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De Beers' shocking legacy


Post Date: 15 Oct 2011    Viewed: 510

'A diamond's sparkling beauty: as evocative of a passionate love story as it is of life's incredible journey.


Your De Beers diamond is selected to sparkle with the fire of life, reminding you everyday of your love.


'At De Beers we believe that perfection is attainable through the meticulous selection of diamonds that radiate the Fire, Life and Brilliance of nature.


'Beauty truly is in the eye of the beholder; once you look into the heart of your diamond, you will know that it shines only for you.


'With a peerless heritage that spans 120 years, our unique passion and expertise in creating jewellery with the world's most naturally beautiful diamonds is unrivalled,' reads part of a powerful and highly manipulative De Beers online advert.


No doubt - this is a short and irresistible diamond ad that can make your prospect rabid with curiosity and begging for more.


The ad is compelling and tells very little about the legacy of this diamond producer which controls about 40 percent of the market for rough and unpolished diamonds.


But burrowing through the history of De Beers in Zimbabwe, one gets a totally different picture.


Zimbabwe has in recent years hit the headlines following the recent discovery of diamonds in Chiadzwa.


More than ever before, some prominent politicians in Government got a heavy battering from the media and anti-government critics over the issues related to the Chiadzwa diamonds.


The words used were quite strong and damaging. 'Corrupt fat cats, diamond syndicates, diamond smugglers, blood diamond peddlers' and all were used.


The news about the Chiadzwa diamonds were full of reports about corruption, human rights abuses and killings.


This article does not in any way seek to justify the alleged corrupt activities and abuse taking place now.


In addition, this report does not seek to simply alter data for personal gain or to attack De Beers but to provide some insight that challenges the one-sided arguments that paint De Beers as an 'Angel of Diamond' mining in Africa.


In this report, I attempt to provide some snippets that challenge Zimbabwe government critics and pro-De Beers mining supporters to screen-out this diamond mining company's history or predisposition for dishonesty.


From a report presented earlier (in September) by Mutuso Dhliwayo of the Zimbabwe Environmental Law Association at a launch of the Publish What You Pay campaign, De Beers' legacy is simple, but disastrous for Zimbabwe - deliberate dishonesty, cost blowouts and massive understatement of the country's diamond deposits in the Marange area.


'Marange Diamonds have a long history of lack of transparency. De Beers Private company prospected in Marange from 1963-1965 but submitted a misleading report to the Smith Regime following the Universal Declaration of Independence by Smith in 1965 that resulted on the government being slapped with international sanctions,' he says. 'It's clear that lack of transparency in the mining sector did not start now, it dates back to the colonial times.'


From the misleading De Beers 1960s report, it is clear that the Marange Diamonds were a strategic diamond enclave with a huge potential for future exploitation.


The report concludes that the Marange diamonds had a:


- Red conglomerate rock in Marange that sometimes harbours diamonds


- Rock similar to Brazil where you mine hundreds of tonnes of red conglomerates to get few diamonds


- Marange Diamonds are severely weathered and therefore of low quality


- Diamond mining was not a viable investment


It is clear from the events that took place in Marange after 2000 that De Beers never wanted to give much detail nor the reason why for understating the potential of this diamond spot.


The concealment of the details is quite critical to understanding the history of lack of transparency in the extractive industries.


Corruption did not start now. It can be traced to the colonial period.


De Beers' commercial dynamics and secrets are only emerging now and are opening debate about the history of dishonesty in the mining sector.


De Beers suspended active prospecting of diamonds from 1965 to 1980 when the liberation movements waged a protracted struggle for independence.


From 1980 to 1994, the diamond company kept a tight lid on the Marange discovery. In 1994, De Beers won an Exclusive Prospecting Order for Marange Diamond Fields.


Prospecting went on for 12 years from 1994 to 2006 without much information being availed to the Government and the mining communities.


Secrecy during this period was commonplace and Zimbabwe lost diamonds running into millions of dollars that were clandestinely leaked out as 'samples'.


There was no transparency about the benefits received by the state nor information about the quantities, quality, price and other technical and commercial details of the diamonds that were mined. Zimbabweans had no information about the management and destination of the diamonds that were smuggled illegally out of the country.


When Zimbabwe adopted Affirmative Action Laws in the 1990s, De Beers was for the first time forced to employ locals.


The company employed Zimbabwean geologists for the first time after facing mounting pressure from government.


Still the company at that time never allowed Zimbabwean geologists to enter the Marange Diamond Fields fearing they would leak details about the commercial viability of the area in diamond production.


Zimbabwean geologists employed by De Beers were not given access to the Marange Diamond Fields.


De Beers held more and better information on the quantity, quality, price and other technical and commercial details on the Marange diamond deposits than the government and local mining experts.


Because of this, De Beers was able to inflate operational costs as a strategic way of maximizing profits, maintaining a tight lid on the Marange diamonds and ensuring the Government, locals and other rival companies never took an active interest of the area.


The kind of flow of benefits that are normally made through the payment of royalties or part of the production to government were never made.


The introduction of Affirmative Action laws created nervousness and stress to De Beers as the company failed to adjust to new realities and the push by the government to safeguard national interests.


As events continued to unfold rapidly, Marange villagers and local Zimbabwean geologists pressured the Government to act on the secret De Beers Diamond processing plant at Bezel Bridge.


In 2006, De Beers notified the government that it would not seek to have its EPO extended for reasons that were not disclosed.


The diamond firm knew that the political game had been upped and chances were high that its exclusive prospecting of the area would be challenged by the government and other new players. What the Zimbabwe government says


Zimbabwe's Ministry of Mines and Mining Development is understood to be considering legal action against De Beers, describing the company as an 'international looter'.


The government believes that in the last 15 or so years, the South African mining giant smuggled more than 1 000 tonnes of diamond concentrate out of Zimbabwe.


Mines and Mining Development Minister Obert Mpofu also says De Beers is a major sponsor of civil society groupings that are vocal in campaigning against the country's right to sell its diamonds.


In his own words: 'De Beers is an international looter. They do not know what transparency is, what good governance is.


'They exported not hundreds of tonnes of diamonds but thousands of tonnes.


'We are going to take legal action.'


The minister also asks why the West and others opposed to Zimbabwe selling its diamonds are not asking what has become of the stones illegally mined by some 50 000 people who forced their way into the diamonds fields and carried out panning there for years before the national security services had to be deployed to safeguard the resource.


'Where are the diamonds that were collected by the 50 000 people in Marange?'


His insinuation is that major international diamond mining/processing/marketing firms were involved and were the major beneficiaries of the illegal activities.


Mpofu says De Beers must come clean on its activities in Zimbabwe.


'They were there for 15 years taking the diamonds everyday and we have the records to that effect and our civil society has never said anything about it.


'They did not say they had found diamonds in Zimbabwe but when Government started to ask questions they abandoned.


'Their withdrawal was so sudden and a few hours later they left African Consolidated Resources (ACR) to take over.


'ACR, a British-listed company without any mining operations but listed for not doing anything, save for making claims that they have mining rights in Marange.


'ACR realized that they would not get enough because government was on their heels, they brought in 50 000 people into the diamond mining fields. All of you saw that.


'And all those diamonds are not accounted for. Is that transparency They (the illegally mined diamonds) are not with government.


'In fact, when government was running around with the help of the (Police) Minerals Unit, one of the ACR directors was nabbed in possession of 27kg of diamonds at one of his houses.


'These are facts that are being ignored. What happened to the diamonds that were being used by (Jonas) Savimbi to fight the (Angolan) government?


'Who was paid in those diamonds, where are those diamonds? Where are the diamonds that were actually fanning the war in Sierra Leone, in Cote d'Ivoire, in DRC, where are they?...


'They are not in Africa, nor are they in Zimbabwe.'


On the future role of international diamond barons in Zimbabwe, Minister Mpofu is skeptical of their potential contribution – probably going by the experience with De Beers.


'(People) keep on referring to Botswana as the best model, but are the people of Botswana getting full beneficiation from their diamonds?


'For your own information, the Tswana people have no idea of what transpires at the De Beers diamond mine.'


How much was taken?


According to information provided by the governmetn of Zimbabwe, De Beers exported more than 1 000 tonnes of diamonds under the pretext that it was carrying out 'exploration'.


It was granted 47 Exclusive Prospecting Orders (EPOs) in Chipinge in Eastern Zimbabwe, the first of which was gazetted in March 1996.


Of these EPOs, 13 were in Chipinge District and the remainder in Chimanimani, also in the East.


The first tenure of exploration was under EPO 1059 in Marange and 1062 in Mutowona, covering more than 61 000 hectares.


Four kimberlites were discovered under EPO 1059 and one kimberlite under EPO 1062.


However, the validity of the EPO lapsed in 2001 before De Beers completed its search.


A new application to renew the EPO was lodged with the Mining Affairs Board and was granted in March 2002.


The company later discovered cemented diamonds, but did not report this discovery to the Ministry of Mines.


It subsequently abandoned operations.


It emerged that in 1996, De Beers exported 32 tonnes of rock samples, 608 tonnes of drill core and 64 tonnes of soil samples. In 1997, it collected 16 tonnes of soil sample and 53 tonnes of rock samples. Eighty-eight tonnes of crushed rock were collected and exported in 1998, while 228 tonnes of the same were exported in 1999.


In 2000, the company exported 38 tonnes of crushed rock.


In 2003, 150kg of exploration samples were exported while rock samples amounting to 761kg and 100kg concentrate were exported in 2004.


In 2005, 262kg of concentrate (64kg of which were exported in trunks and 111 895kg in drums) as well as 1 318kg of rock samples. - Zimpapers


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