Murowa Diamond output up

HARARE - Diamond production at Murowa Mine soared 28 percent to 92 000 carats in the third quarter ended September, a recent third-quarter 2012 operations review from parent Rio Tinto International has shown.

The increase in production at Murowa comes in the wake of falling international diamond prices, which have witnessed most diamond companies cutting back on production.

In the period under review Murowa’s diamond production also grew by nine percent to 215 000 carats in the first nine months of the year.

The group’s overall output increased five percent year-on-year to 3 706 million carats during the period under review.

Argyle Mine in Australia produced 2 454 million carats during the quarter, an increase of seven percent a year earlier, it said.

Canada’s Diavik Mine production was flat at 1 160 million carats.

Rio Tinto said its overall diamond production also increased 13 percent to 9 873 million carats during the first nine months of the year.

Addressing journalists in the capital this week Mines minister Obert Mpofu said diamond prices have been falling in the past three to four months putting a dent on government’s $600 million targeted diamond revenue.

“When the prices go down, producers also reduce their production capacity. They cannot produce at a loss,” he said.

Mpofu did not give the new target for diamond sales.

In July, Finance minister Tendai Biti complained about the low revenue trickling from diamond sales saying by mid-year only $46 million had been realised against the year’s anticipated $600 million.

That forced him to slash the 2012 budget spending target by 10 percent to $3,6 billion.

He said earnings from key minerals such as gold and diamonds were not making it into state coffers.

Natural resource extraction watchdogs have accused President Robert Mugabe’s ruling party of channelling profits from Marange diamonds to senior military officers and party leaders.

Diamond watchdog Kimberley Process has given the country the green light to sell its gems despite opposition from rights groups and Western nations.

Next month, Zimbabwe hosts a conference expected to attract hundreds of traders, diamond experts and non-governmental organisations.

Mpofu said the conference would seek to manage world perception of the Zimbabwean diamond industry and attract foreign investors.

Murowa, located near Zvishavane in South Central Zimbabwe, is a 78/22 percent partnership between Rio Tinto and RioZim Limited (RioZim), an independent Zimbabwean owned and listed company. RioZim is currently undergoing restructuring following approval from its shareholders as part of efforts to increase revenue and unlocking shareholder value.

The Zimbabwe Stock Exchange-listed miner, which is expecting to return to profitability in 2013, forecasting a profit of $20,8 million, has failed to record profits for the past two years and owes its creditors, mainly local financial institutions funds in excess of $50 million.

Shareholders authorised the group to set up subsidiaries for gold, base metals, diamonds, energy and chrome, a move which they believe will see investments being done at subsidiary level and targeted towards a specific resource.

The group will create sub-units — Rio Gold, which will own Renco, Cam and Motor Mines, and all other group gold assets, while Rio Base Metals will own Empress Nickel Refinery and all related base metal assets.

Rio Diamonds will own Murowa and all other related diamond assets while Rio Energy will own Sengwa Colliery assets including a potential power plant.

Rio Chrome will also own 60 percent of a RioZim unit, RM Enterprises and all related chrome assets.

RioZim shareholders have also allowed the group to raise additional capital to develop various resources of its own. - John Kachembere

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