The New Face of the New Normal

Be the public sentiment what it may be, whatever the review mission writes in its report (if it succeeds in writing a report), and over whatever issue and for whatever reason the NGOs slam Zimbabwe – the global diamond industry already has a verdict.

As a diamond business information firm, companies often call with questions relating to the industry – from a historical fact to full market analysis of a topic. But no single topic got us as many phone calls, emails or visits to our offices in the past few weeks as the tender in Zimbabwe last month. Companies wanted to know how to participate, what type of goods will go on the block, who bought the goods, where are they from, at what price the goods were bought, who will transport, what insurers to use and more.

Much was reported in the past few weeks about the tender and much of it, as we know now, was wrong.

Buyers from only two countries were successful bidders – India and Dubai. Diamond India Ltd (DIL) was the successful Indian firm. The buying group confirmed to IDEX Online that it bought $16.3 million worth of rough diamonds. The goods were unsorted, possibly run of mine, and we estimate their purchase at about $45-$50 per carat.

The highest winning bid was more than $400 p/c, offered for a gem-quality diamonds lot.

Of the remaining $40 million or so worth of diamonds, some were industrial goods that sold for less than $10 p/c.

The majority of the offered goods, about 80 percent, were produced by Mbada Diamonds and the rest by Canadile Miners.

As to the Dubai-based buyers, at least one of them bought goods in Zimbabwe a number of times in the past, according to various documents. One of these purchases was part of the rough diamonds Zimbabwe "accidentally" exported to Dubai earlier this year.

Another tender is planned to take place this month, and you should expect to see the same faces there. This is the face of the new normality. Not only that buyers from around the world will fly to Harare's international airport to buy Kimberley Process-approved rough diamonds, some of them may even take the opportunity to examine Canadile's poorly named Zimbabwe Diamond Technology Center – ZDTC.

Zimbabwe is moving forward. It has already established a polishing center and plans to have more polishing facilities. The policies are not fully in place, but the country wants to soon start selling run-of-mine goods by tender for local processing. In other words, Zimbabwe has a whole beneficiation plan in mind and there are companies from India, Belgium, South Africa and Israel already lining up to invest in such operations. Some of them, including large well-known firms, did not wait and have already invested in polishing plants in the country.

As in other cases in the past, not all the rough that enters the plant remains there to be polished. Some quietly leaves through the back door only to return polished some time later and exits the front door as if it was polished locally. Some of the rough never returns.

From a manufacturer's perspective, the logic is simple: Do what you need to buy the rough at a reasonable price, polish what you can in the most economical way, sell the polished and unneeded rough at a profit. Some may call it Economics 101; others may call it simply doing business. In the diamond industry we may choose to call it the new face of the old normal.

I'll be on vacation during the Jewish New Year. The next memo will appear on September 16. Shana Tova to all.