Zimbabwe shuts six diamond firm operations, forces merger

The Zimbabwe government has ordered six diamond mining firms, mainly joint ventures, operating in the country's diamond-rich Marange region to cease operations immediately.

Mines Minister Walter Chidhakwa on Monday cited expiration of licences when he announced the shutting down of operations of Marange diamond mining firms in a meeting in capital Harare.

"Since they no longer hold any titles, these companies were notified to cease all mining activities with immediate effect," the minister said.

The firms are now given 90 days to vacate, taking away equipment and their valuables.

This comes after the miners declined government proposals to merge them into one mining entity, in which the state will have a 50 percent stake.

The Marange diamond fields, in eastern Zimbabwe, were first discovered in 2006 and believed to hold 25 percent of world's diamond reserves.

After chasing away small panners, the government allowed commercial evacuation to begin in 2010 and was able to sell the gems on the international markets a year later.

Mining of the Marange diamonds initially brought huge profits for the firms as the diamond fields were alluvial, which required less investments to mine. As the alluvial deposit dwindled, the country's diamond output dropped from the height of 12 million carats in 2012 to 3.3 million in 2015.

The deep decline of diamond revenue contributed partly to the 2.5 contraction of the mining sector last year. The economic growth has also slowed to the lowest pace in six years to 1.5 percent.