De Beers, Gov'ts And Civic Society Launch “Kimberley Expansion” Initiative

At the joint invitation of De Beers, Global Witness and Partnership Africa Canada, some 45 U.S. (State Department), British (Foreign and Commonwealth Office and Department for International Affairs), Canadian and African government officials, NGOs, representatives of the World Bank, members of influential strategy and policy “think tanks” and others, met this week for a two day conference in London to launch the Diamond Development Initiative (DDI), which covers security, harmonisation and development opportunities for the largely informal alluvial mining sector in central and west Africa. 

The initiators stress that the meeting represented the very early stages of development to construct a multilateral partnership framework that will allow all interested parties to pool their resources, experience and knowledge, and integrate the various concepts that are being developed across the region. In a background document, the initiative takers note that “the Kimberley Process is now recognised by the international community as being a qualified success and an example for other businesses to emulate. However, it has dealt only with the symptoms of the problem. That is, marginalising, if not eradicating, the international trade in conflict diamonds. The cause of the problem is the unregulated nature of the informal alluvial mining sector in central and western Africa. This sector is uniquely vulnerable to the attentions of not only rebel factions – as in conflict diamonds – but also terrorist organisations, those seeking to exploit miners, children and local communities, and parties willing to circumvent the law and indulge in corrupt behaviour such as money laundering.”

When I first learned about this initiative I warmly applauded it - and I still do - but I take exception to the total absence of the diamond trading and manufacturing community, as well as the omission of important players such as Rio Tinto and BHP Billiton from this important inaugural meeting. The gathering aimed “at laying the foundation for a regulatory and developmental environment in which alluvial rough diamonds can be mined and distributed for the greater benefit of artisanal miners, local communities, local governments, and the wider international diamond industry.” Except for Andy Coxon (De Beers LV), Martin van Boackstael (HRD), Matt Runci (Jewelers of America) and Martin Rapaport (representing Rapaport), no “downstream” players from the “wider international diamond industry” were either invited or were present. No private parties involved in buying, financing or trading in the alluvial diamond areas were invited. No diamond or other banks were there. No independent diamond valuators were present – a group which has a vast knowledge of the informal alluvial sectors.

Chaired by Walter Kansteiner (former US Assistant Secretary of State for Africa and now with the Scowcroft Group), the conference was addressing the future organization of the some 25% of world production (by value) which is considered to come from the informal alluvial sectors – a sector in which neither De Beers (nor its Alrosa marketing partner which also attended) is currently operating.

I believe that this type of initiative ought to be worked out, discussed, agreed and financed by governments, international organizations and the diamond industry.  After the recent Diamond World Congress – and after the totally needless surveys conducted among jewelry retailers -- I fear that the involvement of some of the NGOs may actually be a deterrent to industry players and others to embrace the initiative.

Moreover, I thought that times had changed – I am wary when, in such an important gathering, the diamond business is represented by a dozen or so De Beers people – without any other mining companies nor downstream trade and industry associations. And that would be a pity – because the initiative itself is not only appropriate, but badly needed. It is kind of strange that those most directly involved – and knowledgeable about – the informal alluvial markets were not participating in the conference – their input would have made such a meeting far more valuable. Participating governments (especially the United States) should know that there is also a diamond industry “beyond De Beers”. There is.

The initiative takers explain that it is their objective to assess the viability of establishing – through a system of interconnecting partnerships – a regulatory and developmental environment in which rough diamonds can be mined and distributed for the benefit of artisanal miners, local communities, local governments, and the wider international diamond industry. It is proposed that the DDI will be enacted in such a way that it both augments local and international security and provides enhanced clarity to a vulnerable and often opaque sector of the trade. This would be achieved, say the initiative takers, through the implementation and dissemination of information of effective pilot projects, the implementation of new security measures, and fiscal harmonisation in the informal alluvial sector across the region, with the support of the international community.

I returned earlier this week from Sierra Leone. This country, maybe more than any other, needs such an initiative – and the faster, the better. In Sierra Leone, an estimated half a million diggers (nobody knows the precise figure) work a whole day for two cups of rice, a little vegetable oil, and maybe $0.20 – plus a faint hope of receiving a share of some future proceeds. It all adds up to less than $1 per day. De Beers estimates that an estimated one million diggers work in extremely poor conditions. Indeed, ways must be found to improve the return on this form of activity, without necessarily attracting more unregulated miners into the sector.

From a “tactical” point of view, I fail to understand the desire of De Beers – which left the informal alluvial mining countries years ago – to prefer an initiative with NGOs rather than with industry players for this matter. I have been told that this is just an “initial” initiative, that it will be all inclusive, etc etc – but I tend to be somewhat cautious and sceptical when it involves both NGOs and De Beers in partnership. De Beers and the NGOs state that “the role of the international diamond industry will be critical to the initiative’s overall success. It is intended that De Beers, as a co-signatory of this proposal, will actively seek to encourage pan-industry participation. The benefits for the diamond industry are clear: a secure business environment in which to trade.”

There are some 15,000 diamond traders in the world’s diamond bourses and manufacturers associations. Have these organizations become so marginal in the eyes of the NGOs and De Beers that they didn’t deserve an invitation? Does someone believe that NGOs ought first to raise the awareness among worldwide diamond jewelry consumers and retailers and that then the industry will be “compelled” to follow? Are banks only invited to events where there is a need for sponsors? This week has shown that it is both easy and unnecessary to do the right thing - in the wrong way.

As the initiative is so worthy of our warm and strong support – I don’t want to add an additional word. But I thought that someone ought to inform the industry.

Have a nice weekend.