News

Advanced Search

A Final Nail in the KP Coffin

Apr 8, 2010 12:56 PM   By Avi Krawitz
Comment Comment Email Email Print Print Facebook Facebook Twitter Twitter Share Share
RAPAPORT... Abbey Chikane, the Kimberley Process (KP) monitor for Marange, Zimbabwe, submitted his report to the KP on his March fact-finding mission to the area, stressing that his role is to examine and supervise diamond shipments from the fields. In short, the 32-page document outlined the steps that the various stakeholders — private companies Mbada Diamonds and Canadile Miners, their state-owned partner, Marange Resources, and various government bodies — need to take in order to become KP compliant.

“If compliant, the KP monitor is required to confirm the certification on the relevant Kimberley Process Certificate with his signature and stamp and will digitally photograph the certificate and shipment,” Chikane explained.

If not compliant, Chikane said that he will provide the reasons for this noncompliance and recommend remedies, during which period the shipment will be held until the remedial action is completed. Thereafter, “the KP monitor will reexamine the export and, if fully compliant, certify it and sign the certificate, as provided in the joint work plan,” the report stated.

The bottom line, therefore, is that Marange diamonds will inevitably make their way to the market with KP certification. This is no fault of Chikane’s, who is correct in his understanding of the mandate that the KP has given him. This was always the intention of the 12-step, joint work plan formulated for Zimbabwe at the KP November plenary in Namibia — although questions should still be raised regarding whether the country can export monitor-approved stones if other aspects of the plan have not been fulfilled.

For now, however, it is important to understand the sequence of historic events that have occurred at Marange and assess whether the diamonds that await Chikane’s clearance were mined under an atmosphere of killings, violence, intimidation and abuse. For the sake of simplicity, we will not consider the legal claims that have been made by London firm African Consolidated Resources (ACR) at this time.

The Marange timeline, a full account of which can be viewed at www.diamonds.net/zimbabwe/, can be summarized into the following periods:

1. July – November 2006: The government declared a free-for-all at the fields, resulting in a chaotic diamond rush.

2. November 2006 – October 2008: Police took control of the fields through “Operation Chirorokoza Chapera,” which sought to end illegal panning, and mining was conducted by the Zimbabwe Mining Development Corporation (ZMDC).

3. October 2008 – February 2009: Government forces carried out the violent “Operation Hakudzowkwi” to rid the Marange fields of police-controlled smuggling syndicates.

4. October 2008 – Around October 2009: The fields were controlled by military forces, with mining still being carried out by the ZMDC.

5. October 2009 – Present: State-owned Marange Resources, a subsidiary of the ZMDC, formulated joint ventures with Mbada and Canadile to mine two of five diamondiferous zones in the field.

With the exception of the most recent period, for which no in-depth assessment of the working and living conditions at Marange has been conducted, the fields were plagued with killings, violence, rape, child labor, smuggling and general abuses, all of which have been well documented.

Ongoing reports of corruption and stone smuggling by Mbada, Canadile and/or the government representatives involved at the mine provide further cause for concern. But, again, for the sake of simplicity and to provide the benefit of the doubt, we will set these reports aside for now.

Therefore, even assuming that no such abuses have occurred during Mbada and Canadile’s tenure, it is highly likely that conflict diamonds from Marange, at least from the earlier periods, have already, and have yet to, enter the market.

Chikane reported that between October 2006 and February 2010, 4.4 million carats of accounted-for diamonds were mined at Marange, 1.624 million carats of which were sold, with the remaining 2.767 million carats held in stock by the various stakeholders, as described in the following table:


Chikane further reported that an additional 1.366 million carats were produced by the ZMDC during its three-year term as the sole operator of the fields and that it sold 876,000 carats, leaving 490,000 carats in stock. It was not clear from the report whether these carats were factored into the figures pertaining to Marange Resources, a subsidiary of the ZMDC.

The point to stress now, however, is that all of the production related to Marange Resources (or ZMDC), the Minerals Marketing Corporation of Zimbabwe (MMCZ) and the police/the Ministry of Mines and Mining Development (MMMD) should be considered conflict diamonds, given what we know about the events that have occurred at the Marange fields since 2006. That’s discounting the unknown number of carats smuggled from the mines or those exported with KP certifications during the same period.

Chikane is scheduled to visit Marange again shortly “to conduct a thorough examination of individual shipments…to confirm whether rough diamonds selected for shipment were produced and prepared in accordance with KPCS minimum requirements.”

As Chikane stated, eventually, they will be cleared, as all that the stakeholders need do is simply fulfill a list of technical and bureaucratic requirements for Chikane to provide his stamp of approval. In endorsing or, rather, formulating, the 12-step program for Zimbabwe, the KP paved the way for past atrocities to fall by the wayside. The organization has a pending review visit to the area, which may provide it some opportunity to redeem itself, but we imagine this too will be an audit of ticks and KP crosses, rather than an assessment of the country’s human rights record.

We therefore expect both the KP and Zimbabwe to hail their successful handling of the crisis, or crisis averted, when Chikane fulfills his mandate and issues KP certificates for these diamonds, even if this will leave an unpleasant taste in everyone’s mouths. For us, it will serve as another chapter in the Marange Mess, and a final nail in the KP’s coffin.

Note: This article is an excerpt from a market report that is sent to RapNet members on a weekly basis. To subscribe, go to www.rapnet.com or contact your local Rapaport office. The writer can be contacted at avi@diamonds.net  

Disclaimer

©Copyright 2009 by Martin Rapaport. All rights reserved. Rapaport USA Inc., Suite 100 133 E. Warm Springs Rd., Las Vegas, Nevada, USA. +1 702 893 9400. This Rapaport Market Report is provided solely for your personal reading pleasure. Nothing published by The Rapaport Group of Companies and contained in this report should be deemed to be considered personalized industry or market advice. Any investment or purchase decisions should only be made after obtaining expert advice. All opinions and estimates contained in this report constitute Rapaport`s considered judgment as of the date of this report, are subject to change without notice and are provided in good faith but without legal responsibility. Thank you for respecting our intellectual property rights.
Comment Comment Email Email Print Print Facebook Facebook Twitter Twitter Share Share
Tags: Avi Krawitz, Abbey Chikane, Avi Krawitz, Conflict Diamonds, Government, Kimberley Process, Marange Fields, Namibia, Production, Zimbabwe
Similar Articles
Firestone Reports Quarterly Sales 150Firestone Optimistic About 2018 Prices
Jan 17, 2018
Firestone Diamonds saw an increase in the average price achieved at its Liqhobong mine in Lesotho in the second
Comments: (0)  Add comment Add Comment
Arrange Comments Last to First
© Copyright 1978-2018 by Martin Rapaport. All rights reserved. Index®, RapNet®, Rapaport®, PriceGrid™, Diamonds.Net™, and JNS®; are TradeMarks of Martin Rapaport.
While the information presented is from sources we believe reliable, we do not guarantee the accuracy or validity of any information presented by Rapaport or the views expressed by users of our internet service.