Bloomberg News

Zimbabwe Diamond Embargo Costs $30 Million, Mpofu Says

November 13, 2012

A trade embargo on diamonds from Zimbabwe’s Marange fields has cost the southern African nation about $30 million, Mines Minister Obert Mpofu said.

The U.S., the European Union, Australia and New Zealand don’t allow individuals or companies to trade with designated members of President Robert Mugabe’s Zimbabwe African National Union-Patriotic Front party, or businesses associated with the party. Western nations cite human-rights abuses, including the killing of gem diggers at Marange, as the reason for targeted sanctions.

“We estimate that to date $30 million has been confiscated by agencies in transit to Zimbabwe and I know this is a concern to all of us,” Mpofu said in an interview in the northwestern resort town of Victoria Falls, near the border with Zambia. “It doesn’t show any concern about livelihood of Zimbabweans.”

Critics of Zimbabwe’s human-rights record, including Ontario-based Partnership Africa Canada, argue that Zanu-PF has looted about $2 billion from the Marange fields, partly to fund the nation’s military, which is seen as loyal to Zanu-PF.

“Conservative estimates place the theft of Marange goods at almost $2 billion since 2008” and the funds are going to enrich members of Mugabe’s ruling circle and gem dealers, Partnership Africa Canada, a member of the Kimberley Process, the world regulatory body on the diamond trade, said in a report released yesterday.

Proof Needed

Zimbabwean Defense Minister Emmerson Mnangagwa denies the allegation, saying in an interview yesterday that critics should prove it.

Anjin, a Chinese mining company that’s the biggest extractor of stones at Marange, is closely aligned to Zimbabwe Defence Industries, a state-owned weapons procurer controlled by the military, Partnership Africa Canada said in its report.

“ZDI trades diamonds and other commodities primarily through two companies” based in the capital, Harare, it said.

“They trade approximately $50 million diamonds on average a month,” Partnership Africa Canada said.

Calls to ZDI’s Harare offices weren’t answered when Bloomberg News sought comment today.

Still, diamond companies in Europe and the Middle East are keen to trade stones from Marange, traders said at a two-day diamond conference in Victoria Falls that ends today.

Exclusion’s Effects

“We’re convinced that the resulting de facto exclusion of imports from certain areas negatively affects the ongoing social and economic development of Zimbabwe,” Stephane Fischler, president of the Antwerp World Diamond Center said today. “Your diamonds are not fully exposed to the international market, and as such failing to guarantee you the best price and optimal return.”

The U.S. would lift targeted sanctions against people and businesses allied to Zanu-PF when Zimbabwe honored its own laws, Mark Gonzales, a spokesman for the U.S. embassy in Harare, said at a conference in Victoria Falls.

“The ball lies with the government of Zimbabwe to honor its laws and honor the role of its institutions as defined by its people and when that happens then sanctions can be gone,” Gonzales said.

Zimbabwe is able to produce 8 percent to 10 percent of the world’s rough diamonds since its eastern Marange fields were discovered, Chaim Even-Zohar, chairman of industry consultant Tacy Ltd., told the conference yesterday. While Zimbabwe complies with Kimberley Process laws, “insurance companies are afraid of OFAC,” forcing it to sell gems a quarter below market value.

OFAC, the Office of Foreign Asset Control, is a U.S. Treasury department arm that monitors and controls trade with nations under U.S. sanctions.

To contact the reporter on this story: Brian Latham in Johannesburg at blatham@bloomberg.net

To contact the editor responsible for this story: Nasreen Seria in Johannesburg at nseria@bloomberg.net


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