Indian diamantaires rush to Zimbabwe

With UN lifting the ban on rough diamond imports from there, supply booking starts ahead of the wedding season.

Within a week of the first of Zimbabwe’s diamond mines getting an okay from the United Nations’ certification process for eligibility to be marketed, Indian firms have rushed there to book supply.

According to an industry source, around half a dozen Surat-based importers of rough diamonds (‘roughs’) are in Zimbabwe, wishing to book at the current low prices, ahead of a possible upsurge due to the wedding season in December. And, it appears, leading Indian diamantaires based out of Belgium have already booked roughs worth $500 million from the region.

 

The sales of diamonds thought to finance conflicts and human rights abuse is banned by the UN. In 2003, it established what is called the Kimberley Process (KP) certification scheme to ensure this. Any raw (rough) diamond without KP certification is considered a ‘blood diamond’ and Zimbabwe, the subject of global focus over many years for human rights abuses of its citizens, is considered a particular problem. It has been a long time since any of its roughs have had the KP label.

However, two mining operations from Zimbabwe’s Marange region (it has a tenth of the world’s reserves) have finally got KP certification. Last week, an agreement was ratified by KP members at the organisation’s plenary meeting in Kinshasa, Congo, to enable export of roughs from these two KP-compliant operations. More exports from other mining operations in the area are expected to follow, after the KP monitoring team says so.

India’s gross import of roughs, says the Gems and Jewellery Export Promotion Council (GJEPC), rose by 31.2 per cent in 2010-11 to $11.9 billion. India, and Surat in particular, is the world’s biggest diamond cutting and polishing centre, handling 70 per cent of all roughs mines across the world. the rough diamonds mined across the world and processes India’s 90 per cent of rough imports.

With increased supply from Zimbabwe, the diamond cutting and polishing centres in the world — mainly India, Israel and Belgium — are expected to process $17 billion worth of roughs this year, a 27 per cent increase over the $13 bn in 2010.

“This is a real milestone and demonstrates categorically that the KP provides the framework through which the integrity of the rough diamond chain of distribution can be protected, while enabling producing countries to benefit from their natural resources,” said Eli Izhakoff, president of the World Diamond Council.

Praveen Nanavati, joint secretary of Gujarat Heera Bourse, said, “The miners and Indian manufacturers are going to benefit a lot from this decision (KP okay for Zimbabwe). Mining is costly and selling the mined goods is necessary to generate a cash flow. In India, factory owners want large quantities of low-cost roughs to keep their operations running, as well as being able to offer products to price-conscious buyers.”

A majority of mines in these regions are owned by Chinese, who are not interested in investing in the region’s actual growth. They are willing to stockpile the roughs only to sell at a higher price, he said.

“(India) processors are keen to get roughs from Marange and any such deal would be welcome,” said Rajiv Jain, chairman of GJEPC.