RAPAPORT… By his own admission, Zimbabwe’s Minister of Mines Obert Mpofu is not one to mince his words. That was clearly evident in his message to the diamond industry at the recent International Diamond Conference, Mines to Market, in Mumbai. “We are going to sell our diamonds. Those are our G-d-given resources and we are going to sell them,” the minister said. “We are going to do what is good for our people.”
Mpofu led a Zimbabwe delegation to India in October to participate in the conference, after which he was a guest at a crowded reception during a day visit to Surat. The Surat event was billed as the “world’s largest cutting center meets the world’s largest diamond producer.”
The trip was significant both from a personal point of view and for Zimbabwe’s standing in the diamond industry. Mpofu, who was educated on scholarship at New Delhi University and has sent his children to the same school to follow in his footsteps, noted that one of the reasons he was appointed mines minister was because he had previously visited Surat. He appeared well aware of the importance the city holds in the industry, stressing his desire for potential cooperation between the two (see Sourcing for Surat on page 90).
“Diamond mining in Zimbabwe is expected to be a major driver for the economic recovery, both in Zimbabwe and globally,” Mpofu said. “Our entry to the market should be seen as giving hope to an industry that is forecast to have a serious commodity shortage.”
A Freak of Nature
The minister stressed that, like it or not, Zimbabwe is going to be a major player, if not the biggest player, in the diamond industry. “Some have called it a freak of nature, while others have referred to it as a wild card, but the Marange resource is without doubt the largest diamond find in the world today,” he said.
Mpofu was equally conscious of the impact the pending Kimberley Process (KP) annual plenary meeting in Jerusalem in November could have on his country’s future. Mpofu appealed to the international diamond community to cooperate with his government to ensure that the Marange diamonds benefit all stakeholders.
Speaking in advance of the KP meeting, Mpofu dismissed any possibility that exports would be held up any further by the KP and he called any attempt to prevent the flow of the country’s diamonds a “politicization” of the industry.
After heated but inconclusive discussions in Israel in June, the KP finally reached agreement in St. Petersburg, Russia, in July, to allow Zimbabwe to hold two diamond auctions of stones mined after May 28, 2010, by Mbada Diamonds and Canadile Resources. The stockpile of about 4.7 million carats mined at Marange before the May 28 deadline, and those that were mined by various agencies before Mbada and Canadile gained their concessions in November 2009, are subject to a forensic audit, which also is scheduled for discussion at the November meeting in Jerusalem.
Message to Rapaport
Mpofu told RDR that a negative outcome from the KP meeting was “not an option,” insisting that Zimbabwe was going to sell its diamonds and not be influenced by negativity.
Responding to the campaigns against the country highlighting the illegality of exporting Marange goods to the U.S. and the European Union (EU), the minister challenged the Rapaport Group to engage with the country, rather that act as proxies for people who are anti-Zimbabwe. “If you are truly a media house, you should be objective in your reporting, but it is clear to us that you are fronting for people who do not want us to progress,” he told RDR.
In the October 2010 issue of RDR, the Rapaport Group warned its clients that it will expel members who knowingly offer Marange diamonds for sale on the RapNet trading platform and it urged its members to obtain written assurances that they are not being supplied Marange diamonds. While the trading of Marange diamonds may be legal in certain jurisdictions, companies owning or selling the diamonds are banned by the U.S., EU and U.K. governments and the trading being conducted by citizens of these countries may be illegal.
Mpofu countered that denying Zimbabwe the right to sell its diamonds was itself a human rights issue. “You are punishing the whole industry and there are no human rights issues in Zimbabwe,” he said. “It is the most peaceful country and you can move anywhere, anytime.”
Forgiving De Beers
Mpofu suggested that De Beers, the previous miner at Marange, had looted its diamond fields but, in the end, “lost because what they did was not only criminal but immoral.” The minister challenged De Beers assertion that the company did not find any diamonds during the 15 years it had rights to the Marange fields. “In Zimbabwe, you don’t need a sample to realize that Marange has diamonds,” he claimed. “You pick them up as you walk through” the area.
Outgoing De Beers Chief Executive Officer (CEO) Gareth Penny told the conference that De Beers was looking for kimberlite mines during its tenure at the mine, as opposed to alluvial prospects. The company sold its prospecting claims at Marange to African Consolidated Resources (ACR) in March 2006, just before the diamond rush of July 2006, when the government opened the fields to the public.
Mpofu stressed that, despite its history, the government was happy to work with De Beers and any player in the industry, rather than rivaling anybody. He added that the government would act responsibly by selling its stones based on market trends.
“Our strategy is very simple in that it is the demand for rough diamonds that will determine the level of our production,” the minister explained. “We realize that minerals are a finite resource and, as such, it is not our intention to overwhelm the market with an oversupply of rough diamonds for less value.”
In addition to developing its diamond mining sector, in which Mpofu reported that numerous companies have applied for concessions, Zimbabwe is looking to establish a beneficiation industry that would set aside 10 percent of production for local cutting and polishing.
While the legal and bureaucratic processes are being established to set aside the 10 percent supply, Mpofu said that five or six manufacturing companies — from India, Asia and Zimbabwe — have registered their businesses and are ready to start operating once the systems are in place.
He added that demand for Marange diamonds was obvious even before the KP-approved sales, when the stones could be found in all the major diamond centers. “It is the diamond find in Marange that is going to change the diamond industry in Zimbabwe and globally,” Mpofu said. “It should be well understood that all recent and current challenges regarding Marange have to do with the politicization of our recent discoveries, and impact our new role and influence in the industry.”