ALROSA Gets Zimbabwe All to Itself in Mining Agreement

Zimbabwe's President Emmerson Mnangagwa was delighted, while ALROSA CEO Sergey Ivanov was also quietly satisfied of a job well done as they posed for photos after announcing in Moscow that the Russian firm will be launching exploration work in Zimbabwe.

With Russian Federation President Vladimir Putin hosting Mnangagwa, it was fairly clear that a deal would be struck.

"Today we see opportunities for a new stage of our partnership," said Ivanov, making it sound like the mining giant was doing the African country a favor. "We are ready to develop new joint projects for diamond exploration and extraction. We also seek to support Zimbabwe in the development of its diamond-mining industry in line with industry’s best practices. We are happy to share with our partners a wealth of experience in the field of mineral exploration and diamond mining, including the industry self-regulation and responsible business."

Ivanov said a local subsidiary, ALROSA (Zimbabwe) Limited, was established in December in Harare. It will implement projects for exploration and mining operations with a view to establishing joint diamond and other ore mining enterprises. The firm's geologists and mining engineers will arrive in Zimbabwe within the next month to start operations.

That ALROSA would be the first – and maybe the only – major diamond miner to step into Zimbabwe hardly comes as a surprise. Ivanov has been holding talks with the country's leaders for some time. In March, Russian Foreign Minister Sergei Lavrov traveled to several African countries, highlighting Moscow's interest in those countries' diamond and platinum industry during a meeting with Mnangagwa.

Meanwhile, Alrosa, which already has operations in Angola and Botswana, is not exactly a stranger to the African continent, and this move will further expand its footprint.

Meanwhile, Mnangagwa will present the fact as a great success. The country is in no better state economically or politically than it was following the euphoria of the ouster of former President Robert Mugabe – in fact the situation may even be regarded as even worse. Just this week, several people were killed and hundreds injured during protests over an extraordinary 140% tax increase on petrol and diesel. In a country which reportedly suffers from an 80% unemployment rate, fuel now costs an incredible $12 per gallon, inflation is surging, and basic foods and medicines are scarce, it is no surprise that the country is described as being on the brink of collapse.

Despite the country’s diamond riches, none of the major producers operate in Zimbabwe. Rio Tinto Group sold its stake in the Murowa project in 2015 while De Beers quit the country more than 10 years ago. With ALROSA moving into Zimbabwe, the question automatically pops up as to whether De Beers will do likewise.

I have asked that question of senior officials several times over the years. The answer has always been a diplomatic 'no'. When Mugabe was the authoritarian leader for decades and avoided in the West and elsewhere as he undermined democracy and the rule of law in Zimbabwe, it was clear why De Beers would not want to be involved in the country.

And given that Mugabe's replacement is his former deputy who was just as ruthless as his ex-boss while serving under him; that the situation in the country remains abysmal; and the disputed and violent nature of Mnangagwa's election victory last year, it is fairly obvious that De Beers won't be returning anytime soon.