Thursday, August 12, 2010

Zimbabwe holds first diamond auction to boost treasury

Zimbabwe holds first diamond auction to boost treasury
By Kingsley Kaswende in Harare, Zimbabwe
Thu 12 Aug. 2010, 14:30 CAT

ZIMBABWE is expected to boost its treasury after holding its first auction of diamonds since international regulators lifted a ban on the sale of the country’s precious stones.

About 900,000 carats of rough diamonds from the Chiadzwa diamond fields valued at US$72 million went on sale on Wednesday at an auction overseen by diamond regulator, the Kimberly Process Certification Scheme (KPCS).

Buyers from the US, Israel, Russia, Lebanon and India attended the auction, which took place behind closed doors at Harare airport.

The KPCS had blocked the sale of Zimbabwe’s diamonds in November 2009, following allegations of human rights abuses after the government sent police and the army to drive out illegal miners who had caused chaos after they flocked to the diamond fields, east of the country near the Mozambican border.

The regulator partially lifted its ban on Zimbabwean stones at the World Diamond Council summit held in St Petersburg, Russia last month after its monitor in Zimbabwe, Abbey Chikane, made several visits to the diamond fields over the past few months to check on how Zimbabwe was observing the regulatory rules.

This followed months of intense lobbying by non-governmental organisations based in the US, Canada and Australia who lobbied for the KPCS to ban the sale of Zimbabwe’s precious stones because of the alleged abuses.

Chikane continues to oversee the audit of the country's diamond stocks.

Zimbabwe is currently sitting on 4.5 million carats of diamonds that could bring the government around US$2 billion, more than half of the country’s budget at a time when the country is struggling to win budgetary support from donors to turn round its economy.

Donors are still unwilling to extend their financial support until they see tangible political and economic reforms being carried out in the country.

Zimbabwe currently needs US$10 billion to completely resuscitate the economy that has been in its doldrums over the past 10 years after donors imposed sanctions on it as it pursued land reforms that saw over 3,500 farms owned by commercial white farmers being seized for redistribution to landless natives.

The sale of diamonds is now expected to boost liquidity levels, according to Prime Minister Morgan Tsvangirai, who officiated at the launch of the certification programme.

“I am pleased to note that the Minister of Finance, in consultation with the Minister of Mines and Mining Development and other stakeholders, is working on a framework of determining how the revenues from this supervised sale are applied for the benefit of the generality of the people of Zimbabwe through the fiscus,” Tsvangirai said.?

Only stones mined between May 28, 2010 and now were auctioned. A second auction is expected in September.?

Vice-President John Nkomo said Zimbabwe had always been committed to the KPCS, as a founding participant.

However, he called for transparency in the certification programme.?

“Government clearly understands the purpose of the institution and embraces its ideals. However, it is critical that a non-partisan approach is followed in the execution of these ideals to ensure efficiency, effectiveness and fairness in the KPCS,” he said.? “Today’s ceremony is a symbol of our great resolve as a nation to succeed. Although it took us long to be where we are today, we will not tire to do the right things in the eyes of our people and the international community.”?

He said the wealth accruing from diamond sales should benefit the people.?

“Diamonds are our heritage, a heritage, which we should bequeath to our children and future generations. These diamonds should benefit the people of Zimbabwe and it is our shared and collective responsibility as Zimbabweans to guard this resource jealously,” said Tsvangirai.

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