US sanctions may have cost Zimbabwe US$1.9b in diamond revenue


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Zimbabwe was the fourth largest diamond producer in the world last year but it literally gave away its diamonds because of sanctions imposed by the United States which continues to bar the sale of diamonds from Marange although the mines were certified by the world governing body two years ago.

Previous reports said the country was selling its diamonds at 25 per cent less than the normal price, but the Parliament Committee on Mines and Energy says in its report released last month “currently, the diamonds are sold at below 25% of the normal price”.

If this is correct, this means Zimbabwe is not selling its diamonds at 75 percent of the normal price but at less than a quarter of the normal price which means it could have been prejudiced of US$1.93 billion last year alone.

Figures just released by the Kimberley Process Certification System show that Russia was the largest diamond producer last year with 34.927 million carats but it got less revenue than Botswana which sold 20.554 million carats and was the third largest producer.

Botswana realised US$2.98 billion translating to an average price of US$144.95 a carat while Russia averaged US$82.28 a carat raising US$2.87 billion.

Canada, which was the fifth producer, got the highest price per carat of US$192.07. It sold 10.45 million carats for US$2 billion.

Although Zimbabwe was the fourth largest producer with 12.06 million carats, it earned less revenue than Angola and South Africa which were the seventh and eighth largest producers.

Zimbabwe earned US$644 million realising US$53.40 a carat, while Angola sold 8.33 million carats for US$1.11 billion at an average price of US$133.25 per carat.

South Africa realised an average price of US$145.54 after selling 7.077 million carats for US$1.03 billion.

The biggest loser was the Democratic Republic of Congo which was the second largest producer with 21.524 million carats but only realised US$183.1 million.

Australia sold 9.18 million carats for only US$29.35a carat earning US$269.4 million.

The Parliamentary Committee said because of United States sanctions on Zimbabwe’s diamonds the mining companies were trading their diamonds through unconventional means because major international banks, insurance companies and couriers did not want to be associated with Marange diamonds.

“As a result of these financial restrictions, a number of loopholes have been created leading to fiscal leakages, promotion of corruption and national insecurity.

“The USA seems adamant not to remove the sanctions because a letter was written in 2011 by the Minister of Finance requesting the removal of restrictions because of the impact it was having on the socio-economic development of the country.

“In an act of solidarity, the World Diamond Council also called for the removal of the sanctions at a Diamond Conference that was held in Victoria Falls in 2012.

“The irony is that the companies operating in Marange were certified KP compliant, hence should have the freedom to trade equally like all players on the world market.

“However, these companies have been denied that privilege based on unconfirmed allegations that they were involved in undemocratic practices aimed at undermining democracy and human rights abuses in Zimbabwe,” the committee said.

Reports on the committee’s findings have largely concentrated on the “missing” diamond revenue which is allegedly supposed to have benefitted the military when, if correct, Zimbabwe is earning less than a quarter of what it is supposed to.

Finance Minister Tendai Biti says the country has no money to hold the elections due in three weeks. He had budgeted that all the money for the referendum and the elections would come from diamond revenues.

Some leaders of civil society, while calling for free and fair elections, only last month insisted that the United States must not remove sanctions on Zimbabwe, thus including those on the country’s diamonds which were supposed to finance the elections.

(6 VIEWS)

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Charles Rukuni
The Insider is a political and business bulletin about Zimbabwe, edited by Charles Rukuni. Founded in 1990, it was a printed 12-page subscription only newsletter until 2003 when Zimbabwe's hyper-inflation made it impossible to continue printing.

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