Zairian strongman Mobutu Sese Seko has broken his country's diamond sales out of the world diamond marketing cartel, the London-based Central Selling Organization, in a gamble that could mean increased profits or major revenue losses for the already financially pressed nation.
Zaire is only the second African country, after Ghana's break two decades ago, to cut itself loose from the multinational conglomerate that controls 80 percent of the world's diamond trade and is financially controlled by De Beers Corp. of South Africa.
Mobutu's move came after a year and a half of reportedly tense and heated negotiations with the company that had the exclusive purchasing rights for Zaire's diamond production since 1967, British Zaire Diamond Distributing Ltd. (Britmond).
Maurice Tempelsman, the wealthy American precious minerals and diamond merchant, was in Kinshasa last March, a month before Mobutu's break with Britmond became final. Foreign sources in Kinshasa said that Tempelsman apparently had come to Zaire to try to convince Mobutu not to break the 14-year-old agreement with Britmond. Mobutu, however, did not see Tempelsman, whom he had known for many years, according to one of the Zairian leader's advisers.
A spokesman for Tempelsman in New York, Robert Kasmire, acknowledged that the minerals merchant was in Kinshasa in March but added, "Mr. Tempelsman did not seek to see Mobutu " at that time. Tempelsman "knows Mobutu and has known Mobutu for many years" Kasmire said in response to questions about the two men's personal relationship.
Tempelsman was in Kinshasa on other matters relating to his Zaire-based company, Cainves, Kasmire said. Kasmire added that Tempelsman has no diamond mining or marketing interests in Zaire, but does have investments in diamond exploration.
In April, Mobutu issued a decree giving Zaire's government-owned mineral marketing agency, Sozacom, the exclusive right to market the country's substantial diamond production. Britmond, which had insisted on 100 percent purchasing rights, was cut out altogether.
Sozacom, which is supervised personally by Mobutu, held its first sale in May in Antwerp. A London diamond merchant and two others from Brussels paid $6 million for 620,000 carats of industrial diamonds.
Western diplomats here caution, however, that Zaire might face a serious loss in revenues because of declining prices for industrial diamonds. Ninety percent of Zaire's diamond production is of the industrial type. In addition, Zaire's government-owned diamond mining company, Miba, has experienced a sharp drop in production due to aging equipment and lack of spare parts, which have to be imported and paid for with foreign exchange earned through exports.
Between 1975 and 1979, according to a Bank of Zaire report, Miba's diamond production fell from 12.4 million carats a year to 8.1 million carats. This year, Zaire is expect expected to produce about 6 million carats.
Zaire's 1979 revenue from diamonds was $92.9 million or 5.3 percent of total export earnings putting diamonds in fourth place behind copper, cobalt and coffee exports.
According to U.S. Bureau of Mines figures, Zaire is the world's principal producer of industrial diamonds. Of the world's total estimated industrial diamond reserve of 680 million carats, more than 500 million are located in Zaire's south-central Kasai region around Mbuji-Mayi, where Miba has its headquarters.
"Zaire must be very conscious of this tendency of the world industrial diamond price going down," said Bank of Zaire governor Sambwa Pida Mbangui. "There is an increased competitive danger" for Zaire because Australia is expected to begin marketing at least 20 million carats of industrial diamonds next year, Sambwa added.
Before deciding to go it alone, "the stability of the diamond price for Zaire was maintained by De Beers" through the Central Selling Organization, Sambwa added.
In exchange for exclusive purchasing rights, De Beers "provided a fixed price and Zaire was guaranteed a minimum price" for its diamonds, said a Western economist. De Beers also "sopped up the diamonds smuggled out of Zaire" to countries that do not produce diamonds, such as neighboring Congo and Burundi "to protect the price."
Zaire's diamonds represented a small $60 million of the Central Selling Organization's $2.7 billion sales last year.
"Now De Beers is sitting back waiting for Zaire's effort to fail," said the economist. "Yes, I guess you could say, 'hoping that Zaire fails.' "