Diamonds Secretly Auctioned by Zimbabwe

We publish courtesy of Diamond Price Guide

Despite the fact that Zimbabwe’s diamond industry has been in the international spotlight for nearly a year now due to suspicions of foul-play, human rights abuses and diamond smuggling, the Mines Ministry is doing its best to sell its stones.

This weekend a secret auction of Zimbabwe diamonds from its controversial Marange fields took place at an undisclosed location in Harare from Septeber 9th to September 13th, 2010.  The auction was technically approved by the Kimberley Process (KP), the international diamond watchdog established to eradicate the trade of conflict diamonds and was supervised by Abby Chikane, a monitor from the KP.

Officials refused to disclose the quantity of diamonds auctioned to international buyers or the amount of money netted by the sale. “We will not be releasing the quantity or amount that was generated because these were private sales by private companies,” said Thankful Musukuta, Secretary for Mines.

“No other country in the world releases their sales figures or quantities.  When it comes to the issues of diamonds we must be careful as a country because of the sensitivity of the issues associated with them.”

Regardless of Zimbabwe’s desire to keep statistics of the sale hidden from the public, sources close to the sale told Rapaport News that nearly 500,000 carats of diamonds from the Marange mine were sold.

Despite the KPs approval and supervision, many critics of Zimbabwe’s diamond trade have voiced their suspicions about this recent secret diamond auction. Some have denounced the auction’s secrecy saying that the lack of transparency in the sale may be dangerous.  They believe that auctions such as these make it easy for international diamond traders to skirt laws against dealing with companies on the US and European Union (EU) sanctions list.

The American based Rapaport Diamond Trading Netword (RapNet) has already prohibited its members from trading stones mined from the controversial Marange diamond fields.

It was less than a year ago that the Kimberley Process suspended Zimbabwe’s privilege  to produce or sell diamonds from their Marange diamond fields when investigators discovered that soldiers managing the mines had beaten nearby residents and forced them to work in the diamond mine.

Although Zimbabwe’s KP suspension has since been lifted, the weekend sale was the second and last auction authorized by the KP until the organization completes a second investigation.  Further sales will be allowed if and only if investigators can confirm that the military has ceased to control the mines and has ended all human rights abuses in the Marange diamond fields near the Mozambican border.

Zimbabwe completed its first sale of diamonds from the Marange mines last month, auctioning off 900,000 carats and netting approximately $30 million, under supervision by the KP.  The next sale, pending the KP’s approval, is expected to be scheduled for October.

Zimbabwe claims that the military no longer runs the Marange diamond fields, reporting that field operations in those areas have been contracted to two small South African companies, Mbada Diamonds and Canadile Miners.  A third Chinese company has also been permitted to operate there.

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