Back to Index

This article participates on the following special index pages:

How diamond proceeds will be shared
The Zimbabwean and Christian Science Monitor
August 21, 2010

View this article on The Zimbabwean website

Diamond critics have begun analysing the effects of the sale of Zimbabwe's diamonds recently and how it is likely to benefit society.

Some international diamond activists have warned the international community of buying the blood diamonds, saying doing so will see more human rights abuses.

Zimbabwe on August 11 sold 900 000 carats or 180 kilogrammes of Marange - Chiadzwa diamonds, which realised US71 million or US$ 80 per kilogramme. Above there is a table which shows how the royalties will be broken down, with the bulk of the proceeds going to funding "production costs". It is not clear who will benefit from these production costs. The Zimbabwe Mining Development Corporation (ZMDC) will receive 2,5 percent but because it belongs to government, it will pay it a dividend, according to Mines Minister Obert Mpofu.

The current stockpile of diamonds has been put at 900 kilogrammes or 4,5 million carats with an estimated worth of US1,7 billion.

"But 4.5 million at US$80 per carat comes to a lousy US$360 million and according to the split above the government will only realise US$36 million in royalties. Perhaps what they meant was that had the gem quality diamonds not been filtered out for sale to buyers in Manica, Mozambique, then the average per carat would be far higher," said a critic.

"It also does not help build confidence in the proposed split of diamond proceeds to learn that the chief executive and general manager of the Zimbabwe Mining Development Corporation Dominic Mubayiwa and three of his top men at the Corporation have been suspended for two months." Mubayiwa, his group finance director Robert Karemba, group technical services manager Albert Chitambo and corporate secretary and legal advisor Tichaona Muhonde were suspended on 26 July 2010 after the huge three storey home Mubayiwa is building in Borrowdale came under the spotlight. The four were suspended by the new ZMDC board chairman Godwills Masimirembwa.

"Some of us will recall this was the gentleman (Masimirembwa) who was in charge of reducing shop selling prices during our hyper-inflationary era and it was the pursuit of this policy that led to the likes of Makro and other stores being "legally" looted of all their working capital after prices of goods were reduced and these goods were then bought by the team and their cronies who had enforced the price reductions," said the critic.

A US-based Rapaport Diamond Trading Network announced a Zimbabwe diamond ban last week. Rapaport is one of the largest buyers of diamonds in the US.

"I think the significance of this is that the US diamond market is one of the biggest in the world, and when they say they will only purchase a diamond when they are sure that diamond is not from the Marange diamond fields in Zimbabwe, they are taking a moral stand," says Tiseke Kasambala, a senior researcher on Zimbabwe for Human Rights Watch in Johannesburg.

The Christian Sceince Monitor said it was not a surprise that the diamond industry was taking steps to keep politically-tainted stones out of circulation.

"The market is glutted with diamonds, many of them coming out of Russia and other markets that were once off limits, and movies like the action thriller "Blood Diamond" and the real-life trial of former Liberian President Charles Taylor for human rights crimes do nothing to improve the image of a stone that was once considered to be the ultimate symbol of love," it said last week.

"Yet the very same global diamond industry watchdog created to clean up the diamond trade in conflict zones (the Kimberley Process) has given Zimbabwe's diamonds a clean bill of health, sending a mixed signal to consumers looking for a guilt-free purchase. And if US diamond buyers can do without a few hundred thousand Zimbabwean stones, then it is also true that Zimbabwe sellers can do without 10,000 US-based diamond traders. Which again raises the question: will this boycott work?"

"You have to ask yourself is there another market, and my experience is that there is always another market for minerals," says Laura Seay, an assistant professor of political science at Morehouse College who has studied the minerals market in conflict zones in central Africa. "One of the flaws of the Kimberley Process is that it was designed around conflict, not around inhumane conditions or other more ambiguous human rights abuses such as child labour or forced labour."

One of the positive effects of the Kimberley Process, Seay adds, is that it did manage to raise awareness among consumers about where diamonds often come from, and how to avoid funding conflicts with one's spending habits. "If Rapaport can be successful in raising awareness about Zimbabwe diamonds, then it could be effective. And it could push the Kimberley Process to look more broadly at other human rights abuses."

Looking east

To be sure, America is one of the largest markets for diamonds - even in tight economic times such as these. But there are other emerging markets, many of them in Asia, which are experiencing rapid economic growth. Last week, China replaced Japan as the world's second largest economy after the US, and it stands ready to overtake the US in the coming decade. "I think there are a lot of other buyers for diamonds out there, such as India, which are quite keen to buy diamonds," says Raymond Louw, editor of the Southern Africa Report in Johannesburg. "I think this is a going to act as a token rather than a debilitating measure for the regime of [Zimbabwean President] Robert Mugabe."

"If [the Rapaport group] mobilises other nations to ban our gems, then we will be left with no other options other than embarking on the Look East Policy, which over the past 10 years kept the country moving despite illegal sanctions," says Zimbabwe's Minister of Mines, Obert Mpofu in a Monitor interview.

"We will sell our stones to countries...We have countries like China, Malaysia, Russia, India and other Asian countries where we can market our diamonds."

Please credit www.kubatana.net if you make use of material from this website. This work is licensed under a Creative Commons License unless stated otherwise.

TOP