DIAMOND MARKET OVERVIEW
The polished markets are closely watching the continuing strengthening of rough prices. Many dealers indicate that retail sales in the main US market are still slow, which is causing reluctance by buyers to pay higher prices for polished. A factor supporting polished prices, some say, is that manufacturing capacity has not yet fully recovered, as a large portion of the workforce of cutters and polishers in India that were made redundant when the market ground to a halt in the last quarter of last year have found employment elsewhere. As a result, traders are seeing tight supplies in certain areas of polished, which could help support January’s upward trend. As we reported earlier in the week, January saw a strong start to the year. The overall PolishedPrices index increased 1.9% to 116.4 on the 1st of February. However, there are signs of some buyer resistance to the stronger prices, with volumes lower than expected towards the end of the month. During the past week, the main PolishedPrices index eased slightly, opening at 115.08 points on Friday, compared to Monday’s opening at 116.4.

ROUGH MARKET
As the gap between rough and polished prices continues to widen, many traders believe the rough market will have to let off some steam. However, this past  week showed no signs of the rough market slowing down. Traders continued to report active buying activity amid speculation of declining world production levels. DTC reportedly received applications from sightholders for double the amount it sold during last month’s sight of around $550 million. There were reports that Angola production will be lower this year. Russia also sold less than traders expected in January. While the market is widely anticipating a correction in the price of rough, there is no clear indication of an end to the current rally at the moment.

CORPORATE AND EVENTS
A 507 carat white diamond that Petra Diamonds recovered in South Africa in September, has been named the Cullinan Heritage, miningweekly.com reported. The diamond, ranking as one of the top 20 largest high quality rough diamonds ever discovered, was unearthed at the Cullinan mine on September 24, which is Heritage Day in South Africa, the report said.  CEO Johan Dippenaar said that the Cullinan Heritage would shortly be placed on tender in Johannesburg and that it would announce the results of sale before the end of the month. "Since we announced the recovery of the diamond in September 2009, we have experienced a high level of interest from the trade," he said in a statement

The Gemological Institute of America (GIA) issued a press statement seeking information about a counterfeit diamond report. According to a news release issued by GIA, the gem laboratory traced the bogus document back to the diamond trading centre of Antwerp, Belgium. In investigating the case, the lab was able to determine that the report's number did not correspond to the stone that accompanied it but that it did match the report number for another, higher-quality stone. According to GIA, it appears a diamond of lower quality was cut to match the original GIA report but the diamond's measurements, colour and clarity did not match the specifications of the diamond that actually went with the original report. A closer examination of the rogue report revealed that the font, colour and background used in the blue shaded area did not match up to the same characteristics found in authentic GIA certificates, among other discrepancies. The release said GIA is working behind the scenes to obtain more information about the report and its origin, and is working with law enforcement authorities worldwide to help prevent, detect and prosecute such illegal activities. To help the industry or the public identify counterfeit reports, GIA had instituted a free online service called GIA Report Check that allows clients to go online and enter a diamond's GIA report number and carat weight to receive all of the information on the stone. It is available only for diamonds graded from Jan. 1, 2000 to the present.

In apparent defiance of a Supreme Court order, Zimbabwean Minister of Mines Obert Mpofu, backed by police, late Thursday took custody of millions of dollars worth of diamonds from the controversial Marange field which the court had ruled should be held by the Reserve Bank of Zimbabwe, Voice of America (VOA) reported. The minister’s surprise move followed the armed robbery this week of the Harare offices of London-based African Consolidated Resources, which says it retains the contractual right to work the Marange field, the report said. Supreme Court Chief Justice Godfrey Chidyausiku ruled that the diamonds should be held by the Reserve Bank until the mining rights case between ACR and the Harare government has been resolved. But the Supreme Court's registrar said Friday that Chidyausiku's ruling did not mean that all diamonds mined from Marange on disputed claims should necessarily be surrendered to the central bank for safekeeping, the state-controlled Herald newspaper later reported. The Herald reported that the registrar of the Supreme Court sent a letter to attorneys in the case clarifying the meaning of Chidyausiku's order, saying it did not concern all of the diamonds mined on contested claims. An earlier judgment by High Court Justice Charles Hungwe found that ACR retained the Marange mining rights, ordering the Mining Minerals Corporation to return diamonds confiscated from the firm by the army in 2006, the VOA report said. Advocate Farai Mutamangira, representing the Ministry of Mines, the Mineral Marketing Corporation and the Office of the Attorney General, said that the Supreme Court order in effect suspended the lower court order, so "the entire process of removal of diamonds from MMCZ cannot be effected." Studio Seven reached Mpofu but he declined to comment. Mpofu told the Herald newspaper that government will not allow "people representing hostile foreign interests" to exploit Zimbabwe's resources without a legal fight, the report said. Attorney Jonathan Samkange, representing ACR, said the environment has become threatening to his clients. He added that Mpofu's removal of the diamonds was a clear case of interference with the judiciary. Asked about the reported letter from the Supreme Court registrar, Samkange responded that, "I have never heard about this in my lifetime." He said issuance of such a letter would be illegal, because an order "has already been made by the highest court of the land," he told VOA.