Monday, March 21, 2011

DRC diamond chief clears Zim exports

The new chairman of the international diamond trade watchdog the Kimberley Process (KP), has cleared Zimbabwe’s diamonds for export, amid strong protest from the US.

According to the US based Rapaport Diamond Trading Network (RapNet), KP Chairman Mathieu Yamba, from the Democratic Republic of Congo (DRC), has “unilaterally” made the decision. RapNet’s news service Rapaport News quotes a letter sent by Yamba to KP members, saying: “With immediate effect, Zimbabwe is hereby authorised to resume exports from the compliant mining operations of Mbada and Canadile.”

The two companies are joint ventures with the state’s Zimbabwe Mining Development Corporation (ZMDC), and have been mining the Chiadzwa diamond fields under a cloud of controversy since 2009. The government seized the Chiadzwa concessions from a UK based mining firm in 2006, using the military to stamp its authority on the claim and ‘control’ illegal panning. This control led to severe abuses at the hands of soldiers, including murders and forced labour, and in 2009 Zimbabwe was suspended from international trade.

Mining has continued nonetheless and reports of abuses and other irregularities have continued to filter out of the diamond fields. Soldiers are reportedly in control of different smuggling networks, which are said to be facilitating the loss of hundreds of millions of dollars worth of diamonds. At the same time, numerous deaths are still being reported and according to a recent investigation by the UK’s ITV, there are at least 20 deaths a month at Chiadzwa.

The KP, which is meant to be curbing the trade in ‘blood diamonds’, has been trying to reach a diplomatic solution to Zimbabwe, stopping short of banning the country from trade. In 2009 it gave the Zimbabwean authorities time to sort out its diamond industry and reach international compliance levels. The KP last year then authorised two monitored diamond auctions, meant to pave the way for full exports to resume.

But KP members have been unable to reach consensus on Zimbabwe’s trade future, and last year a proposed agreement was shot down, with mainly Western KP members raising concerns about ongoing human rights abuses. The KP’s Chairman at the time, Israel’s Boaz Hirsch, then announced that an agreement was reached earlier this year.

The new chairman, Yamba, subsequently reported that consensus had in fact not been achieved. In his most recent letter to KP members, Yamba stressed that the KP’s working group for monitoring would work to gain consensus regarding the draft administrative decision on Zimbabwe. He added, however, that should the parties fail to reach consensus, “exports (from Chiadzwa) shall continue until the administrative decision is passed.”

Rapaport News reported on Monday that the US has objected to Yamba’s decision to allow the exports. US representatives have apparently sent a note to the KP authorities in India and the United Arab Emirates stating that it would view any shipments from Zimbabwe as non-compliant.
The US has also warned that it would publish the names of companies taking delivery of the diamonds on the State Department website to ensure that all American companies are aware of potentially non-compliant goods. The Office of Foreign Assets Control (OFAC), which administers US sanctions, has meanwhile also been asked to look more closely at the issue of these transactions.

OFAC has listed the parastatal ZMDC on the US sanctions list, and has been actively involved in preventing illicit financial movements from Zimbabwe’s diamond sales. OFAC, together with the US Federal Reserve, recently collaborated to freeze an account held by the ZMDC in South Africa after US$2 million had been moved into the Stanbic Bank account by the ZMDC.

British owned Standard Chartered Bank in Harare also recently refused to process financial transactions involving ZMDC and China’s Uranium Corporation, saying the local company was on the sanctions list. The companies wanted to embark on a uranium mining project, but the US thwarted the deal by blocking the transfers of capital.

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