ACR boss said Mbada could increase diamond production 10-fold

African Consolidated Resources chief Andrew Cranswick told United States ambassador Charles Ray that Mbada, one of the joint-venture partners in the Mrange diamonds, could produce gem quality and industrial diamonds worth over $1.6 billion a year. And it could increase this production 10-fold.

At the time ACR legally owned the Marange diamonds but the government had gone ahead to enter into partnership with Mbada and Canadile.

Full cable:

Viewing cable 10HARARE36, FISHMONGERS UPDATED ON DIAMONDS IN ZIM

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C O N F I D E N T I A L SECTION 01 OF 03 HARARE 000036

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AF/S FOR BRIAN WALCH

NSC FOR SENIOR AFRICA DIRECTOR MICHELLE GAVIN

MAPUTO FOR POL/ECON

E.O. 12958: DECL: 01/21/2020

TAGS: PREL PGOV PHUM EMIN ASEC ZI MZ

SUBJECT: FISHMONGERS UPDATED ON DIAMONDS IN ZIM

Classified By: Ambassador Charles Ray for Reason: 1.4 (d).

——-

SUMMARY

——-

¶1. (SBU) On January 14, Andrew Cranswick, CEO of African

Consolidated Resources (ACR), and Greg Sebborn, an ACR

special projects consultant, briefed the Fishmongers heads of

mission group on current activities regarding their claims

dispute with the Government of Zimbabwe (GOZ) over diamond

fields in Marange. They also told the Fishmongers that a

significant amount of diamonds were being smuggled to RENAMO

stronghold areas in Mozambique. A large sale of diamonds

from Marange was canceled earlier this month at the last

minute by the GOZ because of non-compliance with the

Kimberley process. We continue to receive reports of human

rights violations in the Marange area. END SUMMARY.

—————————————–

GOZ Ignores Court Rulings in Favor of ACR

—————————————–

¶2. (SBU) Cranswick and Sebborn met with the Fishmongers on

January 14 to discuss ACR claims and the current situation in

Marange. Last year, despite ACR claims to a large area in

Marange (Chiadzwa) and a High Court order validating the

claims, the state-owned Zimbabwe Mining Development

Corporation (ZMDC) entered into joint ventures with two

private companies to form Mbada Mining Ltd and Canadile

Miners Ltd for the purpose of exploiting the Marange diamond

fields.

¶3. (SBU) The High Court order by Justice Charles Hungwe

validating ACR’s claims with immediate effect was handed down

in September 2009. The State appealed that part of the

ruling which said the order should take immediate effect; the

appeal is proceeding.   After Mbada and Canadile took

possession, ACR sought an emergency eviction order. This was

denied. Despite Hungwe’s ruling, Mbada and Canadile continue

to operate.

¶4. (SBU) In a somewhat contradictory move, the Ministry of

Mines, which has argued that ACR’s claims are invalid, sent

ACR a letter stating that the claims had been canceled. To

justify the cancellation, according to Cranswick and Sebborn,

Minister of Mines Obert Mpofu forged documents to indicate

that ACR’s claims are in an area alleged to have been

previously reserved by the GOZ for gold mining. Apart from

the forgery, there is no official record that the area was

reserved.

—————–

Who’s Benefiting?

—————–

¶5. (SBU) On January 7, 2010, Mbada attempted to hold an

auction offering 300,000 carats for sale. The auction was

later canceled by the Ministry of Mines; the government

claimed Mbada had failed to follow proper administrative

procedures. Had the auction been held, it would have been a

clear violation of the Kimberley Process Certification

Scheme’s (KPCS) joint work plan adopted and agreed upon with

Zimbabwe in November 2009, stipulating that all diamonds

intended for export must be inspected by a KPCS monitor.

(NOTE: A monitor has not yet been appointed; the GOZ rejected

the monitor suggested by the Kimberley Process. END NOTE.)

Qthe monitor suggested by the Kimberley Process. END NOTE.)

According to Cranswick and Sebborn, all of the diamonds

slated for sale were only a fraction of extracted diamonds at

the site and would have been only mid- and low-grade

diamonds. The auction was merely intended as a mechanism to

legitimize their operations.

¶6. (SBU) Based on actual Mbada production figures for a

HARARE 00000036 002 OF 003

42-day period in September and October obtained by ACR,

Cranswick and Sebborn estimated that the annual sales value

for Mbada industrial diamonds (about 50 percent of mined

diamonds) would be over US$286,000,000. For gem quality (the

other 50 percent ranging from near gem to excellent quality),

the annual sales value would be US$1,375,760,000. Production

could be increased 10-fold, according to Cranswick and

Sebborn.

¶7. (SBU) According to Cranswick and Sebborn, about 15

percent of the Mbada diamonds are stolen and presumably sold

in Mozambique. ACR has no production figures for Canadile;

they presume that most Canadile diamonds are sold illegally

in Mozambique or elsewhere. They noted that the Ndau ethnic

group, related to the Manyika, are predominant in the Marange

area as well as on the Mozambique side of the border which is

a RENAMO stronghold. They told the Fishmongers that large

stores of weapons remain in the area and speculated that

diamonds could be traded for arms.

¶8. (SBU) While it is generally assumed in Harare that large

profits from diamonds sales have gone to the military or

ZANU-PF insiders, neither Cranswick or Sebborn, nor anyone

else we have talked with, knows who is benefiting. A

ministerial committee (ZANU-PF ministers Mpofu and Emmerson

Mnangagwa, MDC-T ministers Tendai Biti and Elton Mangoma, and

MDC-M minister Welshman Ncube) has been appointed to look

into the situation, but until now has not taken action. We

asked Minister of State Gorden Moyo why MDC-T has not

investigated given that diamond profits could be used to

support the government but are likely being used to benefit

the military and ZANU-PF insiders. He responded that MDC-T

is concerned, but is waiting for the ministerial committee to

investigate. Sebborn told us on January 21 that MDC-T may be

waking up. He had a recent conversation with Biti, and

Tsvangirai and an MDC-T lawyer with whom Sebborn had met were

planning to meet with ZANU-PF Acting Minister of Mines

Emmerson Mnangagwa.

————————————–

Human Rights and Labor Abuses Continue

————————————–

¶9. (SBU) An NGO operating in Mutare, the Center for Research

and Development (CRD), continues to report human rights

abuses in and around the Chiadzwa mining field based on

sources working for Mbada, Canadile, and other informal

miners. These unconfirmed reports indicate that soldiers in

the area “regularly” raid a local business center where they

beat mine workers and locals and steal any cash, illicit

diamonds, or other valuables.

¶10. (SBU) CRD also reports that a new “operation” has begun,

Operation Gwejeline (slang for “female panner”), whereby

soldiers round up women at local shops, force-march them to

the mountains, rape them, and force them to sing songs. CRD

estimates this occurs at least twice per month. In addition,

soldiers have rounded up citizens and mining company

employees, stripped them of any cash and valuables and beat

Qemployees, stripped them of any cash and valuables and beat

them, sometimes leaving the victims naked. According to CRD,

“the soldiers do as they please and are pretty much above the

law.”

¶11. (SBU) CRD also described harsh labor conditions at the

Mbada and Canadile sites. According to CRD, there is no

running water and 150 employees share one Blair (pit) toilet.

Employees work 12 hours every day and are not allowed to

rest during weekends. Mbada employees are paid US$300 per

month and not allowed to claim overtime. CRD further

reported that on several occasions, mining employees caught

stealing have been turned over to soldiers who beat them in

the nearby mountains; the beaten employees never returned to

work and their fate is unknown. CRD told us it has a copy of

a letter from the Minister of Labor, Paurina Gwanyanya

HARARE 00000036 003 OF 003

(MDC-T) to Canadile, informing them that the Ministry was

launching an investigation into breaches of Zimbabwean labor

law.

——-

COMMENT

——-

¶12. (SBU) We have seen no indication that the Ministry of

Mines or ZMDC is interested in transparency or complying in

full with the Kimberley Process. It is clear that ZANU-PF

insiders and/or the military are seeking to circumvent the

Kimberley process for their own ends. What is unclear is why

MDC-T, on behalf of a cash-strapped government, has not been

proactive in trying to bring Marange under control. Perhaps

in part to prolong MDC-T acquiescence, the Ministry of Mines

is unwilling to entirely turn its back on the KPCS, instead

seeking shortcuts that might minimally satisfy their

commitments without sacrificing opportunities for illicit

enrichment. The GOZ’s attempt to appoint its own monitor is a

case in point. END COMMENT.

RAY

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