Zimbabwe crisis threatens diamond business in India

SURAT, INDIA – This piece of news from the World Diamond Council (WDC) has shattered the Indian diamond industry, especially the world's biggest diamond cutting and polishing centre in Surat.

WDC, an apex world organisation, has countered the reports that the Kimberley Process (KP) has given Zimbabwe a green light to sell diamonds from the controversial Marange fields and stated that such exports have not yet received formal and final approval from the new Kimberley Process (KP) chair of Democratic Republic of Congo (DRC).

"The authorities in Zimbabwe need to complete a series of consultations with the new KP chair from DRC, who has called for understanding and patience of the industry until the conclusions are reached," said a recent WDC statement.

The apex industry organisation has communicated to the diamond industry stakeholders that the consultations over the legal export of diamonds from Zimbabwe is sensitive and ongoing.

However, until a conclusion is reached, exports of stocks and production from the approved concessions in Marange do not carry the approval of the KP.

Recently, the outgoing KP chair of Israel and the member governments of KP had given their agreement to a document that would allow for the recommencement of exports from approved concessions in the Marange region in Zimbabwe subject to agreement on continued oversight and monitoring by the Zimbabwean government.

The diamond hub in Surat has received a major setback with the WDC’s statement. The industry, which is the world’s biggest importer of Zimbabwe stones, had predicted high growth in 2011 and creation of more jobs after the outgoing KP chair in Israel had given a go-ahead for the recommencement of export from Marange diamond fields in Zimbabwe.

As per an estimate, Zimbabwe has a stockpile of over six million carats of diamonds that was expected to flood the Surat market given the KP approval.

"This is a major setback. The industry, especially the diamantaires in Surat, was eagerly waiting for the Zimbabwe goods to flood the market in order to overcome the severe shortage of rough diamonds," said Sanjay Kothari, vice-chairman, Gems and Jewellery Export Promotion Council (GJEPC).

"The rough prices have appreciated by almost 30 per cent in 2010 due to the shortage and the prices were expected to increase throughout 2011. The deadlock over the export of diamonds from Zimbabwe will create a difficult situation for the diamantaires," said Chandrakant Sanghavi, chairman of Sanghavi Exports.

In July last year, the Kimberley Process Certification Scheme (KPCS) agreed that diamonds from Marange could be sold in the international market. Two auctions were organized in September and October and about 90 per cent of the precious stones worth $100 million were purchased by the Indian diamond dealers, mainly from Surat. But the regulator again imposed a ban in November last year.