Leading diamond companies De Beers, Rio Tinto, Alrosa, and BHP Billiton, who account for up to 70% of rough diamond global production, are facing stiff competition from Zimbabwe (Zim) markets and beginning to lose their grip on India. The Indian market  claims that diamonds from Zimbabwe are up to 50% cheaper than traditional sources.

Experts predict Zimbabwe will influence prices and demand for rough diamonds in 2012, primarily as a result of the increasing demand from India. About 11 million carats of Marange diamonds are expected to source the Indian market this year.

“Diamonds from Zimbabwe have brought stiff competition to the international market, causing prices to fall sharply," said Mumbai diamond trader Santosh Desai.

The going rate for Zimbabwe diamonds is said to be about $40 per carat, compared to the $100 per carat price tag of other sources. About 80% of rough diamonds produced by Alrosa in 2011 were acquired by India. But eindustry experts say Zim diamonds are expected to take a large chunk out of Alrosa’s dominance this year.

Diamonds from Zimbabwe have also caused prices to fall sharply across the board. Rough diamond prices from De Beers and Alrosa have fallen by about 10% per month in Surat—India’s major diamond hub—as a result of Zim diamonds market entrace, and about 30% of diamond pieces manufactured in Surat originate from Zimbabwean stones.

Last November, the Kimberley Process gave several Zimbabwean mines the green light for resuming diamond sales--the Kimberely Process approval designation had previously been revoked for questionable practices. And last month the Zimbabwe Mining Development Corporation 's joint venture  with a Dubai firm known as the Diamond Mining Corporation (DMC) received the Kimberly Process approval to sell diamonds from the resource-rich Marange fields.

Not all is well for Zim markets, however. Watchdog groups have criticized the Zim diamond industry for labor abuses and say that Zim diamond profits could be used for political violence.

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