HARARE – The Zimbabwe Consolidated Diamond Company (ZCDC) has lost a staggering 1,440,507 carats of diamonds due to outdated processing equipment, according to the Auditor-General’s report for the year ended December 31, 2023.
The significant loss, which is 7.58% above the company’s own policy limit for cleaning losses, highlights major operational deficiencies at the state-owned diamond miner.
“The Company’s equipment on processing diamonds was in need of upgrading. As a result, the Company had a processing loss of 29% (1 440 507 carats) which was 7.58% above the Company policy limit of a cleaning loss,” the report noted.
The Auditor-General issued an Adverse Opinion on ZCDC’s 2023 financial statements, indicating that they do not present a fair and accurate financial position of the company.
A primary reason cited was the company’s failure to comply with International Accounting Standard (IAS) 21, which governs the treatment of foreign exchange rates.
The report found that ZCDC’s management did not properly assess its functional currency, a crucial step given Zimbabwe’s volatile economic environment. The financial effects of this non-compliance were deemed material and pervasive to the financial statements.
In addition to the operational and accounting issues, the report also raised an emphasis of matter regarding ZCDC’s wholly-owned subsidiary, DTZ-OZGEO (Private) Limited.
The subsidiary is non-operational and its financial results were not consolidated into ZCDC’s statements due to unresolved issues following the cancellation of its special mining grants.
“I draw your attention to the fact that the Company’s wholly-owned subsidiary DTZ -OZGEO (Private) Limited is currently not operational and has been classified as a project due to the unresolved issues following the cancellation of its Special Mining Grants 5267 and 4955 under the Government Policy on the consolidation of the diamond industry in Zimbabwe,” the report further highlighted.
“As a result, the financial results of DTZ-OZGEO have not been consolidated into the Company’s financial statements. My opinion is not modified in respect of this matter.”
The audit also revealed a number of recurring issues that ZCDC has failed to address from previous years. The company’s management showed little progress in implementing recommendations from the 2022 and 2023 annual reports.
ZCDC submitted its statutory tax returns for January to April 2023 after the legal deadlines.
The Auditor-General also raised concern about ZCDC’s board composition. While a Chief Finance Officer (CFO) was appointed, the board still lacks a member with legal expertise.
The report also revealed that the company had not addressed its significant debts to two suppliers, totaling USD 575,527 and ZWL15 million.
It was also established that no progress was made in liquidating former miners to recover outstanding debts.
According to the audit report, ZCDC management did acknowledge the diamond processing issue and stated that a new detachment plant was purchased in December 2023 to address cleaning losses.
The company also had plans to invest in a deep boiling facility in 2024 to further improve efficiency.
That's straight looting of diamonds and thus nothing to do with inefficiency….