14 June 2013

Zimbabwe: Sanctions Hurt Diamond Sales

Photo: Denford Magora
Marange Diamond Fields in Zimbabwe

ZIMBABWE is selling its rough diamonds from Marange at 25 percent less the normal price due to illegal sanctions imposed on the country, a report by a Parliamentary Portfolio Committee on Mines and Energy has said.

"This has made it difficult for the companies to effectively market and trade their diamonds at competitive prices," said the report which was presented to Parliament recently.

"Currently, the diamonds are sold at below 25 percent of the normal price. In the process, the sanctioned diamond companies are trading their diamonds through unconventional means because major international banks, insurance companies and couriers do not want to be associated with Marange diamonds."

As a result of these financial restrictions, a number of loopholes have been created leading to fiscal leaks, promotion of corruption and national insecurity.

"The US seems adamant not to remove the sanctions because a letter was written in 2011 by the Minister of Finance requesting for the removal of restrictions because of the impact it was having on the socio-economic development of the country. In an act of solidarity, the World Diamond Council also called for the removal of the sanctions at a diamond conference that was held in Victoria Falls in 2012," said the report.

It said companies operating in Marange were certified as KP compliant, hence should have the freedom to trade equally like all players on the world market. However, these companies have been denied that privilege based on unconfirmed allegations that they were involved in undemocratic practices aimed at undermining democracy and human rights abuses in Zimbabwe.

The committee believes that if the situation remains, the country would not be able to realise optimal benefits from its diamonds.

Government is in joint ventures with Mbada Diamonds, Anjin, Marange Resources and Diamond Mining Company on a 50-50 percent shareholding basis. It owns 10 percent of Marange Resources.

Zimbabwe expects diamond production from its Marange fields to reach 16,9 million carats this year. The country grew its production of diamonds by 1 000 percent in three years to 11,1 million carats in 2011 despite extreme domestic and international impediments.

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