With little fanfare, the United States has effectively ended its sanctions on Zimbabwe diamonds.
On March 4, President Biden signed an executive order terminating the national emergency “with respect to the actions and policies of certain members of the Government of Zimbabwe and other persons.”
Several personalities and entities connected to the diamond industry were removed from the Specially Designated Nationals and Blocked Persons List of the Office of Foreign Assets Control (OFAC).
Those included the Minerals Marketing Corporation of Zimbabwe (MMCZ) and the Zimbabwe Mining Development Corporation (ZMDC), Marange Resources, and Mbada Diamond Company. These companies are or were involved in diamond production or sales. Production has fluctuated over the years. From its peak in 2012, the country produced 4.46 million carats valued at $424 million, or $95 per carat, in 2024.
Based on Kimberley Process data.
The sanctions on Zimbabwe diamonds date back to human rights abuses carried out by the state at the Marange fields, which began around 2006 and culminated in the infamous seizure of the lucrative property in 2008. During the operation, government forces gunned down some 214 illegal miners, as reported by Human Rights Watch.
The incident sparked intense debate within the industry and raised many questions which are only really being addressed today with the G7 Russian sanctions.
The discussion around Zimbabwe exposed the ineffectiveness of the Kimberley Process (KP). For the first time, the KP was challenged to deal with the issue of conflict diamonds that didn’t fall within the scope of the conflict diamond definition – those used by rebel groups to fund civil war. In this case it was a government that was accused of the atrocities.
The debate surrounding a wider definition of what constitutes a conflict diamond lingers on and remains a central talking point at KP intersessional and plenary meetings still in 2024.
The Zimbabwe issue also exposed the difficulty the KP has in making decisions. The minister of mines at the time Obert Mpofu – whose name was among those deleted from the OFAC list – masterfully took advantage of the KP’s requirement for consensus to avert being sanctioned by the certification scheme.
The result was that Zimbabwe goods were given the KP stamp of approval. While the US applied sanctions, Zimbabwe was free to ship Marange production elsewhere. Mpofu knew he had a market outside the US which would generate much needed funds for the poverty-stricken country. And members of the trade, with their insatiable appetite for rough at the time, were willing buyers and investors.
The question which then arose was whether one could track Zimbabwe goods through the distribution chain. It would be easy enough for the US to block shipments of Zimbabwe rough, but what about polished diamonds that were manufactured in a third country from Zimbabwean rough? Sound familiar?
In another first, the industry was faced with the challenge of “substantial transformation,” although it wasn’t referred to in those terms back then.
There was discussion about being able to identify Marange polished scientifically. There was a claim that, unlike general diamond production, the Marange goods had a unique greenish hue that could make them distinguishable as polished. Even if that was the case, it was not a foolproof method that could be relied upon.
Instead, at the time, around 2011, the trade was asked whether it could separate production within the manufacturing process. The answer, to this journalist’s memory, was a resounding no. Only a few years later did that mindset begin to shift as blockchain technology evolved and traceability systems started to develop.
Yet there is still some resistance to embracing that change. In that sense, the Zimbabwe case can still play a role. The lifting of sanctions on Zimbabwe diamonds should not automatically open the door for their import to the US. There are still concerns that need to be addressed, including those of corruption and human rights abuses.
OFAC concurrently designated 11 individuals, including Zimbabwe’s President Emmerson Mnangagwa, and three entities to its sanctions list based on those two charges.
Notably, it said Mnangagwa is involved in corrupt activities relating to gold and diamond smuggling networks. He “provides a protective shield to smugglers to operate in Zimbabwe and has directed Zimbabwean officials to facilitate the sale of gold and diamonds in illicit markets, taking bribes in exchange for his services,” OFAC stated.
With the broader sanctions lifted, companies must do their due diligence to decide whether those Marange goods meet their ethical and sustainability standards. Indeed, the function of source verification of diamonds extends well beyond geopolitical concerns – though those arguably rank highest.
Somewhat symbolically, OFAC’s notice for the lifting of Zimbabwe sanctions combined with an update on its measures targeting Russian diamonds.
Perhaps that can be seen as a passing of the baton of sorts. Or, we should take it as a subtle reminder that had the industry taken a more thorough approach regarding Zimbabwe, it would not have the challenges it currently faces surrounding the G7 sanctions on Russian diamonds.
Essentially, the two cases evoke the same concerns and loopholes. The Russia-Ukraine conflict is no doubt different to the atrocities carried out at Marange between 2006 and 2008. But they're similar in that funds from diamond sales are enabling a rogue government.
The industry must now respond to the Russia crisis in a way that it failed to with regard to Zimbabwe. The main difference for the trade is the scale of the relevant production.
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