The Kimberley Process (KP) mini summit in St. Petersburg last week ended with a last-minute compromise that allowed Zimbabwe to export rough diamonds from the Marange fields.

While the agreement came as a surprise to few, especially in light of KP monitor Abbey Chikane’s prior recommendation to enable the exports, it was associated with a strong industry endorsement. As the discussions surrounding Zimbabwe began, the International Diamond Manufacturers Association (IDMA) issued a press release calling for the KP to green light selling these goods on the open market. It stated, “IDMA calls for the immediate implementation of the KP monitor's recommendation to the Working Group Monitoring (WGM) to certify the exports of those mining companies, which meet the KP' members’ standards.”

IDMA president Moti Ganz, who recently visited the Marange operations, stressed that trade in non-KP certified rough diamonds must remain strictly prohibited. “During our deliberations in the past days here in Moscow, the IDMA membership reiterated its unequivocal support of the policies and actions undertaken by the World Diamond Council (WDC) and expressed in the strongest possible terms our genuine support for human rights and sustainable, long-term development for all people involved in the diamond supply chain and the desire that they benefit from their labors,” Ganz said in a statement.

He was further quoted as saying, “We must quickly include Zimbabwe in the diamond pipeline, or it will be a catastrophe.”

It is difficult to understand the IDMA’s urgency to certify the Marange goods regardless of the discussion that was to subsequently take place. Did it not consider the concerns of various parties about the monitor’s recommendation—for example, the insistence that a review mission be conducted in the area, a condition included in the final agreement? Did industry not have its own sticking points about these diamonds?

Ethical issues aside and whether or not one agrees with the position taken by the IDMA, it is important to understand the manufacturer’s point of view, or at least what one can assume would be their take.

Many cutting and polishing professionals expressed their concern to Rapaport News throughout the discussions about the consequence of not certifying the Marange diamonds. These were real concerns in light of Zimbabwe government officials’ rhetoric to sell the stones regardless of the outcome, and especially with the history of smuggling from the mine. It is likely that a larger proportion of unaccounted for diamonds would have made it to the market as a result.

Consider too, that every company operates according to its own ethical standard and that Zimbabwe would likely always have had customers for the goods. Reports indicate that some of the trades largest and leading manufacturers were preparing to buy the goods regardless of the KP outcome.

Some also suggested that given the scarcity of rough on the market, both now and in the long term, keeping a resource as large as Marange – estimated to hold some $2 billion worth of diamonds – off the market is killing business activity, particularly in centers such as South Africa, where beneficiation efforts have been hampered by the lack of goods made available to small- and medium-size businesses. The Zimbabwe diamonds must offer an appealing solution.

Furthermore, if diamond prices are a function of supply, then high costs of rough paid by manufacturers could well be alleviated with the influx of more goods. Despite a reported slight softening of the market in recent weeks, rough is still in demand and is arguably the most profitable resource within the industry today.

It is therefore understandable that the IDMA should have approached the discussions with a sense of urgency to approve the exports.

However, it is also hoped that the IDMA considered the possible consequences of its endorsement. Many are asking if the KP has just allowed itself to be manipulated again by the Zimbabwe government. If so, did the IDMA play a role in encouraging the KP to sell its soul? What are the long-term ramifications of the agreement for the KP? and more importantly for the manufacturer and the industry? Can the IDMA ensure that its principles of “genuine support for human rights and sustainable, long-term development for all people involved in the diamond supply chain” will be upheld through this agreement?

Given the options, if a deal had to be made, the one achieved in St Petersburg was likely a responsible one. Time will tell. It is encouraging that only diamonds mined since Chikane’s last visit in May, during which he was satisfied that sufficient security structures were in then place at the various Marange operations, will be certified in the immediate term. However, it is still unclear how the goods mined between 2007 and November 2009 and from November 2009 to May 2010 will be handled subsequent to their forensic audits, which still need to be carried out. Diamonds stained with past abuses in Zimbabwe have always been the core concern.

It is also encouraging that a review mission to Zimbabwe is required in early August to assess the country’s implementation of the joint work plan even if it would have been preferred that certification be withheld until the review mission report weighs in. Chikane is due to visit at the same time as the KP team to certify the first goods.

For now, though, manufacturers can look forward to a new, rare source of diamonds from which to purchase. As the manufacturer often bears the brunt of the industry as it is squeezed between miners and retailers, the KP may well have averted a catastrophe for the IDMA. But then again, it may have fueled the fire.