conflict diamonds

by Krista Claudene

 

Some Things To Think About

Rough diamonds are mined mainly in two ways. The first way is through huge mining operations centered around an area that holds huge lots of stones, called kimberlite mining because a kimberlite pipe has spewed up from the Earth’s center a pile of diamonds within a certain radius. Kimberlite mines can only be exploited efficiently with mechanized technologies, and so enormous mining operations (like DeBeers) runs these mines. Then, there are alluvial mines.

Alluvial diamond mining (finding ones and twos scattered on riverbeds) is typically artisan in nature. Artisan or small-scale mining is often a poverty driven activity, typically practiced in poor and remote rural areas of a country by a largely itinerant and poorly educated population with few other employment alternatives. Miners sometimes go months without a single find. More often than not, in the absence of functioning state regulatory frameworks and enforcement capabilities, mining of this kind is conducted illegally (illegally, meaning not controlled by DeBeers or by the Governments who are often controlled by DeBeers.) Today, an estimated 13 million people in about 30 countries across the world are small-scale/artisan miners, with about 80 million to 100 million people depending on mining of gold and precious stones for their livelihood (gold, by the way, is even more black-market mined than diamonds).

It is true that alluvial mining exposes the people who seek diamonds to great dangers. In 1999, one kilogram of rough diamonds from Sierra Leone sold on average for $1.15 million. That’s a lot of money. Some of these diamonds were indeed conflict diamonds, where it is said warlords forced men, children and women to do the hunting, keeping the profit for themselves. Various estimates suggest that up to 10 percent of the total population, if not more, make a living from artisan
mining in countries like Angola and Sierra Leone. Based on anecdotal observation, diggers live in utter poverty and usually have to borrow from local "godfathers" who provide them with rudimentary equipment and food for their families. And, here is where the abuses happen. We’ll look at who these "godfathers" are in a moment, but, indeed, this fact alone is indeed enough to argue against the proliferation of black market diamonds.

What I am concerned about, however, is why there is suddenly so much action around alluvial mine diamonds. Miners not in the control of DeBeers or the countries’ governments are called rebel forces. Where are these forces getting the cache of weapons to form these "rebel groups?" Word is, that the warlords are actually corrupt local police and government workers. Then, they elect local "godfathers" who get a pittance of a cut, but certainly enough to detect by their sudden and unmatched local wealth. Diamonds bring big, fast money to the seller. How then, are they going unnoticed, or "undetectable" as the governments claim?

Moreover, it seems highly unlikely that huge amounts of black market diamonds are able to be funneled by a single warlord or even a rebel group. To whom would they sell them? Conflict diamonds are a terrible reality, but they seep into the market on a much smaller scale (making them harder to control) than we are led to believe. Conflict diamonds account for less than 4% of the world diamonds. And, that includes black market diamonds from every single diamond-producing country, many of whom are Australia, Russia and Canada – no warlords there. Conflict diamonds as a subject is being centered on Angola and Sierra Leone. Lastly, who is funding the government (who is generally corrupt) who then arms the military and police (who is generally corrupt) who may turn into warlords? The mining companies looking to go in and mine, perhaps?

Before 2000, conflict diamonds were not the issue they are today. Why? The diamond trade has dealt with this since it started in the 1800's. What happened around the year 2000? Could we look to DeBeers yet again? De Beers changed its business strategy from horizontal integration (aimed at controlling world production and marketing of unpolished diamonds) to vertical integration (from the kimberlite mine to the jewelry sold under the "De Beers" brand name). By doing so, it seems to the world that De Beers has released its control over world prices of unpolished diamonds. The buffer stock was reduced from $5 billion in 1998 to $4 billion in 1999 and to less than $3 billion by June 2000, which is close to the $2 billion needed as working stock. With this new strategy, De Beers has projected a different image and the cartel manager is now called the "Supplier of choice." Let's look at that.

My question, to remind you, is why such an onslaught, media play, U.N. action, sanctions and committees? Outside of humanitarian interest looking to help alluvial miners face better conditions since day one, I look to who else has so much interest in the illegal trade since around 2000. De Beers has supposedly relinquished their hold on stablilizing rough diamond pricing, but has it? DeBeers has controlled the pricing of diamonds on the world market because it is them and the major manufacturers who delve them out – and it is still this group who accounts for the very vast majority of what makes it to market. If De Beers actually relinquished control, diamond prices would be all over the market, with many smaller miners willing to lower their prices to gain a share of the market. Alluvial diamonds rock market stabilization imposed by De Beers’ practices (claim what they may) by their mere presence.

Conflict diamonds is a subject heard about today in the local cafe. How did that happen? And, is the public truly uninformed? Once a diamond is polished, it is impossible to identify the origin of a stone, or a parcel of polished stones. It is usually only possible for gemologists to identify origins if they receive several parcels (tens of thousands of stones) that come from the same area. Once parcels are mixed however, or the parcel group is smaller, it becomes nearly impossible. Manufacturers rarely know if the parcels are mixed and yet are the ones faced with the problem of identifying what is what, and we are forced to rely on what they will tell us. Going down the line, buyers (importers, exporters, chain store buyers, wholesalers) from manufacturers, then, cannot possibly know if a diamond or group of diamonds are conflict diamonds. How, then, can the public know?

If we consumers put pressure on the chain stores (from Kmart to Kays, Tiffany to Zales) to ask the manufacturer…it’s a start. Not a call to stop buying diamonds (because then these poor, afflicted countries' economies will sink) -- but a call to show your interest. It will have an impact. But, realize too -- these buyers can tell us anything, as the manufacturer can tell them anything (since the stones are polished by the time the buyers receive them), and again we are back to DeBeers. DeBeers has control over nearly every single major manufacturer in the world. No manufacturer can only buy alluvial diamonds and have a substantial supply; they need DeBeers to be a player. So, would a manufacturer risk losing a site holder position to toss in a few black market diamonds? I doubt it. Then, this brings me back to, who is buying these black market stones? One can wonder if DeBeers themselves would buy these stones, bought low, brought up to their regulated price, mixed into the parcels to the manufacturers undetected. Studies are showing that the big percentage of the alluvial mine stones are ending up in DeBeers-controlled Antwerp. (80% of all rough diamonds flow through Antwerp.)

Interestingly, DeBeers can benefit two-fold. One, alluvial miners are in small groups and are therefore nearly impossible to identify, locate and eradicate. Whoever gets these stones gets them at a great price, and can resell for market-standard prices. Two, DeBeers-labeled diamonds are "certified" so we are yet again pushed to buy from their pipelines with the outcry now focused against alluvial mine stones. How can we not be suspicious??

Moreover, I ask DeBeers, why is there so much focus on alluvial/black market/conflict diamonds mining conditions and little to no information about the kimberlite mine conditions…the alternative for the very, very, very few elect? Especially disturbing is the focus on HIV/AIDS amongst "artisan miners." They are not going out in groups (or they’d be easy to find). They are not kept in huge mining camps, fenced in and unable to visit their families. The statistics revolving around HIV/AIDS and miners used to speak to kimberlite mines. Now, we have a brand new heavy.

Just thoughts – worth thinking about. For, after all, what can be done against a cartel the size of De Beers? Ahhh....there's the focus, I believe.