SURAT/HARARE (Commodity Online): An Indian city and an entire nation is eagerly awaiting Wednesday’s auction of diamonds in Zimbabwe with international diamond regulators arriving in Harare ahead of the first legal sale of controversial diamonds from eastern Zimbabwe.

The auction has raised hopes of a huge inflow of diamonds into the market which the Indian city of Surat, the global headquarters of diamond polishing, is desperately waiting for. The Indian city is facing diamond supply problems following the De Beers decision last year to reduce production. Since then Surat has been hunting for other options to procure roughs. Zimbabwe’s is a diamond rich nation and Surat has pinned its hopes on the auction on Wednesday. Only problem with Zimbabwe diamonds is that they are controversial and several allegations are flying thick and fast about the exploitation in diamond mines of Zimbabwe.

The Marange gems from Zimbabwe have divided world opinion, with African and Asian countries backing Zimbabwe’s bid to sell the diamonds while the West and rights groups opposed the sale, charging that the military killed several people while driving out illegal miners from the fields in 2008.

Zimbabwe has stockpiled more than 4.5 million carats of rough diamonds since the start of the year, which officials say could fetch the country up to $1.7 billion, nearly 80 per cent of Harare’s $2.2 billion budget for 2010.

Zimbabwe is struggling to attract meaningful economic aid from the Western donors despite the formation of a coalition government by bitter rivals Mugabe and Tsvangirai in February 2009. The country needs $10 billion to revive an economy that analysts say was battered by a decade of mismanagement by Mugabe’s previous ZANU-PF regime as well as resuscitating its collapsed social services such as health and education.

A review mission from international regulator the Kimberley Process has arrived in Zimbabwe Tuesday and started inspection of the controversial diamond fields in the Marange area. Three companies are mining diamonds in a small section of Marange.  They include two Zimbabwean companies backed by South African and Mauritian financiers, and a Chinese company.

KP monitor Abbey Chikane is expected to certify the diamond stockpile on Wednesday, during a ceremony that would be witnessed by Mugabe and Prime Minister Morgan Tsvangirai.

But questions still remain on whether all proceeds from the diamond sales would be accounted for by the treasury after finance minister Tendai Biti charged last month that $30 million from diamond sales from Marange was missing.


Zimbabwe won its battle to sell the Marange diamonds after ZANU-PF and the Movement for Democratic Change put up a united front urging the West to drop its opposition to the auctioning of the gemstones at a World Diamond Council meeting last month in Russia. The southern African country was allowed to conduct two supervised exports of rough diamonds from Marange by September this year.

The Kimberley Process banned the legal sale of diamonds from Zimbabwe because of claims of gross human rights abuses in the diamond fields, problems with smuggling and a lack of security for the rough stones.  The Kimberley Process was formed six years ago to end trade in conflict diamonds.  Since then, some aspects of the international regulators' demands have been cleaned up.

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