Diamond smuggling cost Zimbabwe economy $13 billion, Mugabe says

Illicit trade in Zimbabwean diamonds cost the economy more than $13 billion, forcing the state to create a new company that’s taken control of the country’s deposits, President Robert Mugabe said.

The government on Feb. 22 ordered all diamond-mining companies to end operations and vacate their premises in the Marange and Chimanimani areas and announced the Zimbabwe Consolidated Diamond Co. will take over mining. The state has earned about $2 billion from the gems as about $15 billion was generated by the industry, Mugabe said Thursday on state television in the capital, Harare. He didn’t provide a timeframe.

“Lots of smuggling and swindling has taken place and the companies that have been mining, I want to say robbed us of our wealth,” Mugabe said. “That is why we decided that this area should be a monopoly area and only the state should be able to do the mining in that area.”

Mining is the biggest source of foreign exchange for Zimbabwe, which has the world’s largest platinum reserves after South Africa and also has chrome, gold and iron ore. Production of diamonds in the nation fell to 420,000 carats in the first five months of 2015 from 660,000 carats a year earlier.

Diamonds prices are at six-year lows after slumping 18 percent in 2015, the most since the 2008 global financial crisis, according to data from WWW International Diamond Consultants. Demand in China, the biggest market after the U.S., has shrunk along with a slowing economy and a crackdown on corruption that’s discouraged open displays of wealth.

Assets Nationalized

The creation of the state-owned diamond company followed a refusal by Anjin Investments Ltd., the Diamond Mining Co., Jinan Mining Ltd., Kusena Diamonds, Marange Resources Ltd. and Mbada Diamonds to accept the nationalization of their assets, Mines Minister Walter Chidakwa said last month.

“You cannot trust a private company in that area,” Mugabe said. “We should have learnt from the experiences of countries like Botswana, Angola, Namibia. We might go partner with a leading diamond company, one already well-established.”

New York-based Human Rights Watch said in 2009 that more than 200 illegal workers were killed in Marange as they were being driven off the site by the military. Some were shot from a helicopter, the group said, citing an unidentified eyewitness. The government denied allegations of any human-rights abuses.

– Bloomberg