Partnership Africa Canada (PAC) issued a report outlining the establishment of a regional certification for tracking conflict-prone minerals in Africa’s Great Lakes region. Key features include mandatory, regular and independent third- party audits of all participants in the supply chain and a database to track mineral flow from the mine site to export and beyond. In its press release, PAC noted that its recommendations will form the basis for the Mineral Tracking and Certification System currently in development by the International Conference on the Great Lakes Region (ICGLR) based in Burudi.
KP Authorizes Marange Exports; DMIA, WDC, JA Protest
The U.S. voiced strong opposition to the recent decision by Mathieu Zamba, the current Kimberley Process (KP) chair, giving Zimbabwe “unilateral authorization” to resume exports of diamonds mined in the Marange — without the required consensus from KP members. In a letter to KP participants, Yamba, who is from the Democratic Republic of the Congo (DRC), wrote, “With immediate effect, Zimbabwe is hereby authorized to resume exports from the compliant mining operations of Mbada and Canadile (Marange Resources).”
The U.S. State Department warned that it will publish the names of companies taking delivery of these goods and will ask the Office of Foreign Assets Control (OFAC), which administers sanctions to closely examine all transactions. Reports indicated that the
European Union (EU) has also objected. The World Diamond Council (WDC) issued a statement in which it “advises members of the international diamond industry to refrain from trading in and exporting goods from the region until the situation and the status of these goods becomes clearer.” The WDC offered its assistance in resolving these issues “while protecting the credibility of the KP.”
Industry associations have also protested. Matthew A. Runci, president and chief executive officer (CEO) of Jewelers of America (JA) and Ronald J. Friedman, president, Diamond Manufacturers & Importers Association of America (DMIA), issued a joint letter to their members that they “strongly believe an earlier suspension of exports from Marange should remain in place and that KP participants must adhere to it until further notice.” They urged members to practice “extreme caution and carry out due diligence to protect the integrity of the diamonds they trade in” and that suppliers should provide additional assurances that the diamonds “have not been obtained in violation of applicable national laws and/or sanctions and have not originated from Marange, Zimbabwe.”
Obert Mpofu, Zimbabwe’s Mines Minister, congratulated Yamba on his “pragmatic leadership” and his “efforts to revive the spirit of consensus in the KP,” according to a report in the Herald. Mpofu also castigated De Beers for “looting” Marange diamonds under the guise of exploration and wanted the company to account for these diamonds.
Concerns about diamond smuggling and lost diamond revenue continue. All Africa reported that Zimbabwe could have lost more than $150 million of diamonds mined in the Marange last year. The Zimbabwe Independent reported clashes in the government over the $174 million in diamond revenues that are missing and problems between the President’s office and Finance Minister Tendai Biti over the use of Chiadzwa revenues.*
ALROSA’s 2010 Production Surpasses De Beers
The ALROSA Group of Companies produced a total of 34.3 million carats of rough diamonds during fiscal 2010, a slight gain against fiscal 2009. This production total also marked the second consecutive year that ALROSA surpassed De Beers diamond production, which totaled approximately 33 million carats in 2010.
ALROSA’s combined sales of rough and polished diamonds amounted to approximately $3.48 billion (RUB 99.2 million) in the fiscal year, while its net profit totaled $308.2 million (RUB 8.78 billion).
Interfax reported ALROSA plans to issue an initial public offering (IPO) in mid-2012 that could raise $3 billion with the placement of 20 percent to 25 percent of its shares, making it the world’s largest listed diamond concern. In an interview with Bloomberg Television, Fyodor Andreyev, ALROSA’s chief executive officer (CEO), said that ALROSA is considering placements in the U.S., Canada, Russia and Hong Kong.
According to Andreyev, ALROSA will host a tender for the selection of an IPO consultant, inviting such banks as Goldman Sachs, JPMorgan, Morgan Stanley and VTB. Analyst estimates put the worth of the company’s business at between $6 billion to $12 billion, he stated.
–*Additional reporting provided by Acquire Media.
Article from the Rapaport Magazine - April 2011. To subscribe click here.