Diamonds are for the State: #mugabe | The Chronicle

via Diamonds are for the State: Mugabe | The Chronicle April 11, 2014

DIAMONDS are to be nationalised and all mining of the mineral will become the sole preserve of the State, President Robert Mugabe has said.Extraction, polishing and export sales of diamonds would be done under conditions of strict accountability, he added, speaking during an official visit to the United Arab Emirates.

Under the President’s new proposals, announced on Wednesday to officials and buyers of the Dubai Diamond Exchange in the UAE commercial hub, the President said the government would rationalise existing operations to create one State-led company.

“The government decided it should be the responsibility of the State to organise the production of diamonds as is the case with gold. But the diamond area will be much stricter, a product produced by the State with whatever partner,” President Mugabe said.

Chronicling how multinational companies had cheated the country of its diamonds in the past, the President noted that only three or four of the seven diamond mining companies currently at Marange in Manicaland were meaningfully active, with some of them operating deceitfully.

“We’re naturally disqualifying these and we’ll have two or three who have produced results,” added the President, who mapped the scope of the envisaged reorganisation to encompass management, production and accountability “so we know what we are auctioning here”.

The production and disposal of Zimbabwe diamonds has been mired in suspicion and controversy. Zimbabweans have been calling for a more transparent handling of this critical mining sub-sector.

President Mugabe, who was taken through the various stages of preparing rough diamonds for the auctioning, admitted the diamond industry was complex and a new experience for Zimbabwe.

He said: “Diamonds appear to have a peculiar and quite an interesting niche, or shall I say area of their own, I suppose because of that fame they have had historically.

“I don’t know whether it’s women or men, or both, who gave it (diamonds) value, or illusion. The price of a diamond carat is never fixed as is an ounce of gold. It’s speculative, always driven by markets made up of people with various illusions, various perceptions. We’ve just entered this field of speculations and illusions. We’re still organising our diamond industry.”

Early in the learning tour, the President got exposed to ugly dogfights which typify the industry. An official of DDE who took the President through the processes of cleaning and purifying these precious stones, in readiness for auction, drew an uncomplimentary retort from Abu-Ali Imad of DMC, one of the mining companies in Marange.

“The diamond business,” maintained an upset Abu-Ali Imad, “is about selling illusions. The buyers are driven not by intrinsic value, but by what they hope to get from an uncleaned stone. That’s the producer’s value, that’s the buyer illusion which you’re destroying.”

Rough, unpolished diamonds go through four processes in readiness for the market. The first stage is simply to dust off the stones. The second procedure, deep boiling, is when the stones are subjected to very high temperatures, a process which then yields the real diamond stone by eliminating encrusting impurities. The third stage is de-coating which rids the diamond of a false coat, again of impurities. The last stage is cleaning the diamond stone with chemicals to recapture its real shine. It is these stages which traders in rough diamonds do not always appreciate.

Often, Zimbabwe’s alluvial diamond stones crumble during these rigorous processes, to yield smaller stones, in the process destroying the illusion.

Quipped the President: “Gold is melted and refined. I never heard about the boiling of gold. Nor did I ever hear of any illusions about an ounce of gold. The price is internationally set.”

He added that the diamond illusion appears to have gone beyond buyers to afflict Zimbabweans as well: “We also appear to have diamond illusion back home. Our people think Zimbabwe has now got a commodity bigger than oil. So there has been a rush, great expectations, together with lots of deceit.”

The President also learnt that the Dubai Multi-Commodities Centre is ready to handle more commodities from Zimbabwe, including other precious minerals, flowers and even tobacco.

“We’re here to create an open market,” said DMCC Executive Chairman, Ahmed Bin Sulayem. “And as we do so, we naturally disrupt old markets like the London Bullion market and Antwerp.”

He stressed the Dubai investor was looking at emerging markets, Africa especially, adding: “Dubai businesses are very bullish on Africa. They don’t want to wait in the line, they want to be ahead.”

The President is expected home today.