Archive for January, 2009
by Admin on January 30th, 2009
The European Union (EU) called for the Kimberley Process “to take action with a view to ensure Zimbabwe’s compliance with its Kimberley obligations.” The EU supports action to investigate the exploitation of diamonds from the Marange/Chiadzwa area and alleged financial support of the regime and recent human rights abuses. As a result of an ongoing economic and humanitarian crises in Zimbabwe, the World Diamond Council (WDC) raised concerns this past December about the possible illegal exports of Zimbabwean diamonds.
by Admin on January 23rd, 2009
South Africa’s parliament recently passed a mine safety law that holds company executives criminally responsible for deaths in the country’s gold mines. South African gold mines are among the deepest and most dangerous in the world, and have been responsible for tens of thousands of deaths in the last century. While safety conditions have improved somewhat in recent years, there are still about 220 deaths being reported annually.
Over the years, South Africa has depleted its surface resources, so miners are forced to dig ever deeper to find new sources of gold. Not only is this extensive mining detrimental to the environment, but it also creates very hazardous conditions for workers. Cave-ins and other deadly accidents are more likely to occur in deep mines, where the pressure on the rock ceiling is much greater.
It is hoped that this new degree of accountability will bring about a marked improvement in gold mine safety. In line with the increasing availability of recycled gold and fair trade gold from Oro Verde, we hope that South Africa’s initiative will bring more ethically obtained gold into the global market.
To read about South African gold mines and the new legislation.
by Admin on January 23rd, 2009
Few people when considering diamond mining think about Latin America. In fact, diamond deposits exist in several Latin American countries.
Recently, Venezuela has been in the news because they are exporting diamonds, yet they are not working within the Kimberly Certification Process.
In late September, an article ran in Forbes.com discussing the emerging diamond sector in Latin America. Though its economic outlook is somewhat out of date due to the recent financial declines, it still provides interesting information.
–Diamond production exists in Brazil, Paraguay and Venezuela. There is exploration in Uruguay.
–Diamond trading in Latin America is largely informal and much of what is mined is sold on the black market.
– Some of Brazil’s largest deposits are in rain forests occupied by indigenous people.
by Admin on January 23rd, 2009
Since its launch in 2003, the Kimberley Process of international diamond certification has prevented large quantities of conflict diamonds from entering consumer markets, but there is more work to be done. At the recent sixth annual meeting of the Kimberley Process, Partnership Africa Canada presented a report pointing to dangerous holes in the process. The Partnership called upon India, the current Kimberley Process Chair, to initiate immediate discussion of their recommendations for action.
The report presents evidence of numerous incidences of smuggling, most alarmingly in Venezuela, which illegally exports an estimated 200,000 carats of rough diamonds every year. Additionally, it identifies widely scattered artisanal mines as a particular problem, and calls for an increase in oversight and monitoring all along the global diamond supply chain.
Canada has been a pioneer in its adherence to the Kimberley Process, and we applaud their efforts. Partnership Africa Canada’s report offers targeted suggestions for improvement and coordination of regional and international law enforcement, as well as for punishment for infractions. We hope this initiative will go a long way toward helping the Kimberley Process to increase in both scope and efficiency, and to further legitimize the global diamond supply.
To read Partnership Africa Canada’s report, visit:
by Admin on January 23rd, 2009
Zimbabwe’s recent economic collapse has driven its poverty-stricken citizens to dangerous measures. Many people are illegally searching for diamonds in the country’s diamond fields, where they are regularly being killed by police. The country’s diamond mines are controlled by the government, which routinely routs and arrests or kills citizens in order to safeguard its diamond income. In the last year alone, more than 9,000 illegal diamond miners were arrested by police and nearly 2,000 gems confiscated. In the meantime, government friends and officials are being granted licenses to mine the fields, illustrating the chaos and widespread nepotism that is gripping the country, and the importance of global conflict-free diamond legislation.
Whiteflash sources its diamonds solely from mines which operate under strict environmental laws and human rights standards. The mines we source from are also committed to transparency, so we can track their practices from mine to market.
by Admin on January 19th, 2009
Zimbabwe sent military police back to the Chiadzwa diamond fields in the east of the country to quell violent clashes between soldiers who were meant to protect the diamond fields from illegal activity and the labor force hired to mine the diamonds. The government — which diamond industry experts say could have lost more than $300 million a month in potential earnings to illegal miners and dealers at Chiadzwa – deployed soldiers in November to flush out illegal miners and secure the area in preparation for organized diamond mining.
But the soldiers claim they are poorly paid for a country with million-percent inflation and, after chasing away illegal miners, have themselves turned to mining the diamonds illegally. This creates more chaos, resulting in constant and violent clashes between rival gangs of soldiers, local residents and mining laborers. This past week, soldiers opened fire on each other in the fight for control of the diamond fields. “The shootouts happened on Sunday and Monday between rival gangs of soldiers,” said an army officer who declined to be named because he had no authority to speak to the media.
The officer said there were no casualties from the shootings, but said military police were still making arrests of the individual soldiers involved in the violence. Defence Minister Sydney Sekeramayi was not immediately available for comment on the matter. According to our sources, the soldiers exchanged fire following disagreements over control of labor drawn from the surrounding communities where residents are skilled at mining diamonds.
But a campaign by the soldiers to flush out illegal miners from the diamond fields also ran out residents of surrounding villages who are now reluctant to return and work for the soldiers. “The problem is that, unlike the police who were here before, the soldiers do not negotiate. They force us into their syndicates, and then pay us whatever they like. Most of the time they don’t pay us all,” said a villager.
Zimbabwe is on the line as a diamond trading country under the Kimberley Process, a watchdog body set up to stamp out trade in so-called conflict diamonds that fuel civil wars. The World Diamond Council (WDC) has demanded an urgent inquiry into the Zimbabwean diamond industry amid fears that gems from Chiadzwa may be finding their way onto the black market in violation of rules established to curb trade in conflict diamonds.
by Admin on January 19th, 2009
Speculators come from all over Congo to dig for diamonds at the Matempu Mine near Mbuji May. Men, women and children work at the mine, hoping to find their fortunes buried at the bottom of a 20-meter hole dug into the soft earth. Locals say that on average 15 people die in this mine every month from to shaft collapses or fights. Most of these miners and their families survive on well below the poverty benchmark of $1 per day. They frequently work for several months with no income while they dig shafts deep enough to reach the diamonds.Mbuji Mayi is Congo’s third largest city, originally built to house 6,000 workers and their families for the state-owned mining company. The city now has a population variously estimated between 3.5 and 4.5 million. According to the local mayor, 85% are unemployed migrant workers.
by Admin on January 19th, 2009
The international community should speed up efforts to prevent terrorist groups from using the proceeds from illicit diamond trade to finance their activities and launder their funds, campaigners say.
A Nairobi-based African affairs analyst, Adan Mohamed, said it was “very likely” that groups like Hizballah still use the trade to raise additional revenue.
“Nothing much has happened in putting mechanisms in place to prevent diamond trade from being used to clean dirty cash or finance conflicts,” he said.
Investigations by researchers, human rights groups, the United Nations and media organizations have revealed how Hizballah exploited weakness in the international diamond trade monitoring systems to hide their assets and raise funds.
The illicit trade was mainly carried out in the West African nations of Sierra Leone, Liberia and the Ivory Coast, and further south in the Democratic Republic of Congo (DRC).
The trade was allegedly facilitated in part by former Liberian President Charles Taylor, now facing war crimes charges in The Hague.
Taylor was the main sponsor of the notorious Sierra Leone rebel group the Revolutionary United Font (RUF), which controlled a significant segment of the country’s rich alluvial diamond mines.
The RUF waged a brutal five-year war against the Sierra Leone government in which it targeted non cooperative civilians and punished them by amputating their arms. Some RUF leaders are in the custody of the International Criminal Court.
The gems mined by RUF were shipped to Taylor’s Liberia for onward transmission to Hizballah, al-Qaeda and other illicit international buyers, according to published accounts.
The small but influential Lebanese community in West Africa, comprising mostly Shiites, was also found to be instrumental in facilitating the transfer of illicit diamonds to Hizballah.
A 2004 report in the Middle East Intelligence Bulletin, a publication of the Middle East Forum and the U.S. Committee for a Free Lebanon, said that although the U.S. authorities had been able to reduce the flow of Hizballah financing from networks in the U.S., “it appears that one lucrative source of Hizballah financing is still growing: the diamond trade in West Africa.”
Security information consultant group Strategic Forecasting (Stratfor) said last month that Hizballah could finance new attacks on Israeli targets abroad using funds from a profitable “blood diamond” network in West Africa.
Another group that has in the past documented how Hizballah and al-Qaeda have used diamonds from West Africa to finance their terrorist activities is the international NGO, Global Witness.
In a new report, the group says efforts to monitor the international movement of diamonds have not been successful and more needs to be done.
Global Witness estimates that four percent of illegal diamonds get into the international market every year. The overall global diamond trade is worth over $60 billion and most of the retail sales are in the United States.
A project known as the Kimberley Process Certification Scheme (KPCS) was started in 2003 to monitor international diamond movement, in a bid to prevent the gems from being used to fund conflicts and fuel human rights abuses. Seventy countries have agreed to implement the plan so far.
Pamela Wexler, an attorney who authored the new report, said that although there was much to praise about the KPCS inaugural phase, it had not yet evolved into a fully credible check on the international movement of diamonds.
“Foremost are gaps in oversight, specifically of internal control systems in individual countries and of the peer review monitoring system overall.”
Another key weakness was inadequate checks on private industry by individual governments.
The KPCS requires governments to implement import/export control regimes and to adopt systems to oversee their private sectors, and so keep a documentary record of rough diamonds as they travel from the mine to their polished state.
Diamonds must be shipped in sealed containers and export agencies must certify that parcels are free from “conflict diamonds.”
Members also agree to prohibit entry of uncut stones arriving unsealed or without proper certification.
by Admin on January 19th, 2009
Under the watchful eye of security guards, boys and girls dig for diamonds in the illegal mines of eastern Sierra Leone to pay for their own schooling and put food on the table. Some children as young as 10 walk several kilometers a day to attend school and work in dilapidated mining pits under scorching heat, lured by money from mine owners who keep the gems. “We provide the money and get these boys to work for their living. Is it not a fair deal?” said the Senegalese owner of one mine.
Government figures put the number of underage miners at over 600, but experts here say the real number could be three times higher. “We work on commission where we go to the pits after school and get about 3,000 Leones ($1) after four to five hours work digging and sifting for diamonds,” a 10-year-old girl told AFP. “For us this is a huge sum. It gets us by to pay school fees, buy textbooks and have meals for a couple of days.”
Many of the kids in the mines are working to pay for their schooling, said social welfare worker Mariama Sesay. “We have been trying to get them off the mines but so far it has been an uphill struggle. The illegal miners are tempting them with money and promising them paradise on Earth,” she said, shaking her head in disgust.
Many of the children do not dare to speak to strangers “for fear of losing their job,” she said. The child miners are watched by illegal guards who keep a close eye on them to make sure they do not hide or swallow the gems they find.
“We work in a gang of mostly seven to 12 year olds. Sometimes we find diamonds, but these are quickly snatched from us by the guards,” said Lansana, a 10-year-old who says he is already a veteran miner of two years. “We get nothing from the sales. We are told we are employed only to dig and sift. Whatever is found is no concern of ours.”
Although child labor is illegal in Sierra Leone, the legislation is poorly enforced and the police can sometimes be bribed. Many of the children also say that they must work because their families are simply too poor to support them. “I would go to bed hungry if I miss one day [of digging],” said Momodu, who goes to the Islamic secondary school in Koidu.
“My father died during the civil war [in 2000] and my mother resides in Kenema [also in the east], but she is poor and could not pay my school fees. I decided to come to Koidu so that I can earn some money.”
An estimated 120,000 people were killed and thousands more had their limbs hacked off in Sierra Leone’s gruesome 1991-2001 civil war, which was fuelled by so-called “blood diamonds” used to pay for weapons. Sierra Leone is among the participants of the Kimberley Process, an international initiative that requires members to certify shipments of rough diamonds as “conflict-free.”
Momodu walks 6 kilometers (4 miles) from his house in the small town of Sefadu to Koidu every day to attend classes in the morning. “I am always tired and sleep mostly during classes. After school, I take off my school uniform and head for the mines wearing tattered clothes,” he said.
“It’s an ordeal. Sometimes, there are tragedies. The pits would cave in and some of my friends would be buried by the avalanche.” The illegal mine owners pay hush money to the children to stop them reporting such accidents, he said. “At other times, the police will raid the mines, arrest some of us, but the mine owners will buy out our release,” Momodu said.
The government of Sierra Leone has teamed up with international organisations such as the International Rescue Commission (IRC) to try to get the children out of the mines, but the task is difficult. “The initiative is designed to help kids attend school regularly, but regrettably many of them still sneak to the mines,” said an IRC worker who requested anonymity.
by Admin on January 19th, 2009
Sahr Amara is stooped low, knee-deep in a muddy river, in the fifth hour of his workday. As he has each day for the past week, the 18-year-old will earn a stipend of only 7 cents, enough to buy himself a bowl of porridge to see him through the day.
Yet he returns every morning to dig in the wilting heat on the edge of Koidu, a town in eastern Sierra Leone, hunting for the one thing he says could transform his life: a diamond. Since he is the oldest of six children - three others have died of diseases - much of his family’s future rests on his prospects.
“If I find a big diamond, I can afford to go to school, I can learn, and then I can help my family and even my village,” he says. So far the plan has proved elusive; he has found no gems during his first week of work. “It’s not easy,” he says. “I think it depends on God.”
Whether or not divine intervention leads Amara to a big find, his tale is anchored in a much more earthly economy: the $60-billion-a-year diamond industry, which has built its growth on dreams of love rather than of raw survival.
Koidu, whose diamonds have been mined since the 1930s, is thousands of miles away - and a galaxy removed - from the glittering displays in jewelry stores in New York, Tokyo and London. It is set in a country where the average man earns $220 a year and dies at 39. In the dwellings along Koidu’s dirt tracks, residents eat dinner by candlelight not because it is romantic but because there is no electricity in town, just as there are no telephone lines and little indoor plumbing.
In short, it is hard to imagine a starker contrast between Amara’s world and that of the people who might one day wear whatever diamond he finds, and they live in deep ignorance of each other. When asked what diamonds are used for, Amara draws a blank. “I only know they are valuable,” he says.
But after 130 years of diamond mining in Africa, that ignorance is unraveling fast as the two worlds collide over the image of diamonds. The conflict, which has rocked the industry in recent years, may reach fever pitch this month with the release of the movie “Blood Diamond.” Set in wartime Sierra Leone during the late 1990s, the film depicts a South African diamond smuggler, played by Leonardo DiCaprio diamond industry, trying to recover a rare pink stone from a local fisherman whom rebels have forced to dig in the diamond pits.
The story line - a mixture of villainy and heroism - is classic Hollywood. But its roots are fact: In the 1990s rebels in Sierra Leone and Liberia financed their carnage from diamonds plucked out of the rivers and traded for arms. During a decade of war about 50,000 people were killed, and thousands had their hands hacked off by rebels.
Months before it opened, the movie had garnered media attention, aided by a marketing blitz by Warner Bros. (owned by Time Warner (Charts), parent of Fortune’s publisher) and a $15 million counterattack by the World Diamond Council, an organization founded by more than 50 producers and dealers to end illegal diamond trading.
“We have been engaged in a massive educational campaign,” says Eli Izakhoff, chairman and CEO of the council, which is heavily financed by De Beers, the company that sources about 40 percent of the world’s diamonds, all of them from Africa. “This movie gives the industry a great story to tell.” The council’s message: More than 99 percent of diamonds are now from conflict-free sources, and millions of Africans have schooling and health care thanks to diamond revenues.
The movie is indeed a period piece: The civil wars in Sierra Leone and Liberia ended a few years ago. But the war over perceptions is just warming up. Many in the industry fear that as the end credits roll, moviegoers might glance down at their diamond rings and wonder under what circumstances the gems were dug. Unlike oil prospecting or coal mining - essentials for modern life - those questions could roil an industry whose lifeblood is ephemeral.
“Diamonds are essentially worth nothing,” says Mordechai Rapaport, whose Rapaport Group price list is the industry standard. It’s all about what they signify, he explains: In the case of a wedding ring, it’s the guy, not the one-carat diamond. By that logic, he adds, “when a guy gives a woman a diamond and someone was killed for it, it is not worth anything.”
Diamond producers and dealers did not need Hollywood to reach that conclusion. As war raged in the past decade, they realized that so-called blood diamonds carried a risk to their business that was far out of proportion to the tiny number of stones. Even during the bloodiest years no more than 15 percent of the world’s diamonds were controlled by rebels in Sierra Leone, Liberia, Angola and the Democratic Republic of Congo.
The vast majority of diamonds, then and now, come from deep-level mines run by well-ordered international corporations, including Koidu Holdings, Sierra Leone’s newest such operation, which opened in 2003 and exports $2.5 million in diamonds a month.
And although UN investigators recently found that rebels in the Ivory Coast had smuggled millions of dollars’ worth of diamonds onto the world market through Ghana, blood diamonds account for only 0.2 percent of today’s global supply.
But the industry’s problem is far trickier than percentages. Consumers cannot be sure which diamonds are blood diamonds. And therein lies the potential for a boycott, especially since synthetic diamonds now look close to the real thing. “Diamonds are a luxury, so we depend completely on the consumer’s faith,” says Rory More O’Ferrall, director of external affairs for De Beers. “Anything that affects the integrity of that we need to address.”
Tackling the problem took an unlikely alliance: Industry executives joined forces in 2003 with governments and the UN to end the trade of conflict diamonds. The resulting Kimberley Process Certification Scheme is a rare experiment by a major industry to monitor its own abuses. The 71 member countries agree to trade only among themselves. They inspect one another’s facilities, then issue certificates declaring their diamonds conflict-free.
In theory, rigorous paperwork tries to trace all diamonds from mines to consumers. Transgressors are ousted: The Republic of Congo was banned in 2004, and Venezuela was threatened with suspension last month after reporting zero diamond exports for 2005.
But the system is hardly flawless, even in the U.S. In September the U.S. Government Accountability Office found that Customs and Treasury officials were only haphazardly enforcing the system, leaving companies to monitor themselves. Last year about 300,000 more carats were exported from than imported to the U.S. - which produces no commercial diamonds itself. Representatives from all 71 countries met last month in Botswana to try to tighten loopholes and squeeze out nonmembers. “There are fewer and fewer countries left that nonmembers can trade with,” says Sue Saarnio, the U.S. State Department’s representative to the November conference.
A far grimmer assessment of the Kimberley Process can be found in the back alleys of Koidu. As the clammy heat eases off in the late afternoon, dozens of men converge on the neighborhood dubbed by the locals “Open Yei,” Creole for “keep your eyes open,” a reference to its thriving unlicensed diamond trading.
The action is the area’s major entertainment, drawing a crowd of curious men and children. In a dirt clearing between the small wooden storefronts, Abdollai Koroma runs his business from a chair under a shade tree, clutching a yellow calculator and a jeweler’s loupe in a weathered pouch. During just one hour eight men arrive with their wares wrapped in scraps of paper stuffed in their pockets. Koroma takes each stone and swirls it in his mouth before examining it briefly under the loupe. “This is 1.20 carats,” he says after spitting out a glittering stone the size of a shirt button.
Koroma, who started trading diamonds at age 17, taps on his calculator, peels off a wad of banknotes, and makes his biggest purchase of the day: 200,000 leones, about $66. The previous day the neighborhood trade was equally brisk, as men gathered to sell diamonds to Komba Fillefaboa, a 47-year-old trader who began digging when he was 12. Fillefaboa says he buys dozens of stones on an average afternoon.
“We buy piece by piece and then gather them into a parcel to sell to dealers,” he says. Once the parcel of diamonds is sold to a licensed dealer, illegally mined diamonds are easily mixed in.
Fillefaboa says he has no problem finding buyers, despite Sierra Leone’s strict licensing laws, which ban illegal diamond dealing. Licenses are regarded as too costly and laws too cumbersome. “We are all illegal here,” boasts the neighborhood’s chief, Sahr Sam. “If the monitors come, we scatter.”
In reality, government monitors rarely come to Open Yei. There are only 200 for the entire country, sharing ten motorcycles donated by the U.S. Agency for International Development. “At every level people say to us, ‘If you harass us, we will just smuggle the diamonds,’” says Dan Joe Hadji, a senior monitoring officer in Koidu. “So we allow people to move around and hope and pray that they find religion” -by obeying the law.
Diamond producers and dealers frequently tout Sierra Leone as a Kimberley Process success story, since its official exports soared from near zero in 1999 to about $142 million last year, suggesting that smuggling has plummeted. Not necessarily so: The official statistics cannot be proved, says Jan Ketelaar, mine manager of Koidu Holdings and a former diamond advisor to Sierra Leone’s President.
Worse, this year’s exports are likely to drop about 10 percent, suggesting that bigger diamonds are being smuggled illegally, says a Western ambassador in Freetown who sits on a high-level diamond committee of diplomats and aid organizations but asked not to be identified. Director of Mines Alimany Wurie admits smuggling is widespread - perhaps as much as one-third of all Sierra Leone’s diamonds.
Enforcement is nearly impossible. The frontier with Liberia, whose diamonds are banned from world trade, is just 30 miles from Koidu and riddled with old smuggling routes. Only three of the 36 border crossings into Guinea are guarded, says Hadji, and even those are left unmanned for a few days each month when border officials walk to town to collect their pay.
Yet the rampant smuggling, though illegal, does not kill. And with peace restored in West Africa, it is tempting to think of blood diamonds as little more than a dramatic movie plot. Those who have witnessed Africa’s bloodletting up close say it’s a mistake to relegate the issue to history, because history could repeat itself.
In any future conflict in the region, diamonds would be one of the surest ways with which to buy weapons. “Diamonds were very much the fuel for the war but not the root cause, and those root causes are still very much with us,” says the Western ambassador. “Corruption, unemployment, poverty - I could well imagine another blood-diamond scenario here.”
Faced with that stark possibility, diamond companies have begun trying to tackle the crippling poverty at the bottom of the industry, where, according to Global Witness, a British organization that has done extensive research on blood diamonds, about one million Africans earn pennies a day in the backbreaking and increasingly fruitless search for alluvial stones.
Flying low over Koidu in a twin-propeller plane shows how daunting that task is. Hundreds of men can be seen bent low in the rivers around Koidu. “They are working in absolutely horrific conditions in the hopes of striking it rich, but the majority never do,” says Susie Sanders, a Global Witness researcher.
Little of the region’s innate mineral wealth has filtered down to residents. “A billion dollars’ worth of diamonds have come out of Sierra Leone in the last several years, and there is no electricity or water wells,” says Rapaport, who toured the villages around Koidu last summer with his father, Martin, chairman of the Rapaport Group.
Shaken by the chasm between the diggers and the diamond buyers, the Rapaports are trying to start a Fair Trade association of producers along the lines of Starbucks (Charts), which buys coffee beans for a premium price from some growers, then sells them for more money to socially conscious coffee drinkers. Rapaport is predicting that the current controversy over diamonds will jolt consumers into asking retailers probing questions about the gems’ origins.
If so, they are unlikely to find much information: Two years ago a survey of 40 major American retailers by Amnesty International and Global Witness found that almost none had policies in place against blood diamonds.
Rapaport believes consumers would happily pay a little extra to ensure they are buying African diamonds mined for decent wages under humane conditions. “Our idea,” he says, “is that Tiffany (Charts) is going to wake up one morning and see that Cartier is selling fair-trade jewelry and say, ‘Oh, my God, we need to do that.’ They will change not from an ethical point of view but from greed.”
In Koidu a U.S.-funded program trains diggers in how to grade and value the diamonds they find as a way of avoiding being fleeced by local traders. Last year De Beers and two activist organizations founded the Diamond Development Initiative, an international organization to train diggers in safety and economic issues, and ultimately to try to persuade many to grow crops instead. De Beers has begun a similar pilot training project in Tanzania, which it says it will replicate elsewhere in Africa if it is successful.
But for 18-year-old Sahr Amara all those projects seem abstract. His parents grow crops in a village about 20 miles from Koidu and cannot afford to buy his schoolbooks or pay his yearly tuition of 35,000 leones ($11.66). “I would like to find a diamond so I can go back to school,” Amara says. “If I stay digging at this site for a long time and find nothing, maybe I will leave and try to find a job somewhere.” That would leave Africa’s 999,999 other diamond diggers still searching for a dream.