Old Mutual to disinvest in bloody diamond company

JOHANNESBURG – Old Mutual Plc, the biggest insurer in South Africa, said it’s reviewing its stake in scrap metal recycler New Reclamation Group Ltd. which agreed to mine diamonds from Zimbabwe’s Marange deposit in a venture with the government.

Old Mutual, which owns less than 6 percent of Reclamation, is aware that the Johannesburg-based company “recently engaged with the Zimbabwean government regarding an investment in the mining industry,” it said in an e-mailed response to questions today. “We are reviewing our holding.”

New York-based Human Rights Watch says more than 200 people were killed last year as the army and police cleared as many as 20,000 illegal miners from Marange.

Rapaport Group, also based in New York, said its RapNet Diamond Trading Network, the world’s biggest, banned its members from dealing in gems from Marange with immediate effect because of reports of “severe” human rights violations in the area. Zimbabwe’s police say they have had no reports of atrocities.

Reclamation’s engagement with Zimbabwe’s government “post- dated any reported wrongdoing in the mining industry,” Old Mutual said. Reclamation Chief Executive Officer Michael Movsas wasn’t available to comment when Bloomberg News called his office in Johannesburg today.

Marange was seized by the government from U.K.-listed African Consolidated Resources Plc in 2006 after gems were found at the site. African Consolidated said on Nov. 5 that Reclamation’s venture overlaps its own claim area.

High Court Order

African Consolidated got a High Court order on Sept. 24 upholding its claims and instructing Reclamation’s partner, Zimbabwe Mining Development Corp., to cease mining in the area.

Zimbabwe’s state-controlled Herald newspaper reported on Nov. 11 that the Reclamation venture had been mining diamonds from Marange for about a month. Old Mutual urged Johannesburg- based Reclamation to “remain” in compliance with the court order, the insurer said in its response today.

Zimbabwe is removing troops and police officers from Marange, the Herald reported on Nov. 19, citing Mines Minister Obert Mpofu. The measure is aimed at complying with Kimberley Process Certification Scheme recommendations, the Harare-based newspaper said.

The Kimberley Process, which monitors trade in so-called conflict diamonds, on Nov. 5 recommended Zimbabwe not export diamonds mined at Marange until the area complied with internationally accepted standards.

Reclamation, southern Africa’s biggest scrap metal company, sold 253 million euros ($381 million) of bonds due in 2013 in January 2006. It processes ferrous and non-ferrous metal as well as glass, plastic and paper waste and employs more than 2,000 people, according to its Web site.