Cut Diamond Beneficiation Fee, Say Zimbabwe Businesses

The government slashed the fee to $50,000 in May from $100,000 after increasing it from $20,000 in 2011 following a series of protests from business leaders.

However, the local business community says the cost is still too high. Zimbabwe National Chamber of Commerce national deputy president, Hlanganiso Matangaidze, described the new fees as “too restrictive and discouraging”.

“The reduced fee of $50,000 is still too much for our people," he told The Standard. "Why do you punish local people for starting a project that creates employment,” he asked.

He said that Zimbabwe’s diamonds could provide employment for tens of thousands more workers if there was a level playing field for businesses.

Meanwhile, 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.

Diamond Beneficiation Association of Zimbabwe chairperson, Richard Mvududu, said beneficiation in the country was still at a very early stage, with few companies registered and licensed to cut and polish diamonds.

He said that license 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 the cost of production per carat. The operation costs are 100 per carat,” he said.

That makes them uncompetitive with China, where cost of production is $15 per carat, and India where it is $8-10 per carat. The business community is proposing that the country should move costs so that they are line with regional counterparts such as Botswana and South Africa, where costs are $11 and $485 per carat, respectively.