I recently read an article about the KP potentially dropping the ban on diamonds from the Central African Republic (or, at least the western portion of the country controlled by the government).
Seeing as the most non-industry news outlets don’t tend to do a very good job preserving important nuance or incorporating all the necessary complexities and caveats when trying to summarize such things — example here, where it was written: “The Kimberley Process system for certifying the origin of diamonds is meant to inform customers about where the stones originated” (it does no such thing) — I reached out to a friend of mine that has worked with the KP on such issues. My subject was this:
Do diamond bans work?
Depends. Do they keep conflict diamonds out of the supply chain? Do they make the diamond trade less appealing as a revenue source to rebel groups? Rough Diamond Gemologist does a proper dressing-down of the KP here. Unsurprisingly, “the ban was only enabling the bad guys” was a commonly touted reason for dropping the ban in Côte d’Ivoire in spring of 2014.
As expected, my friend’s response was awesome. What I learned:
With diamonds, much like the other subjects (religion, politics, foreign policy, etc), the more I read about the subject and the more complexities I realize, the less-pointed and more confused I get. There’s few greater joys to me than stumbling upon a fact or quote that turns my entire world upside-down. Here are (some) of those which launched me down longer roads of reading, research and rethinking:
1. De Beers is now 15% owned by the Government of the Republic of Botswana (GRB).
In 2004, the GRB acquired 15% of De Beers. For what it’s worth, this was also complete news to a Forevermark retailer I recently spoke with (given that being accepted into the Forevermark program was described to me as being the toughest application process with the most invasive background check this person had ever consented to, how do they not know this?). The remaining 85% is owned by Anglo-American, who increased their share from 45% when the Oppenheimer family sold its remaining 40% to … the company founded by Ernest Oppenheimer (Anglo), naturally.
In 2006, renowned industry analyst Chaim Even-Zohar bet that the GRB would sell their stake.:
“Anyone closely following the governmental strategies towards diamond mining and diversification will come to the inevitable conclusion that Botswana will sell – and probably sooner rather than later. Selling its stake in De Beers is, for many reasons, in the best interest of Botswana.” — Chaim Evan Zohar
Making bets on the future with certainty is generally a risky thing to do. Safe to say that this has not happened, and the GRB disagrees with that assessment. In 2013, De Beers moved their rough sorting and selling operation, DTC from London to Gaborone. This does appear to be, “for many reasons, in the best interest of Botswana”.
2. Most of the world’s diamonds (by weight) get polished in India
… but some mining companies like De Beers deliberately limit the size of the rough available to Indian sightholders, in order to protect the master cutting/polishing centers in Antwerp, New York and Tel Aviv. Moreover, a barrier to greater beneficiation (cutting and polishing in their country of origin) of diamonds in African countries, is that India maintains a massive cost of labor advantage over their African counterparts.
Not long ago, De Beers used to argue that:
“for a major diamond producer like Botswana, it would be national folly to prescribe that any percentage of their diamonds needed to be beneficiated locally.”— Former Managing Director, Gary Ralfe (2001)
Curiously enough, this position was reversed six short years (and a 15% acquisition by the Government of Botswana) later, under a new Managing Director:
“For the African diamond producing countries, beneficiation is not optional, not a passing whim motivated by political correctness, but an imperative, an absolutely essential and critical part of their macroeconomic policy designed to uplift their economies to provide education and jobs and healthcare for their people and to make poverty history…. We [De Beers] don’t embrace this out of misguided enthusiasm or altruism. No, we embrace it because it makes good business sense and because it is the right thing to do.” — Mr. Gareth Penny, Managing Director, De Beers
“Diversification and Beneficiation” is now proudly touted on De Beers’ website.
3. “Blood Diamond” wasn’t filmed in Sierra Leone.
A simple query of IMDB confirms this simple fact, but Ian Smillie, Executive Chairman of the Diamond Development Initiative, told me: “Small piece of info: the beach scenes in the movie were shot in Mozambique, but there are no mountains in the background in Mozambique, as in Freetown. But if you look at the movie, there actually are mountains – they used CG graphics to do it. Hollywood: dedicated to getting it right.” The country is still desperate to shake the stigma left from that movie, and of course now with the Ebola crisis, the urgency and difficulty of that job has increased dramatically.
EDIT: Rob Bates of JCK tells me: “You are correct about BD, but there were some stray shots filmed in Sierra Leone. (Zwick calls out one in DVD commentary)”
4. Cecil Rhodes’ first monopoly: water pumps
Years before purchasing all the mining concessions in Kimberley and founding De Beers with Rothschild money, Cecil Rhodes established his first monopoly by “[arranging] for the largest capacity water pump in southern Africa to be hauled to Kimberly where it was used in keeping diamond workings open during the seasonal rains. In the dry season this pump was able to be used in the production of a scarce and desireable commodity – Ice Cream.”
5. The Mysterious Car Crash: A Zanu PF Favorite
Edward Chindori-Chininga was a Zimbabwean Zanu PF MP, and Minister of Mines and Mining Development from 2000-2004. On the 1st of June, 2013, He had offered some incredibly nice things to say about the Kimberley Process and “its role and contribution to a conflict free diamond industry in Africa”, in addition to some very well-documented shortcomings and frustrations faced by African countries, and Zimbabwe in particular. Weeks later, he published a report critical of diamond mining operations in Marange, revealing extreme corruption, a lack of transparency (shocker in the diamond world, I know), smuggling, leakages of diamonds, etc. He also revealed to a researcher at PAC that he considered himself “a marked man”, and then days later was found dead of a “mysterious” car crash.
A co-worker of mine is originally from Mutare. When asked about this, he offered a little chuckle and noted with a sort of “yeah I’ve heard this one before” tone, that this is business as usual for ejected Zanu PF politicians whose perceived usefulness has run its course. Turns out, this is indeed business as usual for Zanu PF, and NewsDay catalogs a handful of such “mysterious” car crashes here.
6. Following UN embargo on Liberian diamonds, the Taylor regime relied on timber for funding.
Global Witness details:
To compensate for the loss of diamond revenue caused by international sanctions, Taylor sold Liberia’s forests to logging companies – shifting his sources of financing from blood diamonds to conflict timber. Among those who received logging concessions during this period was international arms dealer Leonid Minin who, at the time of his arrest in 2001, was planning a large arms deal for Liberia.[xiii] Also holding major concessions was Dutch national Gus Kouwenhoven, who ran the notorious Oriental Timber Corporation, which was involved in importing arms into Liberia and developed infrastructure that was used to transport weapons to Sierra Leone.
Vice President Mujuru appeared to ignite a diplomatic storm Sunday after telling a church gathering that India had “built a whole town” from smuggled Marange diamonds.
Right now they are claiming that the Marange diamonds have been exhausted but no one here has any diamond rings or other jewels. No jobs were created locally in diamond polishing. All the diamonds were taken to India where they have built a town from Chiadzwa diamonds – it’s called Surat and yet Zimbabweans continue to struggle
If you do not want to get scammed, free your mind of greed. Do not believe in miracles in the rough diamond business, and if you don’t know what you are doing, hire someone who does.
When a man with experience, meets a man with money, the man with money gets the experience, and the man with experience gets the money.
via Rough Diamond Geologist