government officials and other diamond supply chain actors in Africa. I have gained a lot of insights on how the diamond value chain works and can benefit Africa that I am willing to share.
Therefore, allow me to present 10 key points that can stand as challenges and opportunities in advancing investments in the diamond sector in Africa. Your Excellency I also have a bonus point on mining and trade of critical minerals-energy transition minerals. Please note, my points are a mixed bag-they are not in any particular priority order.
Creating the Right Legal and Policy Environment
African states need to strengthen their legislative and policy environment to ensure security of investment, just tax regimes and transparent licensing and contracting frameworks to promote legal certainty for investors in the diamond sector. One of the key legislative gaps in Africa is policy inconsistencies and changes that make it difficult for investors to plan and secure their investments. Most internal control systems remain weak and lead to leakages of diamonds. Some countries in Africa, for example Sierra Leone, Liberia and others have made progress in the formalization of artisanal and small-scale mining through laws that grant mining permits to local artisanal miners to allow them to participate in this economic activity. Others are licensed as dealers and agents. Mining laws should reduce the administrative burden and simplify permitting procedures for mining and trade of diamonds while respecting the rights of local communities and other laws.
- Undervaluation of Diamonds
Undervaluation of diamonds sourced from African countries is a real and major risk and vulnerability that ADPA should closely look into. Undervaluation entails buying diamonds on the cheap and reselling them at 10 times their original price without any major value addition to the stone. ADPA should lead research across the continent to assess if African states are deriving value from diamond trade and some markets. Pushing harder to combat unfair trade practices is critical. There is need to look at factors that cause undervaluation, which may include lack of value addition, lack of sorting of diamonds, or even reputational issues that damage the image of diamonds.
- Beneficiation and Value Addition
Many African countries have been exploring the option of investing in value addition and beneficiation. Value addition needs good economic and market research and assessments before sinking capital into it. My suggestion would be to assess value addition from a regional approach through establishment of Regional Value Addition or Beneficiation Hubs with shareholding by States or commercial state entities e.g. a SADC regional hub for cutting and polishing could be established in any of the diamond producing countries. The benefits could be spread through employment from the region and distribution of wealth across the region. States can also take advantage of the regional population and economies of scale as part of the market for the end product e.g. jewellery. National level capacity can then be incrementally built through this approach. Investing in research, innovation and skills will be important including uptake and deployment of breakthrough technologies. There is need to create a common market for diamonds. This can enhance information sharing, cooperation and building a good brand of diamonds from African countries.
- Consumer needs and Responsible Mining and Sourcing Standards
For both foreign and domestic investors or state commercial entities to survive in this age, listening and addressing consumer interests and changing dynamics in the luxuries market is vital. Companies investing in Africa need to seriously consider adopting responsible sourcing standards that allow them to implement due diligence measures to identify risks/impacts on human rights, the environment, labour and community needs and take measures to address them. Consumers of diamonds are now concerned about ethical standards and community benefits. Advances in technology, Artificial Intelligence and Block Chain are changing the market landscape and African states have to be aware of how to take advantage of these advances. Consumer resistance to unethically mined diamonds and millennial demands for clean diamonds is real and not imagined.
After the adoption of responsible sourcing principles by the Kimberley Process in 2021, African states should consider adopting policy or legislative measures to promote and implement responsible sourcing measures or Environmental, Social and Governance (ESG) systems in the diamond value chain for companies. The KP Administrative Decision on Principles on Responsible Sourcing adopted in 2021 provides a basis for this as well as the WDC System of Warrantees.
The growth of synthetic or lab grown diamonds has potential to affect economies, livelihoods and investment decisions in African diamond producing countries. African countries should be worried and take measures to address any factors that negatively affect the brand of natural diamonds to attract investments. The sudden upsurge in synthetic diamonds being marketed as ethical and the cheap prices should worry anyone in Africa concerned about the economy. The idea should be to find measures to make natural diamonds answer the ethical questions.
- Diamonds for Community Development
Investments in Diamond mining and trade have contributed to economic development in some communities. However, many communities in Africa have not yet realized the economic benefits. We observed that except a few countries, many communities in Africa where diamonds are mined do not have access to adequate services such as hospitals, roads, water and other social services. There is need for African States to come up with local community development policies for diamond mining companies.
- Community Participation and Artisanal and Small-Scale Mining
Artisanal diamond mining is largely criminalised in most African states. However, there are different options to pursue. The first is legalizing artisanal diamond mining for communities to work on marginal areas but respecting KP minimum requirements. The second is adoption of Community Development Agreements as the case in Sierra Leone with percentage allocation of revenue to communities from investments while the third is creating a Community Share Ownership Trust. Promises that are unwritten or codified in legislation create tension, disgruntlement, and resistance to investment in communities – leading to the loss of social license to operate for companies. Community-private partnerships may also help to trigger community led investments. In Sierra Leone, we observed the Gem Fair model as a pilot that can be replicated and customized in other countries. There are many examples to learn from in DRC, Angola and Guinea.
- Kimberley Process Reforms
There is need for African states to look at ways of customizing already existing approaches and systems for an expanded conflict diamond definition that allows countries to assess human rights, environmental and labour related impacts. The idea is not to embargo diamonds from any country, but to help countries address problems by themselves or with assistance from others. Banks are now looking at environmental systems, and labour laws in order to advance loans for investments. Therefore, the diamond sector should not lag behind.
I also encourage African countries to domesticate the Africa Mining Vision and the Africa Minerals Governance Framework (AMGF) to ensure that Africa utilizes its mineral resources strategically for broad-based, inclusive economic development. I was involved in drafting the AMGF, so I am very familiar with the key aspects and requirements. The AMF even includes the adoption of measures to promote good governance of mineral resources through revenue transparency, contract disclosure, beneficial ownership, and environmental stewardship.
ADPA’s Voice in the KP has largely been inaudible.
ADPA should start to actively participate in KP meetings and events including research to advise and inform African states on emerging threats or opportunities in the diamond sector. ADPA should consider involving civil society to help critique ideas, plans and processes. I must applaud Zimbabwe for extending this invitation to us this year and last year.
Critical Minerals or Energy Transition Age
Your Excellency, we have now entered the critical minerals or strategic minerals age – the new oil. African states should take advantage of the global appetite for critical minerals such as Lithium, nickel, graphite, chrome, copper and platinum among others. We are talking of minerals that can facilitate green and digital ambitions, the making of batteries, aerospace and defence applications. Emerging regulations and initiatives in the EU such as the Critical Raw Materials Act seek to promote partnerships with other supplier countries, avoid dependence on single suppliers and to regulate environmental sustainability and human rights. Another emerging initiative is the Minerals Security Partnership (MSP) involving several countries including the United States, Japan, Canada, EU among others (with the DRC, Angola, and Botswana having attended some of the meetings). Chinese investments in critical minerals across the world is also increasing.
We need to take advantage of these initiatives and assess how Africa can benefit. For Zimbabwe, developing a Lithium or Strategic Minerals Policy will be critical, and should include comprehensive legislative framework for facilitating investments, mining, trade, value addition and export of the processed minerals. We need to ensure that we reduce dependence on one investor in the sector to promote competition and avoid undervaluation of minerals.
Your Excellency I am sure the points I have shared with help African states to move forward on making diamonds work for the people and economies.
With those remarks I thank you.