(NEWZIMBABWE) De Beers and the fight for Zim diamonds
De Beers and the fight for Zim diamonds03/01/2012 00:00:00
by By RN Bhaskar & Yogini Joglekar
OVER last fortnight, many supporters of the Oppenheimers’ diamond empire were in a flap. The Indian government had finally decided to clear trade in diamonds with Zimbabwe.
That decision put paid to attempts by the De Beers group (founded and known to be controlled by the Oppenheimers) to cow Zimbabwe into selling its diamond roughs only through the De Beers channels.
For De Beers, the stakes are high. Over the past two decades, it has watched its control over the global supply of diamond roughs slip from over 95 percent (for almost a century) to just about 40 percent today.
Economists had predicted this would happen, as nobody can control a cartel forever. High prices inevitably encourage independent prospectors and producers, leading to new sources of supply. This has happened in oil; it had to happen in diamonds as well.
Zimbabwe was critically relevant to De Beers’ plans. Its mines produced good quality large diamond roughs, which command excellent prices in global markets.
And since Zimbabwe’s diamonds were being sold to Indian traders, it gave Indians an opportunity to cater to the market for bigger and better cut and polished diamonds (instead of focusing only on the lower end of the market).
Also, De Beers had already managed to get all the other mines in the region to agree to a process where the diamonds would be sold through its own channels.
But Zimbabwe had resisted.
Not surprisingly, the country was accused of peddling ‘blood diamonds’.
Foremost among the critics who tried to isolate Zimbabwe was Martin Rapaport, managing director, Rapaport group, which has been trying to establish its diamond price list as the best market indicator of diamond prices across the globe.
Rapaport claims to be “the primary source of diamond prices and market information. Group activities include publishing, research and marketing services, internet information and diamond trading networks, global rough and polished diamond tenders, diamond certification, quality control, compliance, shipping, and financial services.”
In fact, a couple of months ago, Rapaport’s attempts to persuade media-persons in Mumbai to write against the trade in Zimbabwe diamonds by some Indians were roundly criticised by many journalists who thought it was not fair to make such charges.
Many Indian diamantaires too believe the prices displayed by Rapaport are the prices and trends that De Beers would like it to indicate, thus giving De Beers a chance to prop up the prices of the roughs it wants to promote, over those it wishes to exclude.
Rapaport hotly denies this. “We are an independent trading and listing exchange,” he says.
But then, Rapaport refuses to list the prices of Zimbabwe’s diamonds, saying they are ‘marange’ or blood-tainted diamonds, mined in the most exploitative of conditions.
“Marange diamonds are sanctioned by the US and EU governments out of concern that they will fund such abuse. While such diamonds are legal for trade in India, they are not ethical diamonds and should be avoided by responsible companies and consumers,” he says.
“It is vital that India’s diamond industry separates marange from non-marange diamonds so that legitimate distribution channels can be maintained and India does not get a bad reputation as aiding and abetting human rights abuses in the diamond industry by mixing bad diamonds with good diamonds.
“The Rapaport Group is a US entity and will not tolerate the listing of marange diamonds on its trading networks for ethical as well as legal reasons.”
But such sanctions and labelling are not fair.
As DNA pointed out in these pages in May last year, De Beers has itself been the biggest contributor to violence and exploitation in the diamond industry.
It may be recalled that in December of 1953, Sir Ernest Oppenheimer appointed Sir Percy Sillitoe, who was earlier the head of the British counterespionage service known as MI-5, to create a system that could stop independent producers (often referred to as smugglers) from selling diamonds in the open market.
Those who did not accept the price offer made by De Beers and its associates were beaten into submission, killed, mugged or even ransacked. Sillitoe helped set up an elite core of agents called the International Diamond Security Organisation, or IDSO, which even hired private armies of mercenaries to ambush diamond caravans in the jungles.
When much of these ‘smugglers’ had been eliminated, the IDSO was quietly disbanded. But, the work of elimination of independent ‘smugglers’ continued (more details on this subject can be gleaned from http://www.edwardjayepstein.com/diamond/chap14.htm).
Similarly, there were attempts to isolate Botswana diamonds, till the government agreed to create a joint venture, Debswana, with De Beers through which all its diamonds would be mined and sold. It could also explain why Congo and many other African countries like Tanzania and Ivory Coast are not being labelled as producers of ‘blood diamonds’.
That could also explain why Indian diamantaires never really cared for the boycott of Zimbabwe diamonds.
Vested interests then tried to use the Directorate of Revenue Intelligence (DRI) to seize stocks of diamonds that Indian firms had imported from Zimbabwe, which the DRI said had been ‘sanctioned’ by the US.
Finally, under representations from the Indian trade, the government decided to allow trade in Zimbabwe diamonds.
“We think the move is totally a step in the right direction because India being one of the largest markets for diamonds needed a wider scope to carry out business.
“This will prove to be important and beneficial for a country like ours. India supported and at the same time pitched for clearing diamond imports from Zimbabwe as this will give us room for generating huge employment opportunities as well,” says Sanjay Kothari, vice chairman of the Gems & Jewellery Export Promotion Council.
Shashikant Shah, a diamond industry consultant, concurs.
“This move will help us in maintaining the industry demand and reducing our other costs. Zimbabwe produces huge quantities of diamonds and since India polishes nine out 10 diamonds, the countries can strike the right balance of trade, creating jobs for us,” he says.
Clearly, Indian diamantaires have now become bigger champions of free and fair trade in the diamond market than those countries which once used to tout the need for such principles in global trade. dnaindia.com
Labels: CORRUPTION, DEBEERS, SANCTIONS, ZIMBABWE
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