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South African company, New Reclamation Group, a private limited company is reportedly planning to form a venture with Zimbabwe to mine diamonds from a deposit that human rights groups say has been the site of military atrocities. This comes as the world's diamond control body called on Zimbabwe to clean up a lawless field, but stopped short of suspending the country from a process meant to keep "blood" gems off the market. 

South African company New Reclamation says it will begin mining for diamonds in eastern Zimbabwe this month in a joint venture with the state's mining and development corporation.

According to documents obtained by VOA, the company's chairman David Kassel has resigned from his position to take part in the operations to exploit the diamonds.

New Reclamation will reportedly manage mining on the diamond deposit through its company Grandwell Holdings Ltd. in partnership with Marange Resources Ltd., a unit of the state-owned Zimbabwe Mining Development Corp.

Part of the land the company will use is held in a lease by a British company, African Consolidated Resources. In 2006, the Zimbabwe government seized the land from the British company after gems were found in the deposit.  As many as 20,000 illegal miners besieged the area and were later cleared off by the army and police. New York-based Human Rights Watch says more than 200 were killed in the area last year. Zimbabwe's police say they have had no reports of atrocities.

Andrew Cranswick, chief executive officer of African Consolidated Resources said the New Reclamation's reported mining plans with the Zimbabwe government set a bad precedent for any future investment in Zimbabwe.

"It is detrimental to Zimbabwe's diamond industry which could prove to be the life-saving force for the economy because these diamonds are going to get extremely bad names," he said. "These will effectively be stolen diamonds, and any diamonds coming out of there will be stolen goods. So we have this natural resource plundered and looted in an organized fashion by foreign thugs. "

Zimbabwe, which is trying to recover from a decade-long recession, is trying to attract foreign investment even as a dispute between Mugabe's Zimbabwe African National Union- Patriotic Front and the Movement for Democratic Change threatens to dismantle a coalition government set up in February and deter investors.

Cranswick said New Reclamation would be operating on the northern part of its claim through a company registered in Mauritius.

"We as a company view this extremely seriously and will take full legal recourse through litigation and criminal orders if we can get them in South Africa, Zimbabwe and Mauritius," he added.

This week, the Kimberley Process, a global body created to curb trade in gems mined to fund conflict, considered whether to suspend Zimbabwe as a member after a mission visited the Southern African country in May. Investigators found killings and forced evictions from the Marange diamond fields in the east of the country close to the border with Mozambique.

Despite the findings, the Kimberley Process panel stopped short of kicking Zimbabwe out.  Instead it has adopted a plan - proposed by Zimbabwe itself - which includes calls for an independent inspector to monitor diamonds leaving the controversial fields.

According to human rights activists monitoring the situation,  most of the stones so far extracted at the diamond fields have been smuggled out of Zimbabwe and sold in Mozambique.  Human rights groups also say the diamonds have been an important source of revenue for the military and for President Robert Mugabe's ZANU-PF party.

Ian Smillie, one of the architects of the Kimberley Process, says the panel's decision on Zimbabwe was "farcical."

He said the Zimbabwe mines ministry has "lied repeatedly" to the the diamond regulatory body.