The available figures indicate that the Indian diamond industry along with other major diamond trading nations is gradually recovering from the shattering effects of global economic crisis. Though the country was able to make some progress on export front in the month of May, it is still significantly short of the 2008 level of $2.55bn in the same month on polished diamond exports. Besides, India still has a polished export deficit of $864mn for the first five months of 2010, up from the deficit of $430mn it posted a year ago.

However, it is not clear whether India will be able to put the past trade record on track as major procurement sources have become susceptible to stiff competition. The latest developments in Zimbabwe and China ties signal that the latter is making inroads in obtaining diamond mining rights from some African countries including the former, to nudge India from the African procurement zone.

China is planning to augment its diamond polishing sector, which only produced $3bn in exports in 2009 as compared to India’s $17.5bn. It seems a fight is brewing between the world’s two fastest growing economies, China and India, to lay claim over diamonds of Africa.

According to sources, a deal has been struck between Zimbabwe and the Chinese government to supply weapons in exchange for a steady supply of diamonds. Moreover, some reports claim that Zimbabwe’s government is secretly giving mining permits to soldiers of the Chinese military, challenging the Kimberly Process, which promotes the mining and production of conflict-free diamonds.

Toboc Trade News

The illegally mined diamonds get its name conflict/blood diamonds after the rebel or government forces employed inhuman methods by enslaving the common population to mine these precious gems. The KPCS is currently chaired by Namibia, and was established in 2003 which also serves as a deterrent to blood diamonds getting into global market.

As per KPCS norms, the rough diamonds must be sealed in tamper-resistant containers and required to have forgery-resistant, conflict-free certificates with unique serial numbers each time they cross an international border. But the Namibian Deputy Minister of Mines, Bernhard Esau during his opening speech in the meet admitted that fake Kimberley Process certificates were a growing concern and had to find ways to stop them.

Taking into account several blatant violations on human rights and illegal trade practices in countries including Zimbabwe, Lebanon, Guinea, Ivory Coast, Brazil and Venezuela despite KPCS being in effect, a coalition of civil society groups stated that KPCS was failing to achieve its primary goal. Similarly, Global Witness which exposes the corrupt exploitation of natural resources and international trade systems said “The clock is running out on Kimberley Process credibility”.

In October last year, Zimbabwe government forcefully took charge of the Marange fields, the high diamond yielding region on the pretext of widespread illegal mining. As a result, the World Federation of Diamond Bourses in April banned the sale of diamonds from the Marange fields. Yet illegal trade of blood diamond from Zimbabwe is still rampant.

On the other hand, Venezuela despite agreeing in 2008 that it would suspend its diamond trade until new control systems could be established, a civil society investigative visit to Venezuela in May this year found that diamonds are still being mined and smuggled into the global legitimate market with complete impunity. With such glaring examples at hand, KPCS had to put in place some tough measures to curb blood/conflict diamonds being traded in any market.

Toboc Trade News