The Rise—and Likely Fall—of Marange Diamonds

Sometimes things that begin poorly, end well. Such is not the case, alas, with diamonds from the Marange region of Zimbabwe (sometimes also called Chiadzwa). Diamond excavation in the area has had a short, brutal history, and now, with most of the miners in the area pulling out, it looks like the dreams of turning the area into a major diamond producer will be dashed. 

Early predictions said the area could produce up to 25 percent of world production for years to come. (According to diamond analyst Paul Zimnisky, last year its production neared 19 percent.) Former mining minister Obert Mpofu proclaimed that the country would earn as much as $2 billion a year from its diamond resources, and some hoped the economically depressed country could profit from its diamond riches like neighboring Botswana. 

And yet, persistent and ugly controversies surrounding the gems in the area—including the violence sparked by their initial discovery, the Kimberley Process’ two-year embargo on the diamonds, allegations of corruption, and United States and European Union sanctions—have led both revenues and production to fall short of what was originally expected. 

When in 2006, it first became obvious there were a lot of diamonds in Marange, the region became overrun with illegal diggers. In 2008, the government launched a severe and repressive crackdown, with allegations of rape, torture, and the deaths of more than 200 people. In one bizarre episode, a police officer beat an elderly woman digger, who turned out to be his own mother.

In response to the violence, and under pressure from NGOs and allied governments, in November 2009 the Kimberley Process halted the exports of Marange diamonds upon Zimbabwe’s completion of a “work plan.” This led to two years of arguments and brinkmanship over whether the plan had been completed and if exports should be re-allowed. By the end, the dispute—which pitted a handful of governments, including the United States, against just about every other KP country—had grown so bitter that many worried it would spell the certification scheme’s demise, with South Africa at one point reportedly breaking the embargo, and other African nations threatening to bolt. Finally, the diamonds were finally cleared for export in November 2011. Mpofu promised to make the KP “proud.”

But according to Farai Maguwu, who runs a local NGO called the Centre for Natural Resource Governance (and who was jailed during the negotations to break the embargo, exacerbating tensions), the seven miners who came to the area were all “bogus companies without proven records.” 

“The companies knew well that they got their concessions through irregular means, [since] proper procedures were not followed, and there was no oversight,” he says. “They knew politically Zimbabwe is unstable, it’s an accident waiting to happen. Hence, the companies worked 24/7 to maximize profits while they still had the chance.” In the end, “they never invested in anything. It’s just been smash and grab.”

From the beginning, there have been persistent questions about whether the proper amount of diamond profits has been going to the government treasury, or simply allies of the ruling elite. Mpofu has been accused of taking $10 million in bribes and diverting a large amount of diamond proceeds offshore. There has been talk of diamond values being underreported in Dubai—because of so-called transfer pricing. Even a government newspaper recently wrote that the country has “little to show” from its gem resources.

In the diamond industry, the issue of Marange gems has been incredibly fraught and problematic, and many of the current divisions in our industry have roots in the Marange mess. Even after KP gave its okay—which caused Global Witness to quit the scheme, leading to the biggest PR blow in its history—the gems still couldn’t be sold in the United States and the European Union, as most of the miners were partnered with companies connected to ZANU PF, the party of President Robert Mugabe. (The EU’s sanctions were lifted last year.)

For his part, Maguwu does not feel that the current U.S. sanctions against Marange diamonds are helping things. “It is important for the American government to revisit that policy,” he says. “When Europe bought Marange diamonds, the value of the diamonds went up more than 50 percent, and they tried to be as transparent as possible.” He also believes the recent Antwerp tender “was hugely sabotaged by Marange companies, which wanted the process to flop so as to maintain trade with Eastern syndicates. They sent very low-quality, broken pieces to Antwerp.”

And while he understands why American consumers would not want to buy those diamonds, he says that Zimbabwe leaders just use sanctions as an excuse for non-transparency. “The Zimbabwe people suffer because there are limited options,” he says. (Other NGOs have spoken positively about the sanctions.)

Right now, it’s not clear what will happen in Marange. Mbada Diamonds—chaired by Robert Mhlanga, an ally of Zimbabwe president Robert Mugabe (and board member of the Dubai Diamond Exchange)—may be taking up most of the mining there, but there may not be all that many alluvial diamonds left. (A Mbada spokesperson did not respond to a request for comment.) The real treasure trove may be buried underground, but that would require building costly underground mines. 

“Diamonds, I believe, are still there in Marange but can be extracted at a huge cost, which these opportunists cannot afford to shoulder,” Maguwu says. “It’s time for the real diamond miners to stand up and be counted.” He says that some of the companies were so unsophisticated they used “spirit guides” to explore.

What’s more, the seven companies seem to be leaving behind a mess. Some have reportedly dumped chemicals in an area river. A group of them relocated villagers, and are now accused of not following through on deals made to them, leaving some without water or food.  One miner has been accused of violence against workers, including forcible sodomy.    

So, at the end of five years of Marange diamond mining, not only is Zimbabwe not the new Botswana, but the country seems to be in as dire straits as ever. Asked if anything positive has come out all this, Maguwu says: “There is really nothing good to talk about. Unfortunately for Marange, it was all a disaster.”

JCK News Director