Zim enters diamond big league

Despite rampant corruption, smuggling and looting of diamonds, Zimbabwe has entered the top 10 league of the world's gem-producing countries.

The development indicates the troubled nation could yet recover from a decade of economic ruin if good governance is restored.

Zimbabwe is now ranked as the seventh biggest diamond-producing nation in the world, according to global rankings released on Friday.

According to figures released by the diamond regulator, Kimberley Process Certification Scheme (KPCS), and reproduced by US trade gem regulator, Rapaport, Zimbabwe produced diamonds worth $334-million last year and is now ranked seventh in the world.

The rankings show that Botswana is the world's top gem producer with $2.5-billion, followed by Russia, which produced diamonds worth $2.38-billion, and Canada, with diamonds valued at $2.3-billion.

South Africa comes in at fourth position after its mines produced gems worth $1.8-billion, while Angola produced $976-million and is rated fifth. Namibia is now ranked sixth after producing $744-million.

Zimbabwe has been operating under strict and tight KPCS monitoring. This is because most of the country's diamond earnings are from the controversial alluvial Marange or Chiadzwa fields.

There are, however, other diamond mining operations around the country.

During the period under review, global rough diamond production by value rose by 39% year-on-year in 2010 to $12-billion, according to the KPCS.

The value figure was still below the peak year of 2008, when production totalled $12.73-billion.

In terms of carat volume, rough diamond production rose by nearly 7% to 133.12 million carats. The average price per carat produced rose by 30% to $90.13.

Despite Zimbabwe's entry into the top 10, diamond production is riddled with corruption, sleaze and theft.

Finance Minister Tendai Biti last week intensified his complaints about the lack of transparency and accountability in the Chiadzwa field.

Biti said in parliament on Tuesday during the presentation of the fiscal policy review statement that Zimbabwe had exported more than 700000 diamond carats since the beginning of the year, but the exports and revenues declared were not tallying.

Biti said it was worrying that while Zimbabwe exported 716958 diamond carats to outside markets, only $103.9-million was realised.

He said this was happening at a time when diamond prices continued to firm on the international front, with carat prices fluctuating between $1300 per carat and highs of $5000 per carat.

"It is worrying to note that there is no connection whatsoever between diamond exports made by Zimbabwe and the revenues realised thereof. It is worth noting that out of 716958.90 diamond carats exported from Zimbabwe in the period under review, only $103.9-million was accounted for through CD1 forms submitted at the Reserve Bank of Zimbabwe."

"About 18% of the diamonds mined from Marange diamond fields are of gem quality; 23% of diamonds mined from the Murowa diamond fields are industrial diamonds. We need to put in place proper mechanisms to monitor the movement of the diamonds from the point of mining, marketing, export and trade."

According to Zimbabwe's 2011 national budget, the country's mineral resources contributed 4.9% of GDP and 65% of its exports in 2010.

By some definitions, this makes Zimbabwe resource-rich, although the mineral revenues that actually accrue to the state are minimal and significantly less than one might expect.

Zimbabwe was in June allowed to sell its diamonds under close KPCS monitoring amid heavy protests from the US, Canada and the European Union.

The KPCS, which evaluates and monitors international diamond trade to prevent the selling of conflict diamonds, started when Southern African diamond-producing states met in Kimberley, South Africa, in May 2000 to discuss ways to stop the buying and selling of blood diamonds.