Zimbabwe relaunch of diamond exports with whopping sale (Roundup)

By Columbus Mavhunga and Clare Byrne Aug 11, 2010, 14:43 GMT

Harare - Zimbabwe's cash-strapped government celebrated Wednesday the relaunch of its diamond exports by putting a large stash of rough diamonds extracted from its eastern Chiadzwa fields up for auction in Harare.

The government announced that a whopping 4.5 million carats of diamonds were available for sale at Harare International Airport after Zimbabwe was cleared by the Kimberley Process (KP) to resume its diamond exports.

But the head of the KP mission in Zimbabwe Abbey Chikane said he had not certified the sale of all Zimbabwe's stocks.

'Slightly below a million carats will be sold today while the rest await my signature and that of auditors,' he told the German Press Agency dpa.

The Kimberley Process is an international certification body set up to curb trade in 'blood diamonds' - diamonds used to fund conflicts.

The KP last year ordered Zimbabwe to suspend its diamond exports over reports of gross human rights abuses by the army in the diamond fields but since cleared two consignments for sale.

On Wednesday afternoon, Zimbabwe was due to sign an agreement with the KP allowing it to fully resume exporting diamonds that have been mined under KP supervision. The sale was to begin after the signing ceremony.

A red carpet was rolled out at the airport in the morning, as private jets bearing international diamond buyers arrived for the sale.

Mines Minister Obert Mpofu told the German Press Agency dpa the sale could fetch up to 1.7 billion dollars - over half Zimbabwe's annual budget.

But Prime Minister Morgan Tsvangirai, who heads a power-sharing government with President Robert Mugabe, warned against overstating the country's diamond wealth.

While the proceeds 'should benefit the generality of Zimbabweans through the fiscus and boost liquidity levels in the country' such estimates were exaggerated, he said.

'I've heard and read of billions of dollars coming from today's sales. Please let's be realistic. Let's not create high expectations for our people,' Tsvangirai added.

Mpofu's estimate would work out to Zimbabwe receiving around 377 dollars per carat.

While labelling the gems high-quality Chikane told dpa they were more likely to fetch up to 80 dollars a carat.

Experts have questioned the quality of the alluvial diamonds, which are encased in hard rock.

'The diamonds themselves tend to be large in size but you have to cut away a lot to make them into something like a ring,' Craig Smith, head of the Geological Society of South Africa told dpa.

The KP took action against Zimbabwe last year following a brutal crackdown by the army against illegal diamond diggers in Chiadzwa in late 2008, when Mugabe's Zanu-PF still had a monopoly on power.

New York-based rights watchdog Human Rights Watch says scores of people were killed and injured by the army, who control of the fields and, by Zanu-PF's own admission, used the opportunity to line its own pockets.

Since then Zimbabwe has reduced the army's presence and licensed two little-known South African companies to mine the diamonds in a joint venture with the state Zimbabwe Diamond Mining Corporation.

A KP team led by South Africa's Abbey Chikane visited the area again on Monday and Tuesday to confirm whether the abuses had halted.

'The army and police remain there,' Chikane said.

'The KP will have to bring the issue of human rights to its logical conclusion, hopefully when it meets in November,' he said.

Tainted diamonds have come under the spotlight at the trial in The Hague of former Liberian warlord Charles Taylor, who is accused of having received blood diamonds from Sierra Leone in return for supporting rebels in that country's brutal civil war.

Zimbabwe has always insisted its Chiadzwa diamonds cannot be classified as blood diamonds because the country is not at war.

Human rights activists say the term should be expanded to include diamonds mined in conditions of gross human rights abuses.