RAPAPORT… India is clearly courting Zimbabwe. In doing so, the world’s largest diamond cutting center is sending its own, none-too-subtle, message ahead of the Kimberley Process (KP) plenary meeting set to take place in Jerusalem on November 1.
The local Indian industry hosted Zimbabwe Mines Minister Obert Mpofu, where he emerged as the clear guest of honor, somewhat overshadowing the PowerPoint presentations of De Beers, Rio Tinto, ALROSA and Botswana with both his charm and his country’s untapped resources.
Mpofu subsequently visited Surat, where thousands of diamond workers — some holding A4 printouts showing the Indian and Zimbabwean flags side by side — lined the streets to greet him. He, in turn, appeared quite eager to see Zimbabwe diamonds in a Surat factory and when the goods arrived, his smile’s sparkle made the diamonds pale by comparison.
In short, Mpofu’s visit to India was a PR coup for Marange diamonds and it came just in time. These goods are about to be scrutinized again, not only by the KP, but perhaps more significantly, by human rights groups and the international media.
In the coming week preceding the KP plenary, as well as during the meeting, discussions will center on findings from a recent KP review mission to Zimbabwe and what the appropriate next steps will be to help bring Marange goods to the market.
It is likely that further KP-approved sales will be scheduled for production mined at Marange’s Mbada and Canadile concessions after May 28, when they were deemed compliant with KP standards. There have been two already, in August and September. But the bigger question will be what to do with the stockpile of approximately 6 million carats of goods mined before May.
There are also questions about the military presence in the rest of the Marange fields and compliance issues in the other concessions that have been granted at Marange.
The truth is that very little is known about the operations being conducted at Marange. Transparency is clearly not a strong point in Zimbabwe’s state-run agencies. This week, South African watchdog the Southern African Resource Watch and three members of the Chiadzwa community in Marange petitioned Mbada Diamonds’ parent company, New Reclamation, to disclose the full extent of its Marange operations.
Amongst other things, they want to see written assurances that Mbada’s activities are benefiting all Zimbabweans, proof that compensation is being paid to communities relocated from the Marange concession area and evidence of the consultations that allegedly transpired with the leaders of affected communities ahead of the commencement of mining operations.
Excluding discussions outlining the challenges of selling Marange goods to the U.S. and the European Union (EU), which both have trade sanctions on the governmental agencies controlling Marange, these issues did not enter the Mumbai fray, however. If Mpofu’s blatant message at the conference was “We’re going to sell these diamonds one way or another,” India’s less conspicuous reply was “We’ll buy them.”
The demand for Zimbabwe goods extends beyond India to Belgium, Israel, China and the United Arab Emirates (UAE) and is indicative of the current hunger for rough diamonds in the market.
As Rio Tinto’s marketing manager, Jean Marc Lieberherr, explained, there are a number of factors influencing the demand for rough at the moment. While these factors include buoyant emerging markets in China and India and the prevailing effects of the sharp production cuts enacted during the downturn, the most striking remains the fact that the long-term outlook for supply falls significantly below demand. More than one speaker at the Mumbai conference stressed that it is vital for manufacturers to ensure long-term, stable supply from producers. This is embodied by the Zimbabwe opportunity.
Mpofu claims Zimbabwe will soon be the largest diamond producer in the world. While the lack of transparency and available data about the Marange resource make it difficult to assess, the country will clearly be a major player, offering enough diamonds to ease nerves about the current shortage of rough.
These shortages will not be discussed in Jerusalem come November. But they will impact the meeting. It will be a challenge for KP members to separate themselves from these considerations. Frankly, it is difficult to argue that the livelihood of 800,000 Surat workers and their dependents is not reliant on a stable supply of rough that Zimbabwe promises.
However, that is not the KP’s mandate. Rather, its directive, in this instance, is to assure that the Zimbabwe diamonds that come to the market are conflict free, in every aspect of the definition. Despite all the Zimbabwe hype now apparent in India, fulfilling that goal remains a tough task.
The writer can be contacted at firstname.lastname@example.org.
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