The Battle For Sierra Leone Has Only Just Begun
February 13, 03The civil war in Sierra Leone is over and the alluvial mining sector seems to be working at ever expanding capacities, producing some $250-$300 million a year - if not more. Of this amount, some $40 million (at declared export value; the actual value is much higher) is officially exported; the bulk of the output is smuggled out.
The smuggling isn't taking place because the Sierra Leoneans want to avoid a minimal (3%) export tax; it is taking place to enable the close to 450,000-500,000 diggers (those who are working on the river beds to dig up the diamonds) and their bosses, the licensed miners, to somehow survive. The average digger may get two cups of rice and $0.20 for eight hours of toiling under the sun.
Though slavery was officially abolished in the world a few hundred years ago, it has de-facto been reintroduced in the Sierra Leone artisan mining sector. The miner advances a few dollars to his workers; to do so, he borrows a few dollars from a "supporter" (very often someone linked to what is called here the Lebanese dealer cartel) and a system is created that each owes some moneys to his providers.
In turn, the miner must sell the diamonds he finds to "his supporter" - and this supporter has a "supervisor" at the mine site, to make sure that every stone found gets directly to the safe of the supporter's local office in Koidu, Bo or Kenema. None of the miners know anything about the true market value of the diamonds mined; the "supervisor" who "buys" the stone may give him as much as 3%-5% of the Antwerp market value. Such payment will take place mostly only at the end of the five month digging (dry) season.
Well over 80% of the internal market is controlled by a cartel of Lebanese dealers, which has its own price book. The cartel works so effectively that you cannot get a higher price anywhere else. Also, because of the "supporter" system, the owner of the diamonds must sell to a specific party and he has lost all ability to negotiate.
When miners or dealers smuggle, they don't do that just to get a better price. They mostly do this to avoid selling to "their supporters", those to whom they are indebted. In the Sierra Leone marketing system, those with the means have created a fabric which puts close to half a million people in bondage - a new type of slavery.
These lines do not represent a summary, but rather some indication of the complexity of the diamond mining and marketing realities in Sierra Leone. There are various different ways in which the mining is organized, and these lines reflect mostly the flavor of an enormous powder keg of problems. If the international community fails to impose a more rational, a more decent and more sensible mining and marketing system on Sierra Leone, it will only be a matter of time for the civil war to resume --- most likely. I have been told in Koidu, there is a form of a rebellion against the local Lebanese cartel.
The United States and British governments recognize this and have made diamond sector reforms in Sierra Leone a major priority to utilize the time window in which the United Nations (mostly rather friendly Pakistani troops) still maintains the peace in this lovely, but at the same time, in many respects, most miserable, country.
Some Israeli, American and Belgium companies have tried to establish a meaningful presence here, to get some competition in the local market. These efforts have largely failed - the cartel didn't allow it. Some others have effectively joined the system, by employing Lebanese buyers or agents, who "play ball".
By joining the club, those buyers have become part of the problem and not part of the solution that must be found to uplift half a million diggers who live in the most unbelievable poverty, getting a little food and maybe some $5 per month. That's what half a million people get for mining $250-$300 million worth of diamonds - their diamonds.