ZIMBABWEAN DIAMOND TRADE DEMONSTRATES POROUS DRC

C O N F I D E N T I A L KINSHASA 000219

SIPDIS

SIPDIS

E.O. 12958: DECL: 02/21/2017
TAGS: EMIN ETRD PGOV ZI CG
SUBJECT: ZIMBABWEAN DIAMOND TRADE DEMONSTRATES POROUS DRC
BORDERS

REF: KINSHASA 57

Classified By: EconOff W. Brafman for reasons 1.4 b/d.


1. (C) Summary. The recent illegal movement of Zimbabwean
diamonds through the DRC demonstrates the GDRC's lack of
control over its borders. For several weeks, reports have
circulated in Kinshasa about the smuggling of unique
Zimbabwean diamonds, setting off a flurry of interest in the
Zimbabwean diamond sector. The GDRC is investigating this
diamond trade and has halted any attempted export. End
summary.


2. (C) For at least several weeks, distinctive diamonds,
primarily industrial-grade, have been illegally making their
way through the DRC from Zimbabwe (reftel),although the
quantity cannot be determined. These gems are easily
identifiable; several of Econoffs' diamond sector contacts
have described them as the color of brown beer-bottle glass.
A Lebanese businessman told EconCouns that initially the
buyers, reportedly mainly Chinese, Pakistani and Indians,
were purchasing large quantities of these stones for about
USD one per carat in Zimbabwe. The gemstones were then
smuggled into the DRC and sold in one kilo parcels for about
USD 10 per carat. (Note: At five carats/gram, a one kilo
packet would be worth about USD 50,000. End note.) The
stones were then reportedly being re-exported to India,
China, Pakistan and Antwerp. (Note: Contacts have told
EconOffs thousands of carats from various source countries
are smuggled into the DRC every year in addition to the
Zimbabwean diamonds. End note.)


3. (C) After GDRC officials became aware of the Zimbabwean
diamonds, the CEEC (the DRC's diamond evaluating and export
agency) began investigating. The World Diamond Council is
also reportedly investigating this diamond flow. During the
recent Indaba Mining Conference in South Africa, Paul
Mabolia, the GDRC's Kimberley Process counselor, met with a
CEEC representative, the head of the South African diamond
board, and the Zimbabwean Ministry of Mines official with
diamond exploitation oversight, to discuss the problem. As a
result, the GDRC agreed to seize any Zimbabwean diamonds it
comes across and prohibit their export.


4. (C) The recent Zimbabwe diamond finds have also created a
small "diamond rush." Mabolia told EconOff diamond traders
in the DRC have complained that many of their buyers have
gone to Zimbabwe in search of higher profits. Deboutte told
EconOff a business person approached him with a proposal that
DGI invest in a diamond mine in Zimbabwe, but the company
declined.


5. (C) Comment. The trade of Zimbabwean diamonds highlights
the porosity of the DRC's borders, although it is no secret
that many diamonds are smuggled in and out every year. Until
the GDRC can better control its borders, neither the
Kimberley process nor any other traceability or certification
scheme can effectively prevent illegal trade. End comment.
MEECE