Re-import of Zimbabwe gems enthuses diamond trade

After several years, a consignment of rough diamonds from Zimbabwe arrived in Mumbai last week. The trade here is hoping this will mean an end to the ‘blood diamond’ problem that had stopped legal imports from Zimbabwe.

In the 1980s and 1990s, forces in some African countries were using forced labour to mine gems. The money was used to war against governments or illicit trafficking. The diamonds so mined were known as blood diamonds.

Earlier this decade, on the basis of a United Nations mandate, producer nations adopted a process called the Kimberly Process Certification System to vet the origin of gems. Zimbabwe’s was a unique case in that the government itself was accused of using ‘blood diamond’ methods to mine and sell gems to enrich a few people.

So, imports from Zimbabwe were banned. But, supply came through other channels —$1.5-1.7 billion worth gems from that country were reaching the market each year.

However, this August, Kimberly allowed a one-off supervised sale of 1.1 million carats of diamonds mined in Zimbabwe.

This has given hope to the diamond trade here (about 70 per cent of rough diamonds are cut and polished in India). Says Vasant Mehta, chairman of the Gems and Jewellery Export Promotion Council (GJEPC): “With the Kimberley process certifying diamonds from Zimbabwe, one can say that the abuse of blood diamonds has ended”.

“Supplies from Zimbabwe will bring equilibrium in demand and supply of rough diamonds and discipline prices. This is expected to end speculative movements in prices of rough diamonds,” said Mehta.

The first consignment has been imported by Diamond India Ltd, a company formed by leading merchants and processors. “Our company is the first importer of these diamonds; these are worth nearly Rs 78 crore.” said Chairman Pravin Shankar Pandya:

Zimbabwe is said to have exported diamonds worth $50 million in three consignments. Two have been imported by Dubai-based merchants of Indian origin. Normally, diamonds from Dubai come to India for processing.

Meanwhile, Russia has also decided to increase the supply of rough diamonds and a large chunk of that is expected to come to India, putting further pressure on speculative activity. However, traders say Russia is a mature player and the supply rise will be gradual.

Shreyas Doshi, chairman, Shrenuj Diamonds, said: “In any scenario, a gradual price rise in polished diamond prices will be seen and an annual 10 per cent price rise cannot be ruled out.”

Some traders are concerned at the processing capacities, since the processing hub, Surat, is facing a shortage of workers. Chandrakant Sanghvi, western region head of GJEPC, said, “The Gujarat government should incentivise training of skilled workers required for diamond processing to help the industry cope with the labour shortage.”