Last Updated : 25 August 2009 at 22:25 IST

No ban on Zimbabwe diamonds, Surat happy

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SURAT (Commodity Online): Surat, the world’s biggest diamond polishing centre, heaved a sigh of relief this week when news came that Zimbabwe will not be suspended from the international diamond regulatory body.

Following the rise in the trade of blood diamonds, Zimbabwe was facing a ban from the Kimberley Process Certification Scheme (KPCS), which at present is headed by Namibia’s mines minister Bernhard Esau.

If the small, medium and big diamond polishing units have been able to withstand the dwindling profit margins in Surat due to the slump in demand, then it is mainly due to imports of rough diamonds from Zimbabwe, which are cheaper by 25 per cent than other parts of the world. Most diamond units have been using roughs imported from Zimbabwe.

Most of the major diamond mining companies, including De Beers, Alrosa, BHP Billiton had reduced their diamond production following the credit crisis in the market. In May 2009 with some liquidity in the market, rough prices started to show signs of improvement and increased by almost 30 per cent.

Surat imports an estimated Rs 35,000 crore worth of rough diamonds per annum. While the Diamond Trading Company (DTC) licence holders have direct access to the roughs, the non-sightholders import rough diamonds from Dubai and Antwerp.

A KPCS delegation that was in Zimbabwe a few months ago had recommended that the country be suspended from the KP following widespread abuse and killings in Chiadzwa diamond field.

However, in an effort to convince the KPCS to issue a fresh report, absolving the country of any wrongdoings, the regulatory body’s head was allowed to tour the still militarised diamond fields in Zimbabwe last week and he was convinced that there was no need to ban Zimbabwe from the KP.

In a recent development, the Surat Diamond Association (SDA) approached the Russian consulate in India for easy availability of rough diamonds. The SDA urged the Russian consulate to arrange for direct supply of roughs so that the manufacturers do not have to pay extra premiums to diamond dealers in Antwerp and Dubai.