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  • Writer's picturerutendo matinyarare


Updated: Apr 5, 2023

  1. Background Of Missing Diamonds

In Zimbabwe, we have been struggling with a prevalent myth that claims Zimbabwe lost $15 billion worth of stolen diamonds over a ten-year period.

President Robert Mugabe alleges this claim, which is further fueled by a report given by MDC parliamentarian Eddy Cross in parliament.

Reportedly, $15 billion worth of Zimbabwean rough diamonds were pilfered and allegedly pushed onto the global rough diamond market, accompanied by an additional $6 billion worth of diamonds processed legitimately through the Kimberly Process channels.

What the data says is telling. If this were accurate, it would have constituted an unprecedented 15% dump of unregulated rough diamonds on the global market during a worldwide recession, which would have resulted in an infringement of the Kimberley Process Convention, soliciting a swift investigation and response by them upon the offending nation.

The numbers of the period are also revealing with Rapaport reporting that within this same ten-year period, international prices of rough diamonds increased by 30% (see graph). The trend hardly consistent with a 15% injection of illicit rough diamonds on the global market.

If anything, it illustrates a shrinkage in supply, possibly in response to the reduction in economic activity due to the recession, a response in line with the standard price protection mechanisms used by diamond cartels in times of depressed demand.

Some non-industry players have suggested that maybe cutters and dealers were buying and hoarding Zimbabwean rough diamonds for the long term. While most other Zimbabweans simply believe without the common sense to ask any critical questions at all.

However, the issue is, it's not common practice for diamond dealers to hoard rough diamonds because diamonds are not in short supply (except when cartels close the taps during times of low demand or recession). Moreover, they are not a wise store of value.

The fact is that diamonds are not scarce or valuable, but instead, they are highly abundant semi-precious stones formed by the compression of carbon at high temperatures and pressure. The only reason they are priced high is due to marketing-induced demand combined with the artificial control of supply by diamond cartels.

Cecil John Rhodes consolidated the global diamond industry into a dominant cartel called DeBeers for this purpose, while also influencing diamond trade laws in South Africa to frame international law around the resource.

Later, the Oppenheimers took over DeBeers and set up the CSO (Central Sales Organization), after which they established the Kimberly Process Convention to further protect the cartel from independent suppliers some decades later.

All of this was done to ensure that their cartel gained full control and monitoring of the supply of diamonds, which killed competition, artificially manipulated prices, created scarcity, and supported high prices to reinforce the perceived value of diamonds.

To put it in context, the biggest diamond companies in the world (DeBeers, Petra, Rockwell, Lev Leviev, Porges) all hold billions of carats of rough diamonds with the aim of reducing the supply to the market.

If all of these diamonds were on the market instead, they would have depressed diamond prices to levels lower than semi-precious stones for good, resulting in those holding diamonds losing a significant amount of value.

This is common knowledge among diamond dealers, as it is taught in all diamond cutting schools, well-documented in textbooks, and industry journals.

Furthermore, the industry trends, production records, and accompanying diamond crashes of the 1880s, 1890s, and 1920s are full of dealers who lost large amounts of wealth from hoarding diamonds.

Another industry concern is that major diamond producers are beginning to manufacture colourful, synthetic, flawless diamonds in their laboratories, which are indistinguishable from natural diamonds.

In fact, these synthetic diamonds tend to be bigger and have better cuts with very few flaws than what is commonly found in nature. In turn, this has depressed the prices of natural cut diamonds as clients who demand the impossible for lower prices are driving demand.

A trend noticed over the years is when a number of antique and rare natural diamonds belonging to celebrities have been auctioned, only to fetch less than the initial investment on them. This is being read as a sign that there is a glut of fancy, flawless synthetic stones on the market, which will lead to further reductions in demand for natural rough gem diamonds and thereby their prices over time.

For these reasons, it is highly unlikely that Zimbabwean diamonds were ever hoarded by dealers to the extent suggested by the $15 million number being punted.

We also have boart or industrial diamonds constituting 80% of Zimbabwean production. These have industrial uses in military, tool, and machine manufacturing but come at significantly lower prices and higher volumes, making smuggling almost impossible.

As with gems, they are excessively abundant, with many major industrialized nations holding significant stockpiles and having established contracts with the leading producers for rainy days, making it less likely for them to randomly engage new suppliers outside their contracts.

Zimbabwe Must Not Bank On Diamonds

The above factors are some of the reasons why some of us are advocating that the Zimbabwean government takes diamonds off its strategic minerals list, liberalizes the market, allows Zimbabwean diamond cutters to get allocations so that we can develop a cutting industry in the country ASAP. By doing so, it will create jobs, build expertise in the industry, generate returns and savings in this small window where natural diamonds still have a demand because they might not have for much longer.


In summary, gem diamonds have no real intrinsic value besides the artificial value fostered by cartels controlling supply and the marketing hype generated around them. Hence, it's unlikely that Zimbabwe could have injected $21 billion in rough diamonds on the global market, $15 billion of them illicitly in a ten-year period, without being caught out by the cartel and global prices falling.

Industrial diamonds are too bulky to have been smuggled illicitly across borders without detection. Moreover, Zimbabwe would have had to produce and sell world-record volumes of them to make up for the amount in question. Additionally, diamonds have very elastic demand, meaning too much rough on the market would have resulted in a buyer's market in which too many diamonds were chasing little money. This would have resulted in a reduction in price rather than the 30% increase we saw over the decade in question.

The Billion Dollar Questions

This brings us to the billion-dollar questions: If Zimbabwe put $15 billion of illicit diamonds on the market, in contravention of KPC regulations, where did they go? Why did they not affect global rough diamond prices over the period? And why didn't KPC detect the infringement and suspend the country for infringing its regulations?

The moment we have these facts and questions on the table, we begin to realize that the story of Zimbabwe pushing $15 billion of stolen rough diamonds onto the international market with an additional $6 billion that went in through the proper channels over the past ten years is a strawman's argument with no scientific basis.

Eleven Reasons To Remember About Zim Diamonds

To sum up this long essay neatly, here are the eleven reasons why Zimbabwe is unlikely to have lost $15 billion on stolen diamonds over the ten-year period in question:

1. The diamond industry is controlled by a stringent cartel called KPC that monitors and audits all certified diamond mines worldwide to control output and protect global prices. Zimbabwe would not have been admitted to the Kimberley Process without consenting to monitoring and implementing security measures to secure its diamond output and prevent substantial amounts of diamonds from leaking onto the market undetected.

2. The country would have been suspended from the KPC and its diamonds labeled as blood diamonds after it was discovered that substantial amounts of stolen diamonds had entered the market.

3. The world prices of rough diamonds would not have seen a 30% surge during the same period (2006-2016) in which the stolen diamonds are purported to have entered the market.

4. Instead, prices would have probably fallen by the same quantum due to the 15% increase in rough supply on the market during a recession.

5. An injection of $21 billion of Zimbabwean diamonds over a ten-year period on the rough diamond market would have made Zimbabwe the biggest diamond producer in the world. This is considering that $21 billion in rough diamonds at the average price of $57/carat would mean Zimbabwe produced more than 400 million carats, surpassing Russia and Botswana as the biggest rough producers worldwide.

6. Such an increase in diamond production should have seen a significant and proportionate rise in demand for:

• Dump trucks

• Diamond mining equipment

• Processing plants

• Sorting equipment

• Skilled technicians in the diamond industry

• Semi-skilled mine labor

• Accommodation in Manicaland

• Fuel demand

• Consumer products due to increased employment and income in the area

However, we did not see any of these over the given period.

7. Zimbabwe would have become the biggest employer in the international diamond industry, meaning that our unemployment numbers would be significantly reduced.

8. We would have also seen a ripple effect in the number of international diamond trading companies, cutters, and valuers opening shop in Zimbabwe to process the product and harness the windfall.

9. Security companies transporting diamonds and protecting diamond dealers would have proliferated in the market.

All you have to do is visit South Africa, Congo, and Sierra Leone to see the number of Lebanese, Jewish diamond traders, and foreign security companies in those countries to understand the trends that develop in countries with huge diamond industries.

10. Diamond banks and vaults would have sprung up in Mutare and Harare.

11. Coinciding with that, there should have been a significant increase in alluvial tailing dumps to form mountains of at least 200 million tonnes of gravel around the diamond mining areas, as we see in Johannesburg due to gold mine dumps.

This is considering that Zimbabwe is said to have had a yield of 2 carats per tonne of soil moved for each carat produced, according to Eddy Cross.

The numbers clearly don't tally.

Rutendo Bereza Matinyarare.”