Report On The Proceedings of The Diamonds in Guinea
Report On The Proceedings of The Diamonds in Guinea
Report On The Proceedings of The Diamonds in Guinea
Monrovia, Liberia
28 – 30 June 2006
Report on the proceedings of the Diamonds
for Development Sub-Regional Conference
Table of Contents
Hosted by the Government of Liberia’s Ministry for Land, Mines and Energy and held at the
Ministry of Gender and Development in Monrovia, the conference was attended by 118
participants from Cote d’Ivoire, Guinea, Liberia, Senegal, Sierra Leone, South Africa, the UK
and the USA. They included representatives of the governments of Cote d’Ivoire, Guinea,
Liberia and Sierra Leone, the Secretariat of the Mano River Union, the regional and
international public and private sectors, civil society, local mining communities, academics and
donors.
The conference was informed by a background paper produced by International Alert on the
current state of diamond mining in the Mano River Basin and the potential of diamonds as a tool
for peacebuilding and development. Based on a series of visits to working diamond mines,
interviews with diggers, mine owners, traders, exporters, government officials and NGOs, the
report provided an overview of the sub-region and detailed analysis of each country, identifying
possible ways of delivering a larger part of the revenue from diamonds to the miners
themselves and to the rural communities that host them, plus strategies for making artisanal
mine owners more efficient and profitable and less financially dependent on the traders who buy
their stones. It also suggested ways of improving cooperation and harmonising diamond policy
at the regional and international level.
The proceedings were opened officially by Her Excellency Madam Ellen Johnson Sirleaf,
President of the Republic of Liberia and included plenary sessions and break-out group
sessions, which focused on:
• Issues and challenges of harmonisation (of licensing, land and mining, taxation, labour,
environment)
• Legal, social and fiscal issues (community, local development and environment, legal and
regulatory frameworks, fiscal and revenue management)
• Strategies for moving forward and making diamonds a positive force for development in the
region
The importance of devising practical ways forward was strongly emphasised throughout the
conference. A communiqué summarising its conclusions and recommendations was approved
by the participants and will provide the basis for future action.
The conference organisers would like to thank Her Excellency Madam Ellen Johnson Sirleaf,
President of the Republic of Liberia for her support. Special thanks are also due to Minister
Eugene Shannon for his strategic vision in championing the objectives and the framework of
D4D, Assistant Minister A. Kpandel Fayia for taking the lead in the organisation of the
conference and to. In addition, we would like to thank the governments of Liberia, Cote d’Ivoire,
Guinea, and Sierra Leone for their contribution and participation.
Conference Proceedings
The issue of diamonds is a critical one for the countries of the Mano River Basin. The
significance of the sub-region’s diamond market in global terms is relatively small, but its impact
on local economies is substantial. The sub-region is rich in natural resources and there is
enormous potential for creating revenue. However, the majority of its people live in abject
poverty and the misuse of revenue generated from diamonds has fuelled violent conflict. This
high value industry has provided very little benefit to governments and communities.
The conference acknowledged that, in recent years, efforts have been made at the international
level to address the problem of ‘blood diamonds’ - by governments, the private sector and
international NGOS, including initiatives such as the Kimberley Process Certification Scheme,
which aims to control the flow of rough diamonds into international markets.
However, it is now time to focus on the human dimension of alluvial diamond mining,
complementing initiatives such as the Kimberley Process and putting the diggers, miners and
the communities in which they work at the heart of any discussions and policy formulation. If the
perspectives, interests and needs of these communities can be linked to the development of
national and regional government and donor policy in a coordinated way, then it is much more
likely that the vicious circle of poverty and conflict can be broken and poverty reduction, conflict
prevention and development achieved.
Participants recognised the scale of this challenge, but saw it as one that could and should be
met, so that the diamond trade can not only be prevented from undermining peace, security,
development, human rights and the environment, but be harnessed as a positive and strategic
force for development in the region, improving the lives of its people.
In addition, the countries of the sub-region share many social, environmental and community
issues that are affected by mining and common or transboundary problems, including
unregulated movement of populations, infrastructure limitations, pollution and lack of
development and participants acknowledged the benefits of sharing knowledge and lessons
learned in order to find solutions to these and of making concerted and harmonised efforts in
order to resolve them.
It was agreed that more attention needs to be paid by governments to the consequences of
mining and that industrial companies, local and national authorities and communities need to
work together more effectively for development. The complexities of how to achieve sustainable
development though an activity that is by definition not sustainable and extractive were
recognised and the conference concluded that further analysis and clarification of the issues will
be required before efforts to harmonise policy can take place at the sub-regional level.
1. The exploitation of diamonds has, to a large extent, failed to contribute to social and
economic development. In some cases it has been detrimental to sustainable development
in the sub-region and to the image of the diamond industry as a whole.
2. A number of initiatives are underway, led by various stakeholders - both state actors and
non-state actors - that have the potential to contribute to the development of the sector.
3. For this potential to be fully realised, a number of challenges need to be met, which fall into
four categories:
• Economic framework
• Management of productive assets
• Management of social issues
• Sub-regional coordination and harmonisation
Revenue management
Participants emphasised the benefits of devolving management of resources to the local level.
Guinea’s experience of making use of income from gold, whereby a tax of 0.04% of revenue
has been levied in order to fund development projects that are managed by local government
was given as positive example of this. After a four-year period, donor funding has been replaced
by mining tax1 and has made a concrete difference to the lives of citizens. Similarly, in Sierra
Leone, a proportion of the 3% export duty on diamonds is paid directly to communities through
the Ministry of Resources under the Diamond Area Community Development Fund (DACDF).
Alternative financial support for small-scale miners was seen as crucial and it was suggested
that governments should continue to explore alternative sources of risk capital and private
sector investment. Facilitating access to credit was acknowledged as another priority for
governments and NGOS but careful study and consultation with financial institutions and groups
would be required before schemes could be devised. The micro-finance experience of larger
global banks might be usefully harnessed here. In addition to credit, savings provision should be
included in financial programmes and sustainability should be considered from the start.
However, participants also noted that as local currencies are not convertible on world markets,
the alluvial diamond trade is often used by investors as a means of converting their local
currencies into foreign exchange. As long as these currencies are not convertible on world
markets, larger banks will be unlikely to invest.
1 Presention by Mr Luigi Tessiore on behalf of Mr Carlos Barry, UNDP Guinea, Mining revenues and local development
fund in the northern region of Guinea.
2 Presentation by Mr Andrew Keili, Executive Director, CEMMATS Group Ltd, Encouraging competition and breaking the
chains of the bonded seller: how to introduce sustainable new forms of mining finance
The conference recognised that developing an entrepreneurial culture would take time as the
majority of miners are not used to formal business practice such as honouring legal and
financial agreements or making business plans. However, the provision of training in these
areas would not only mean that miners would be able to generate increased revenue but that
they would also be equipped to move into other sectors when diamond mining - a finite industry
- becomes untenable.
Culture and traditional beliefs such as the idea that money from diamonds “is a monster’s
money and the more you waste or lavish it the more one gets”3 also need to be taken into
consideration and educational campaigns mounted to encourage miners to better manage their
revenue.
Other recommendations included limiting the issue of licences to areas known to be likely to
generate adequate revenue. Technical support, assistance with mechanisation and equipment
(possibly on a revolving basis) provided by mining ministries in those areas would improve
efficiency and ensure that mining operations are profitable.
Cooperatives/umbrella organisations
Forming cooperatives or conglomerating artisanal miners into more mechanised small-scale
mining operations was welcomed as a means of increasing productivity and revenue but
experience thus far in Sierra Leone (most notably with the Peace Diamonds Alliance) has
shown that more consideration needs to be given to how this should be done. Successful
initiatives in the Democratic Republic of Congo could be used as a model and more information
on these was requested. The question of whether cooperatives might be cross-border or within
borders was also raised, as was the idea that cooperatives might involve not only miners but
also local communities.
Image
In addition to measures to increase efficiency and thus productivity, it was suggested that efforts
should be made to improve the global image of diamond mining, shifting away from the negative
connotations of ‘blood diamonds’ and ‘conflict diamonds.’ Failure to do this could result in falling
demand. Because the alluvial mining industry is based on small-scale operations, there is little
space for manoeuvre and it was estimated that a drop in the market of as little as 5-10% would
result in the closure of a large number of mines, with a subsequent harsh impact on local
communities.
Participants discussed the clarification and harmonisation of legislation on land use. It was
recognised that the diamond mining industry’s impact on the environment is significant and that
communities need assistance to cope with the social disruption and environmental degradation
that it generates. Environmental remediation needs to be added to the ‘traditional’ priorities of
education, health and the provision of safe drinking water and strategies developed to reduce
the negative impact of mining on the environment, possibly tied to National Environment Action
Plans. The development of cleaner technologies was identified as one of these strategies.
Governments were seen to have a major part to play in the mitigation of environmental impact
through ensuring that policies, guidelines and procedures regarding the impact of mining on the
environment are devised, complied with and effectively monitored. Measures suggested
4
included the levy of a fee on annual licences to cover the cost of environmental remediation ,
performance bonds, insurance policies, bank guarantees and adequate compensation for injury
to persons and damage caused to property by mining operations. Responsibility for restoring
land after operations cease should rest with mine owners but in addition, local communities
should be provided with the financial resources for land reclamation, restoration and
rehabilitation.
Emphasis was laid on the importance of putting mining activities into a longer-term framework.
Not only should environmental impact assessments (EIAs) of mining operations be carried out
as a preventive measure but the social impact of such operations should also be taken into
consideration (through integrated environmental and social impact assessments (IESAs)) to
include mineral resources and mine life, public participation, reclamation, restoration and
rehabilitation and monitoring. Governments, in consultation with CSOs/NGOs, should devise
guidelines for such assessments.
Apportionment of claims
Issues around land ownership were identified as problematic, including the reluctance of local
communities to accept licences to mine land that they consider theirs because of cultural
heritage. It was suggested that those who claim ownership of land by cultural heritage should
be encouraged to legalise this ownership in order to protect it.
Another suggestion was that government land ministries could devolve a certain amount of
responsibility to a locally based representative in each mining zone who could issue licenses,
give accurate reports on levels of extractions and act as a liaison between the ministry and the
community. This would greatly enhance and inform decision-making and the development of
policy as well as ensuring that communities benefit more from the mining industry. It would also
support the application of and compliance with the Kimberley Process.
4 Guinea currently levies a 500,000 Guinean franc (US$110) charge – one third of the cost of the annual
licence fee - on artisanal mining licences to cover the cost of environmental remediation.
Taxation
Differing levels of export tax amongst countries in the sub-region mean that diamonds are
smuggled to those with lower fees for export. Harmonisation of export tax was posited as a way
to reduce smuggling, however tax harmonisation has political and economic complexities
(including implications for sovereignty and potential loss of revenue for specific countries) and
participants saw the need for further and refined analysis of the issue, calling for greater
government understanding of the dynamics, complexities and implications of taxation and
harmonisation of policy, whilst also recognising that taxation levels should not be set so high
that the trade itself is taxed out of existence.
Developing the legal framework (mining, environmental and land tenure law)
The challenges of developing the legal framework so that it can be properly implemented were
discussed at length, particularly the issues of formalisation of the sector and of the
harmonisation of policy, legislation and tax. Formal legislation, based on the needs of the
community, is required in order to introduce best practice principles to this informal and
unregulated industry. Diamond mining takes place all over the sub-region, but it has yet to
emerge as a sector. Formalising it, through harmonised laws and procedures would strengthen
it, provide it with greater strength and maximise revenue, as well as providing protection for
those involved. Sierra Leone’s Law Reform Commission is currently reviewing all laws relating
to the mining sector with a view to modernising regulation, including Kimberley Process
compliance legislation and diamond marketing and production. One approach could be to share
drafts of legislation in order to provide working documents for consideration.
However, it was acknowledged that laws differ in form and substance between the countries of
the sub-region and another option might be to draft a legal framework that could then to be
studied carefully to see which parts of it would be applicable in each case.
The regional harmonisation of penalties and ways of enforcing them was suggested, plus the
negotiation of a protocol on harmonised tariffs. In addition, there was discussion on the
possibility of drafting of a Diamond Act, based on the Namibian example, which could be
replicated in each of the participating countries, embodying a comprehensive set of provisions
and addressing best practices from production to export, to include requirements for a chain of
warranty (licensing, receipts, invoices, declaration of stock etc.).
The complexities of legal harmonisation were noted and participants suggested that further
analysis at national levels would be required before harmonising policy at the sub-regional level.
The complexity of the issue notwithstanding, it was agreed that efforts should be made to keep
the number of laws promulgated to a minimum in order to promote comprehension and
encourage compliance.
Internal controls
International sanctions against diamond mining in Cote d’Ivoire and Liberia were seen as having
failed, increasing the volume of smuggled diamonds flowing out of West Africa and undermining
legitimate trade in Guinea and Sierra Leone. The Kimberley Process has helped to ensure that
a higher percentage of the diamonds produced by Guinea and Sierra Leone are sold through
legal channels but it has not managed to ensure that each diamond certified can be reliably
traced back to its mine of origin.
Diggers’ unions
The need for self-regulation led to the suggestion that unions may be better equipped to deal
with malpractice within the industry than government or police. However, for this to take place
they would need to be established as legal entities in order to empower them to bring criminals
to justice.
Another suggestion was the compulsory registration of diggers by local district councils,
preferably in their hometowns, after which they would be free to dig anywhere within the
country. Registration would give diggers entitlement to certain benefits from the district council
and would address sub-regional security concerns about the large numbers of able-bodied
young men who are unaccounted for within the sub-region’s economies.
3. Set up a flexible task force to identify appropriate ways and means forward (including
through the elaboration of terms of reference) including an institutional framework. The
task force should:
It was agreed that this task force should hold its first meeting as soon as possible after
the conference.
5. Undertake a scoping exercise in order to assess the viability of developing national and
regional core policies.
Responsibility for implementing the above actions will be taken by the task force.
Confirming their commitment to ensure that diamonds from this region will henceforth not be
used to undermine peace, security, development, human rights or the environment,
The participants,
1. Welcome the emphasis placed on the human dimension of the alluvial diamond trade
and the centrality of mining communities in all efforts to improve the performance of that
sector which, so far, has been sub-optimal.
2. Acknowledge that the sector faces a number of challenges that require appropriate
and timely interventions at the national and sub-regional level with institutions such as
the Mano River Union, ECOWAS and other stakeholders to address the macro-
economic framework, the management of productive assets, social issues and the
establishment of appropriate governance frameworks.
3. Recognize that complementarities exist between Diamonds 4 Development, the
Kimberley Process Certification Scheme, Diamond Development Initiative, and Peace
Diamonds Alliance, the Communities Artisanal Small-Scale Mining Secretariat and the
Extractive Industry Transparency Initiative and advocate for strengthened collaboration
among them.
4. Note with satisfaction the active deliberations that identified follow-up activities aimed at
fostering partnership and dialogue between the various stakeholders with the ultimate
goal of alleviating poverty in mining communities and furthering regional cooperation in
West Africa, particularly amongst MRU member states, including Cote d’Ivoire.
5. Urge the organizers in close collaboration with governments and all stakeholders as
appropriate to implement the following activities that have been approved:
c) Set up a flexible task force to identify appropriate ways and means forward (including
through the elaboration of terms of reference) including an institutional framework. The
task force should:
It is imperative that the task force hold its first meeting as soon as possible after the
Conference.
e) Undertake a scoping exercise in order to assess the viability of developing national and
regional core policies.
6. Thank Her Excellency, Ellen Johnson Sirleaf, President of the Republic of Liberia, for
her leadership in hosting the conference and the organizers for providing this necessary
platform for sub-regional dialogue.