BELGIUM: New African diamond centres and the strict appliance of the Kimberley process could lift African nations out of poverty and conflict

The biggest world diamond conference in Antwerp announced on Monday (October 15) that the diamond producer countries would like to see a major shift of power in their favour and dramatically rethink the industry's traditional business strategy. It would do this by developing the cutting and polishing end of the industry to producer countries in Africa, Russia and Canada and thus taking part of it away from diamond centre of such as Antwerp in Belgium. If successful, this shift could translate, for African diamond producing nations, into more revenue, more employment and better chances of long term development. The conference therefore threw a major challenge to the industry and to African nations' in their bid to create new African diamond centres. It could inject much needed government revenue to struggling nations such as Liberia, Sierra Leone and the Democratic Republic of Congo (DRC) as well as give countries such as Botswana, increased employment and control over diamond pricing. But the diamond industry remains controversial. It was recently tainted by the scandal of 'blood diamonds', so described after rebels used the gems to fund their 1991-2002 civil war in Sierra Leone. The United Nations imposed a ban on gem exports to try and curb the war and installed the Kimberley process to stop diamonds from funding conflicts by requiring government certificates for gems to show they come from legitimate sources. At the Monday night (October 15) gala show for diamond producers and traders gathered in Antwerp for the 2-day conference, the outspoken broadcaster Bob Geldof chided the industry for continuing to fail African nations. He also said the Kimberley process was not good enough and that 'blood diamonds' continued to make their way into the market. The diamond business, he said, is a bad business because it puts human rights aside and allows for the exploitation of millions of Africans. "This business, this industry dealing with beauty and brightness, just like money itself, got into trouble. But it got out of trouble because it came up with a formula for moving around the torture, mutilations, the brutality," Geldof said. He said the Kimberley process was only about 80 percent successful because it did not deal with the problem of conflict at its root and urged all in the diamond industry and outside to act. "Who says that this is not about human rights. Of course it is. Anything that deals with the lives of millions of the poor is only about that. How can you have mines and villages in Sierra Leone with not one well? How can you? Of course its about human rights! How can you have 1.5 million workers in abject poverty and for every one of those artisanal miners you have 10 other people dependent on them with AIDS with hunger with no prospect of a job? Of course its about human rights! Stop it! Stop your nonsense! (applause) Geldof said. Liberia was one of those countries banned from importing diamonds under the UN embargo because it could not account for their origin. Western Liberia is close to the border with Sierra Leone where rebels sifted diamonds from alluvial deposits in riverbeds and pits to fund the civil war. Geldof, who praised her president Ellen Johnson-Sirleaf, said the poor west African nation had been a victim of the conflict diamond and that it was still struggling to get itself out of it. Johnson-Sirleaf said conflict diamonds had ruined lives and plunged Liberia into fiscal collapse without even alleviating the poverty which continues to prevail in mining communities and in the country as a whole. "This high mineral wealth has played a major role in the past in fuelling conflict and has generally been a resource curse. Today our country lags far behind in basic human developments," Johnson-Sirleaf said. But Liberia also sees diamonds as a crucial source of much needed revenues which could lift it out of poverty. Which is why Johnson-Sirleaf proudly announced that, after complying strictly with the Kimberley process, Liberia had finally succeeded this year in shipping its first consignment of diamonds since the UN had lifted the embargo. "The first parcel of diamonds valued, very small but to us very symbolic and very significant, at US 200,000 bearing the first Liberia KP certificate was exported to Israel in early 2007 (applause), confirming that liberia had indeed become fully compliant and the taxes to the government from that were duly deposited in government revenues," Johnson-Sirleaf said. Jonson-Sirleaf's cash-strapped government lifted its own moratorium on exports in July. Three per cent of diamond sales fo to the government and represent a valuable source of hard currency for a country seeking to rebuild its devastated economy and infrastructure after one of Africa's most brutal wars. Diamonds are a fundamentally important source of revenue for many other African countries. It makes up 50 percent of Botswana's national income and could, if properly managed, push up revenues for those that do not yet have the right infrastructure to fully reap the benefits. At the Antwerp conference diamond producing countries said they no longer wished to act exclusively as supplies and that they wanted to capture a larger portion of the value chain. The managing director of the world's largest producer De Beers said the industry should encourage the creation of new diamond centres in Africa. Gareth Penny believes the global diamond market has proved robust in the face of a credit crisis and rough prices have held up. There are great opportunities in beneficiation for African countries and it makes good business sense. "Its not altruism that leads us to support enthusiastically the creation of new African diamond cutting centres but a sense of what is right, what makes good business sense of what consumers will demand and a determination to create the necessary conditions for future stability of the business," Penny said. He says moving the polishing and cutting centres could help in the process of democratisation of Africa, already well under way, by encouraging them to create a politically and economically safe and stable environment for the industry. This in turn would attract international capital and skills, including competitive and predictable fiscal regimes, an educated workforce, good infrastructure and a supportive civil service. De Beers would work closely with governments to ensure diamond supply was appropriate and consistent while manufacturers would have to invest their capital, technology and experience. De Beers urged manufacturers to bring Africans into their businesses to develop skills. Diamond manufacturers would also have to put their well-developed distribution channels to work for the new factories. "We've got a continent that's growing at you know at nearly 6 percent a year which is a lot faster than Europe is growing or America so there are lots of opportunities. This commodity boom that we're in now I don't think is going away. You know with India and China becoming a part of the world economy to the extent that they are and the global players that they are, that will continue to drive demand for natural resources and that will continue to make Africa an interesting continent to be investing in" Botswana is the world's biggest diamond producer by value. Acting permanent Secretary at the Minerals and Energy Ministry, Kago Moshashane says that developing the cutting and polishing end of the diamond business within Botswana would create further employment and revenue as well as allow the country to better monitor diamond pricing. "We have done our homework and we have identified 16 diamond cutting factories. Amongst those 16 you have got the 10 best cutting industries in terms of the side holding of de Beers, OK, if you look at the structure or the profiles of the countries, they are the 10 top diamond cutters in the world and I have no doubt we are going to succeed," says Kago Moshashane. The Democratic Republic of Congo (DRC) sees its own diamond reserves as a mismanaged wealth which needs to be fully tapped. Deputy Minister of Mines, Victor Kassongo believes the Congo could tripple the value of its mining sector from 600 million US dollars to 2 billion US dollars. But in this case it would be by allowing efficient industrial groups to take over from local players. The country, that last year held multi-party elections, currently has about 700,000 artisanal miners pulling out what Kassongo described as the "long-hanging fruit". Congo has set itself goals to increase efficiency of production and boost transparency of distribution by 2010. Actual production is estimated at about a third higher than declared production. "Yes its a challenge by itself because the diamonds is wanted by everyone in the world and it happens that it is in Congo and the Congo wants to do the best out of the diamonds. The diamonds is a low hanging fruit in Congo because we think we work on diamonds for the last 500 years, somehow we know it, we know how to look at that but we are looking at it manually, which we shouldn't. We want to create this environment to get companies to come. The companies are coming, some of them are just floating on the stocks instead of operating in the Congo so its both sides: its our charge how to attract those companies, how to get them to produce diamonds, how to select them so we so we open the door, the first come first served," Kassongo said.

ITN Source | October 22, 2007

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