Archive for October, 2009
Conflict-diamond report raises ’serious questions’ over Lebanon
by Admin on October 22nd, 2009
Lebanon and a number of other countries are failing to comply with international measures governing the diamond trade, a tersely worded report said last week. The Kimberly Process Certification Scheme (KPCS or KP), is a non-legally binding process sanctioned by the UN in 2003 aimed at certifying the origin of rough diamonds from sources free of conflict fueled by diamond production.
NY DDC Delegation Meets With Panama’s President
by Admin on October 22nd, 2009
A high-level delegation of leaders of the diamond industry headed by Eli Izhakoff, chairman of the World Diamond Council (WDC), just returned from Panama, where they met with President Ricardo Martinelli of the Republic of Panama. The delegation urged President Martinelli to eliminate any trade barriers that impede Panama’s import and export of diamonds and to have that country immediately adopt the legislation necessary to join the Kimberley Process (KP).
New York Diamond Dealers Club (DDC) president Moshe Mosbacher said that he supported expanding trade opportunities between the Panama diamond industry and members of the DDC. According to Mosbacher, “The New York industry is ready to work bilaterally with Panama to improve the relationship between the New York and Panamanian industries.” He informed President Martinelli that enacting the necessary legislation would represent a valuable contribution to the growth of the diamond trade between New York and Panama.
Eli Avidar, managing director of the Israel Diamond Institute (IDI), indicated that Panama could become another Hong Kong in terms of its impact on the diamond and jewelry trade with other countries, particularly those in South America.
Dr. Martin Hochbaum, managing director of the DDC and chairman of the United States Kimberley Process Authority (USKPA), informed President Martinelli of the role the U.S. private sector plays in implementing the KP. He added, “We would be pleased to make available to Panama our experience and expertise to help Panama expeditiously meet the Kimberley Process requirements.”
Panama Diamond Exchange (PDE) president Erez Akerman expressed gratitude to President Martinelli for his support of the industry and for the leader’s offer of cooperation to ensure its growth. Izhakoff presented President Martinelli with a Silver Bowl to commemorate the meeting. He expressed confidence that Panama would quickly move ahead to enact all legislation required to join the KP.
Following the presentations by the diamond industry officials, President Martinelli told the visiting delegation, “Let’s go forward.” He said he would instruct his government to promptly initiate whatever legislation is necessary to have Panama immediately eliminate trade barriers for the diamond industry and meet all the conditions necessary to join the KP.
Botswana mulls life after diamonds
by Admin on October 21st, 2009
Botswana has received a harsh wake-up call as the global economic crisis sees diamond revenues plummet, giving a stark view of what lies in store when the country’s economic mainstay runs out.
The Botswanan government has long recognised the urgency of diversifying the economy, but this has proved problematic for the world’s largest diamond producer, a landlocked nation overshadowed by regional heavyweight South Africa.
Experts predict diamond reserves in Botswana will run out in 20 years, a blow for Africa’s most successful economy and stable democracy for which diamonds provide 30 percent of gross domestic product.
“We have always appreciated that our dependence on diamonds as a major revenue earner does leave us vulnerable and therefore the need to diversify is very important,” President Ian Khama told AFP in an interview last week.
Botswana, which produces 22 percent of the world’s diamonds, bringing in 50 percent of government revenue, halved output and suspended much of its diamond activities in 2009 as the economic crisis hit its mines.
“The economy has been hard hit by diamonds. The forecast deficit for 2009/2010 is 13 percent,” said Suwareh Darbo, Botswana country economist with the African Development Bank (AfDB).
A GDP of 26 billion dollars in 2008 is forecast to shrink 11.5 percent in 2009, but is recovering slowly.
To assist Botswana with the fallout from the financial crisis, the AfDB in August made a rare loan of 1.5 billion dollars to the country which has consistently had one of the world’s highest growth rates — averaging nine percent since independence in 1966 until 2004.
A record of sound macro-economic policy will make recovery from the crisis easier, but key challenges to long-term sustainability remain.
“We have put in a number of measures to try to open up to be able to grow, our agricultural sector, our tourism sector,” said Khama.
In the gem industry itself, the government is trying to turn the country into a global diamond centre and not just a producer.
The Diamond Trading Company Botswana was launched last year to have sorting and mixing of diamonds done in Botswana, a process which has been delayed until early 2010 due to the economic crisis.
To finance this expansion, the world’s top diamond bank, the Dutch bank ABN-AMRO recently opened a branch in Botswana.
Tourism is another key sector for further development in the wildlife-rich country which has successfully focused on the high-end market, but also took a knock in the crisis.
Diversification into other mining is also an option that has been delayed by the crisis.
Razia Khan, a southern Africa analyst with Standard Chartered in London told AFP that Botswana is “one of the best examples of how any natural resource was managed in Africa.”
However poverty and unemployment remain high in the country of 1.9 million people, attributed to diamond mining not being very labour intensive, employing just over 5,000 people.
Botswana has also introduced an offshore financial services sector in a bid to become an investment hub in the region and facilitate trade.
While the country has offered incentives for manufacturing firms to set up shop, Khan said the odds were “stacked against” Botswana which remained in the shadow of regional economic giant South Africa.
Another key focus is moving into power generation, a much needed commodity in the region.
Andrew Mwaba, lead economist with the AfDB, told AFP the crisis had increased the impetus for diversification.
“Government is paying more attention to other sectors. This could be a wake-up call for many countries who are dependent on one commodity.”
Botswana’s Khama sworn in after landslide vote win
by Admin on October 21st, 2009
Botswana’s Ian Khama was sworn in for another term as president on Tuesday after a landslide election victory in the world’s largest diamond producer.
Khama, the son of the southern African country’s founding president, took over the post last year and will serve a five-year term after the governing Botswana Democratic Party extended its parliamentary majority.
The BDP has won every election since independence from Britain in 1966.
The party won 45 of 57 constituencies, and about 54 percent of the popular vote, compared with just over 20 percent for the Botswana National Front.
Khama, 56, overcame divisions within his own party but faces a tougher task to revitalise an economy battered by a global crisis that led to a huge fall in demand for diamonds, which account for 40 percent of the economy.
The country of just 1.8 million people faces another double-digit contraction in the 2009/10 financial year.
In an inauguration speech outside parliament, Khama urged the private sector to work with the government to boost growth.
“While optimistic about our future, I remain conscious of the challenges brought on by the global financial crisis,” he said, after deciding against a lavish ceremony to save costs.
“In this connection, the private sector must redouble its efforts in a spirit of partnership with government to grow the economy.”
Botswana’s economy is expected to rebound as demand for diamonds recovers in 2010, with investors looking for a return to the prudent financial management that made it one of Africa’s gems.
Khama, an ex-soldier and critic of Zimbabwean President Robert Mugabe, appealed to communities to help fight poverty and vowed to stick to principles of democracy and freedom.
Botswana has long been considered one of the least corrupt countries in Africa and, before the crisis, had the highest sovereign ratings on the continent.
It has won wide praise for its battle against AIDS, offering drugs and other treatment to contain an epidemic estimated to have infected one in three adults.
However, debt has soared in the downturn and concern about human rights lingers.
Botswana faced international scrutiny in 2006 when its highest court ruled it had illegally forced San Bushmen off their ancestral lands, and in 2007 the government banned 17 people, mostly foreign journalists and human rights activists from the country.
UK firm bids to reclaim its rights to Zimbabwean ‘blood diamond’ field
by Admin on October 20th, 2009
THE British owners of a Zimbabwean mine at the centre of “blood diamond” allegations say they are still in tentative negotiations with Robert Mugabe’s government about re-taking ownership of the field.
Aim-listed African Consolidated Resources bought mining rights to the Marange diamond fields in February 2006 but was evicted eight months later. That prompted illegal public mining of the site, followed by a violent and bloody backlash by the Zimbabwean military in which it is alleged 200 people were killed.
After it was evicted, ACR launched a legal battle to challenge the decision and regain control of the 100,000-acre field. Last week, it won its case in the Zimbabwe high court when Justice Charles Hungwe told the state-owned Zimbabwe Mining Development Corporation, now in possession of the site, to stop mining the fields, and ordered the power-sharing government to restore ownership to the firm.
The court decision represents a significant victory for ACR, which says it wants to set up a joint venture with the government. But the administration has signalled that it may appeal; it had drawn up a shortlist of two unnamed foreign mining firms which it wants to run the mines instead. ACR finance director Roy Tucker said: “It’s a sensitive issue and we have to be careful what is said about this. There have been talks with officials and we hope there will be a resolution in weeks, not months.”
Following ACR’s departure from the site in 2006, thousands of amateur prospectors descended on Chiadzwa in the Marange district. Men and women armed with spades and sieves dug wherever they wanted, overseen by local police taking bribes. However, concerned that the government was not getting a cut, President Mugabe sent in army, police and security agents to re-take the site.
The crackdown saw widespread arrests, beatings and killings of anyone suspected of involvement in unsanctioned diamond mining or smuggling. Soldiers threw up a massive cordon around the diamond fields as the military were given free rein in return for wealth and, some say, continued support for the Mugabe regime.
On 26 June, the New York-based pressure group Human Rights Watch cited accounts from more than 100 witnesses, miners, police officers, soldiers and children alleging human rights abuses by troops. It said its researchers had gathered evidence of mass graves and accounts of an incident in which military helicopters fired on miners while armed soldiers on the ground chased villagers away.
The military are now accused of press-ganging local people to mine for them in return for a pittance. Villages and towns deemed too close to the diamond fields were demolished and their residents forced to move away.
At the height of the mini-boom and before the military crackdown, the nearby city of Mutare, 60 miles north, was seen as a “wild west” town with cash-rich miners flaunting their wealth in new goods, cars and US dollars. The diamonds would be smuggled out through the nearby Mozambique border where dealers from Lebanon, Belgium, Iraq, Mauritania and the Balkans were waiting to buy in cash.
Monitors from the Kimberley Process, an international watchdog on diamond mining, visited the area in the summer to investigate the “blood diamond” claims. The term usually refers to diamonds mined in conflict areas, the profits from which are used to finance war, insurgency or violence.
However the working party that visited Marange at the start of July has so far failed to make a public recommendation on whether Zimbabwe should be suspended from its certification process. Bernhard Esau, chairman of the Kimberley Process Certification Scheme, said last month: “The team provided the KPCS and Zimbabwe with an interim update in July but is yet to produce its final report. No final decision has yet been taken. The chairman has not made any unilateral decision on Zimbabwe and there was no attempt to pre-empt KPCS procedures.”
After the July visit, Zimbabwe’s official Herald newspaper said troops would withdraw from the area, but there have been no reports that this has taken place.
ACR’s Tucker said: “We want to get back on site, which will need improved security and transparency of operations. That means no illegal business or side deals.
“There’s been a lot of coverage on what’s happened in Marange and the Kimberley Process but we want to manage it in a proper way. At one stage there were 15,000 people mining there with picks and shovels, digging holes to get at the diamonds.”
ACR gained property rights to the area after De Beers let its licence expire. Tucker said that diamonds at the mine were “frosted”, giving the impression that they were less valuable industrial-grade diamonds.
He added: “We think others missed a trick – we knew their real worth, but we’ve never been able to mine there. We’re still waiting on the full judgment from the court, but we hope we can resolve the issue with the government. We’ll have to fulfil some spending obligations at the mine, but we think that can be sorted.”
South Africa Starts Diamond Fingerprinting Project
by Admin on October 20th, 2009
South Africa’s minerals science council, MINTEK, and the South African Diamond and Precious Metals Regulator (SADPMR) are launching a geo-scientific project to study the possibility of determining the origin of individual rough diamond crystals.
The study will explore whether trace elements — elements found at the parts per million and sub-parts per million level — allow to differentiate between diamonds from different geographical areas when physical characteristic data is combined with chemical data.
During the analysis of trace elements, a Laser Ablation Inductively Coupled Plasma Mass Spectrometry (LA-ICP-MS) is used. The technology is capable of analyzing elements at the parts per trillion level in a diamond.
In the past, chemical-physical analysis of diamonds was dismissed as impossible, however, advances in the LA-ICP-MS technology and other technologies made profiling of diamond sources seemingly possible.
“If proven to be successful, diamond fingerprinting would help to reduce theft and illegal mining and help prevent ‘conflict diamonds’ from entering the legitimate trade, which is the objective of the Kimberley Process Certification Scheme,” said Ashok Damarupurshad, Strategist at the SADPMR. “In other words, it would help to enforce controls on the international diamond trade. It is for this reason that the SADPMR has provided initial funding for the establishment of the lab at MINTEK.”
However, before any successful fingerprinting can be established, a large database containing samples of different diamond sources must be established.
Brazilian Mining Corporation Discovers Kimberlite of a New Kind
by Admin on October 19th, 2009
In the most recent geological report for property 231, the Brazilian Mining Corporation announced the discovery of a diamondiferous kimberlite. A satellite remote sensing study used in advanced multi-spectral diamond exploration has found several kimberlites containing diamonds in this part of the Sao Luis River Basin diamond venture.
The Sao Luis River Basin territory consists of two properties totaling 6,863 acres. This is located in Mato Grasso, near the town of Juina in Brazil.
The first property, consisting of 4,666 acres, began diamond mining in 2000. So far, over 175,000 carats have been produced. In 2004 and 2005, the National Department of Mineral Production documented 119,334 carats. The second property of 2,197 acres abuts the first area of exploration. Mining began there in 2006.
Originally, property 231 in the Sao Luis River Basin project was given a value of $300 million. However, the newly-discovered diamondiferous kimberlites were not included in this, and could push the value of the project up exponentially. The report did not include any sub-surface diamonds at much lower depths, or even in the secondary alluvial gravels just below the surface. The report also did not consider the quality or size of possible stones. Several gems valued at as much as $500,000 per stone have been discovered in the Juina region.
The Brazilian Mining Corporation plans to aggressively cultivate these newly-found kimberlites, tapping into perhaps hundreds of millions of dollars worth of rough diamonds.
Diamonds Are Only Part of the Africa Question
by Admin on October 19th, 2009
When the West became aware of the issue of blood diamonds via a Hollywood movie, people finally took action, and the Kimberley Process was created to attempt to stop the trading of illegal diamonds. Although this has only been marginally successful, it has, at least, brought awareness to the African and South American countries that have been suffering so that Westerners could wear big jewels. With the trial of former Liberian President Charles Taylor and possible UN sanctions against the Mugabe-run Zimbabwe government, changes are coming, although they have been altogether too slow for not only the people suffering at the hands of money-hungry dictators, but also for some of the original creators of the Kimberley Process. Ian Smillie, one of the original creators of the KPCS, left the organization when he realized that it was not accomplishing what it set out to do.
Now there is a new type of criminal emerging through the vast loopholes in the Kimberley Process: traders in “conflict minerals”. The KPCS touches only on the specific topic of diamonds, making no mention of the travesties that occur for the collection of certain valuable minerals.
In the Democratic Republic of the Congo, violence has skyrocketed since the beginning of 2009. Not only are rebels after the gold that is so easily found in Congo, but they have also learned the value of the minerals that go into some of the West’s most common devices. Every cell phone, laptop, and mp3 player requires minerals that are mined in the Congo. And out of the more than $2 billion spent by the international community on peacekeeping and emergency assistance for the Congolese, only one-tenth of one percent of that money addresses the issue of conflict minerals.
With no particular laws governing the flow of these minerals, and with no Western outcry for the UN to take measures to create them, the Congolese government is getting rich off of the terror of their own people. Human rights violations are being constantly perpetrated by the government, but without the eyes of the world on them. With militia running freely throughout the country, the Congolese people are suffering terribly. The abduction and conscription of child soldiers has become commonplace. Women and young girls are routinely raped and sold as sex slaves. Civilian homes are looted and often burned to the ground.
Mineral merchants don’t know where to turn. While they might enjoy the favor of one armed militia, an opposing group will view him as an enemy and terrorize him. Sexual assaults against men have become as common as those against women, as soldiers have found this an easy way to humiliate, subjugate, and demoralize their own people.
At this time, the United Nations supports the Congolese government, while not acknowledging a few major points. First, the Congolese government actually flourishes during this time of rampant rebel in-fighting, which allows top officials to make tremendous amounts of money in the trade of ill-gotten minerals. Second, the neighboring countries of Rwanda and Uganda are experiencing economic growth because of their involvement in smuggling the minerals across the borders. And third, the huge corporations that make devices using minerals from Congo are careful not to leave any evidence that they are making cell phones for the price of human dignity and life.
The only way to stop the violence in Congo would begin with consumers demanding that companies from which they buy only source minerals in non-harming ways. When corporations have to answer to this, governments and other stakeholders can take stronger action and create a system similar to—but more successful than—the Kimberley Process. With mandatory tracing and certification that only conflict-free minerals are used in consumer goods, it is possible that it will become more profitable to trade legally.
For any regulation to be successful, it is important that we learn from the failures of the Kimberley Process and improve on it. With the impending trip by Hillary Clinton to the Congo next week, it is possible that the groundwork can be laid for a more humane mineral-mining process. With the eyes of the US on the Congo, peacekeeping and civilian protection become more possible.
Either that, or Leonardo DiCaprio has another movie to make.
Kimberley Process Has Failed, Says Architect of Scheme
by Admin on October 19th, 2009
The leading creator of the Kimberley Process Certification Scheme, designed to stop the trade of blood diamonds, has said that he “stomped out” on the plan, as it was no longer working. Ian Smillie, considered the “grandfather” of the KPCS, says that the Scheme is headed for a complete breakdown as both governments and the diamond industry itself are failing to act against gross human rights violations. This month, Smillie left his job with the KPCS, stating to the GlobalPost that he is “not prepared to take part in a pretence that the Kimberley Process is working when it is not.”
Smillie was one of the original authors of the KPCS, a 2003 United Nations-backed agreement designed to—and credited for—breaking the relationship between the diamond trade and brutal conflicts, primarily those in southern and western Africa. 49 Nations signed the agreement. Few have lived up to its intent.
Speaking from his Ottawa office, where he works as research coordinator for the non-governmental organization Partnership Africa Canada, Smillie noted that, “It isn’t regulating the rough diamond trade. It is in danger of becoming irrelevant and it’s letting all manner of crooks off the hook.” These remarks came even as the 49 participating members—including governments, industry, and civil society—met in Namibia to address an ever-growing list of concerns. His thoughts have been echoed by Global Witness, a London-based human rights group that has been tracing international mining activities.
At the top of the watch list is Zimbabwe, where hundreds of miners were massacred by the army as the Robert Mugabe’s government took control of the prolific Chiadzwa mine. Under strict KPCS guidelines, these diamonds are not categorized as “conflict diamonds” because they are funding the government, and not a rebel army. Smillie rejected this, unequivocally stating that, “They are blood diamonds. They have blood all over them.”
According to Global Witness, 100% of Venezuela’s diamonds are being smuggled. Guinea is not reporting a 500% increase in diamond production this year, which raises a red flag. Those diamonds could easily come from Sierra Leone or Liberia, or any of the surrounding countries not participating in the KPCS. Lebanon is exporting more rough diamonds than it is importing, despite the country’s complete lack of diamond deposits. In many areas of West Africa, many diamond traders are Lebanese, bringing the diamonds back to a country known to use smuggled diamonds to fund criminal and terrorist organizations. Soon after the September 11 attacks on the US, Washington Post journalist Douglas Farah was able to link illegally-mined West African diamonds and Al Qaeda.
Yet all of these countries remain active members of the Kimberley Process.
Although in April the World Federation of Diamond Bourses called on all members not to trade any diamonds coming from the Marange region of Zimbabwe, the KPCS body made no such statement. Ian Smillie sees the Scheme failing, but hopes that its new overseers will make the necessary changes to enforce regulations and change ambiguous language. Leaving any grey areas offers morally bankrupt diamond traders to continue selling their wares unmolested by rules protecting human rights.
According to Smillie, a complete collapse of the Kimberley Process—including not changing the existing language of the current system—would cause two things. He warned that, “The diamond trade would go back to its criminal past and rebel armies would have no problem finding buyers for their blood diamonds. The potential for diamonds fueling conflict would be back.” With the weak language that exists in the KPCS now, conflict is already taking place, but is not stopped because it is only the ‘funding of rebel armies’ that is forbidden. If the current government of a nation is corrupt and illegally trading diamonds, then the KPCS can’t do anything about it.
Smillie sadly notes that, “When you see what the Kimberley Process can do, it’s very disappointing where it fails.” Hopefully, the United Nations will step in and make the changes that both the ‘grandfather of the KPCS’ and the watch-group Global Witness recommends, before more blood is spilled and the diamond industry is forever tainted.
India for greater diamond trade co-operation with Africa
by Admin on October 15th, 2009
India Monday called for greater trade co-operation with African diamond producing nations - Angola, Botswana, Namibia, South Africa, and Congo - to name a few. “India is fully committed to working with African producers of rough diamonds to assist them to move up the value chain,” said India’s Minister of State for Commerce Jairam Ramesh at the four-day plenary of Kimberley Certification Process Scheme (KPCS) which began here Monday.
Referring to his deliberations with the authorities in Angola, Namibia, Botswana, South Africa and Congo, Ramesh said: “We have offered our expertise in mining technology with a focus on beneficiation.”
“We have offered to establish diamond cutting and polishing facilities and train local people in this craft both in India and in the producing countries.”
“I am hopeful that India’s offer will be taken up by these countries. I am convinced that this is a win-win proposition for both India and the African diamond producing nations.”
Nearly 350 delegates from over 45 KPCS member-nations are participating in the deliberations, which will discuss various issues related to diamond certification and trade in “conflict diamonds” that are illegally mined and used by rebel groups to finance wars.
Referring to the issue of differential prices, Jairam Ramesh said: “We need immediately to put in place policies that will restore stability in the rough diamond market.”
He also urged upon the KPCS participants to “make all efforts to accommodate the continued operation of the trade with minimum impediments.”
“As governments, we should assist and support - not become obstacles. It is incumbent upon us not only to be alert but also to keep up our markets and help each other out.”
KPCS, an initiative of the United Nations (UN), is an international certification scheme that regulates trade in rough diamonds by preventing the flow of conflict diamonds.
Some of the key member-nations participating in the global meet are Australia, the US, the United Arab Emirates (UAE), Canada, Congo, Israel, Liberia, Namibia, South Africa, Russia, China, Britain, Romania, Brazil and Tanzania.
The KPCS currently has 48 delegates representing 74 countries. India, the chair of the scheme till December 2008, is one of the founding members of the KPCS.
Fact sheet on KPCS
What: The Kimberley Process is an initiative of governments, industry and civil society to stem the flow of conflict diamonds.
Why: Trade in these illicit precious stones has fuelled decades of devastating conflicts in countries such as Angola, Cote d’Ivoire, the Democratic Republic of the Congo and Sierra Leone.
When: The genesis of the process was in a meeting in May 2000 among South African diamond producing nations in Kimberley, South Africa. The UN General Assembly adopted a resolution in December that year to free the world of conflict diamonds, and following that, the process came into force in 2003.
Process: The KPCS imposes extensive requirements on its members to enable them to certify shipments of rough diamonds as “conflict-free”. Procuring diamonds from bona fide sources ensures this, accompanied by a certificate.
Success: Diamond experts estimate that conflict diamonds now represent only a fraction of one percent of the international trade in diamonds, compared to estimates of up to 15 percent in the 1990s.
Indian diamond industry: Nine out of every 10 rough diamonds in the world are cut and polished in India, employing one million people directly. The country exported cut and polished diamonds worth $13.36 billion in 2007-08, registering a 36.8 percent growth over the previous year.
