The lifting of sanctions by the European Union (EU) on Zimbabwe Mining Development Corporation (ZMDC) last September allowed Marange diamonds access to international markets.
The Antwerp World Diamond Centre (AWDC), which was instrumental in the lifting of the trade embargo, hosted two tenders between December and February.
The transparency that came with the tenders was hailed by many as something that Zimbabwe desperately needed given the opaque nature that previously characterised Marange diamond sales.
Despite the two successful Antwerp tenders, Harare announced that it was planning to have tenders at the Dubai and Shanghai diamond centres to accurately gauge their worth.
Zimbabwe went on to conduct its ‘inaugural’ rough diamonds tender in Dubai end of March, which officials described as highly “successful” compared to the Antwerp tenders.
Different tender results were thrown around raising suspicion that Harare was planning to sideline Antwerp.
Our Editor in Chief of the African Bureau, Mathew Nyaungwa, got in touch with AWDC chief executive Ari Epstein to understand his reading of these developments.
He said although the decision on whether or not Zimbabwe resolves to side with other diamond centres was not theirs to make; he believed that Antwerp was the ideal partner for Zimbabwe fr om a short and long-term perspective.
Find below excerpts of the interview.
Antwerp recently conducted two tenders of Marange diamonds, which you considered successful. You reportedly noted that the second tender achieved diamond prices of about $80 per carat, while Harare said it was $72.96 per carat. Can you set the record straight?
During the second tender, Zimbabwe offered 959,403.59 carats in Antwerp. A total of 840,576.97 carats were sold at a price of $79.94/ct, for a total of $ 67,191,778.04. You should also take into consideration that in the second tender, not all the goods were optimally cleaned and sorted, and one company tendered goods that were of very poor quality and not representative for the company’s production footprint, a big difference with what we are hearing fr om the goods that were tendered in Dubai, which is said to comprise of goods that were all optimally cleaned, and in line with all the companies’ production footprint.
You blamed one miner, which I presume is Mbada Diamonds, for taking away high quality stones and instead brought 'poor' goods for auction in Antwerp. What do you think was the motive behind this move and what was the impact on the average price recorded during the tender?
Which producer is concerned is not what matters. What matters, is that parcels offered by this producer did not represent full production footprint of the mine, but skewed to smalls and industrials. Some of the parcels composed of heavily broken pieces that apparently had already been tendered (several times) before, according to comments received fr om tender participants of the second Zimbabwe tender in Antwerp.
You were once quoted in the Zimbabwean media as saying that Marange diamonds would fetch superior diamond prices from Antwerp than anywhere else in the world. What do you make of reports attributed to Zimbabwean officials that the recent Dubai tender attracted superior prices compared to yours?
[As I said previously], the correct average carat price fetched in Antwerp is $79.94. You should also take into consideration that in the second tender, not all the goods were optimally cleaned and sorted, and one company tendered goods that were of very poor quality and not representative for the company’s production footprint, a big difference with what we are hearing from the goods that were tendered in Dubai, which is said to comprise of goods that were all optimally cleaned, and in line with all the companies’ production footprint.
We are happy that through the two Antwerp tenders, we have allowed the Zimbabwean mining companies to learn a few very valuable lessons on how they can optimize return for their minerals, for example by optimizing cleaning and sorting adequately before the goods are sent to out for sale. The prices fetched in Antwerp represent a 60% increase from the prices at which Zimbabwean diamonds were being sold for in Dubai and India in the past 4 years. It is by far the highest average price that has been realized for a large shipment of diamonds since official Marange diamond sales commenced in 2010.
In 2012 Zimbabwe alone sold approximately 12 million carats at an average price of $53/ct, mainly to eastern markets such as Dubai, India and China. We find it remarkable that over the past two years when Antwerp couldn’t import Marange goods due to the EU sanctions, none of the other markets like Dubai took the initiative to organize tenders up until now.
Mbada Diamonds chairperson Robert Mhlanga told the Zimbabwean parliament recently that he had strong reservations about Antwerp because "they are our yesteryear enemies". He also said that "we have actually reeled under sanctions, thanks to Brussels and for us now because they have claimed to have lifted sanctions and we run to them. Personally, I have my own reservations". What is your response to this and do you think that Harare shares the same sentiment?
Whether or not Harare shares the sentiment of [Dr] Mhlanga is not ours to say. We merely point to the facts. Even though the goods were optimised further in terms of assortments and cleaning in the Dubai tender compared to goods that were in the second Antwerp tender, Antwerp fetched higher prices than Dubai.
On top of that, the Antwerp tenders were conducted in full transparency. We are puzzled why other diamond centres never took the chance to hold tenders before sanctions were lifted. As soon as the sanctions were lifted Antwerp took every step to organise tenders that would generate more revenues for Zimbabwe in the shortest amount of time possible and in the most transparent manner possible. Lastly, just recently, we shared our ideas on how Zimbabwe can benefit even more from these resources through a long-term vision in which Antwerp is more than willing to share its knowledge. I believe these facts speak for themselves really.
Mhlanga also claimed that Zimbabwe was losing a lot of revenue in “commissions” paid to the AWDC but he could not give figures. Can you shed some light on these ‘commissions’?
For both the Antwerp tenders there was full transparency on the results and the precise revenues for the Zimbabwean government, the comparison with the production footprint and so on. So far, I haven’t seen the same level of transparency from the Dubai tender.
You should realize we are the largest diamond trade centre in the world wh ere today some 84% of all rough diamonds are traded. Of course we would be happy to have more of Zimbabwean rough diamonds come to Antwerp, it confirms our leadership, our number one market position. But I honestly have no idea what [Dr] Mhlanga means by commissions paid, as there are no commissions whatsoever paid by the Zimbabwe government to the AWDC. I believe you should ask [Dr] Mhlanga what commissions he refers to precisely.
Do you think Zimbabwe is capable of abandoning Antwerp to work with other diamond trading centres like Dubai, which appeared to have charmed President Robert Mugabe on his recent visit?
Again, all we can do is point to the facts. The decision on whether or not Zimbabwe decides to side with other diamond centres is not ours to make. We believe Antwerp is the ideal partner for Zimbabwe from a short and long-term perspective, wh ere Antwerp is committed to share its expertise. We are not in it for the quick wins.
Should it continue selling its goods in different centres, including Antwerp, what measures do you think are needed to ensure that you receive the same quality of goods?
I think the two Antwerp tenders have demonstrated that is imperative to adequately prepare the goods in order to optimise revenue. From a more broad perspective, I think it is key that the Zimbabwean government implements a strategy or a model that will enable a sustainable diamond industry in the future.
The Antwerp tenders were hailed by many as something that Zimbabwe needed given the opaque nature that previously characterised Marange diamond sales. Do you think that this will help build the battered image of the diamonds from the southern African country?
For all the stakeholders of the global diamonds industry, be it in Africa or here in Antwerp, transparency is the only way forward. Not only because it is demanded by today’s society, but also because it is better from a business perspective. I believe the Marange tenders in Antwerp have demonstrated this amply.
What impact do you think Marange diamonds will have on rough prices now that they are being sold openly on the global market?
Both the Antwerp diamond tenders were welcomed enthusiastically by the diamond dealers here in Antwerp. Obviously the availability of Marange goods in the industry’s primary market, Antwerp, had a positive effect on the market. It is difficult today to say what the effect will be in the future as the questions remain on wh ere Zimbabwe will hold future tenders.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
