Gem miners' labours earn few riches for Sierra Leone

Gem miners' labours earn few riches for Sierra Leone

By Michael Peel, Financial Times

July 9 2004

On a potholed track outside Koidu, eastern Sierra Leone, young men carrying shovels, buckets and mesh filters stream as if in pilgrimage towards a network of muddy craters. Scores of labourers work the area in small teams, shovelling earth and removing it in sacks. As a visitor approaches, a shout from one of the youths reveals the purpose of this vast and chaotic enterprise: "You want diamond?" he cries.

"We sell [diamonds] to dealers at a reasonable price," says Sheku Sesay, a digger. "They see the profit: for the workers, no profit."

Sierra Leone's diamond sector, once the centre of international concerns about how gem sales in Africa fund civil wars, is in turmoil in spite of international initiatives aimed at improving regulation. Internal conflict ended more than two years ago, but local people, non- governmental organisations and officials say smuggling, lack of policing and exploitation of workers remain big issues.

The Kimberley certification process, intended to stop the export of gems from war zones, appears to have had little impact on the mismanagement and criminality undermining one of the nation's few functioning peace-time industries.

"We have diamonds, but they are not assisting in development," says Mohammed Jabbie, president of Mocky, a Koidu-based youth organisation. "They are creating more problems." Much of the country's diamond exports, which are forecast to reach $100m (?81m, £54m) this year, come from in and around Koidu.

The area was occupied during the 10-year civil war by the rebel Revolutionary United Front, which was notorious for chopping off civilians' limbs and kidnapping children to fight. The RUF earned an estimated $25m to $125m a year through gem smuggling.

Mining since the war has mostly been speculative and chaotic, focusing on areas where diamonds are thought to lie near the surface. At one of the Koidu craters, Umaru Kallon runs and finances a gang of five young men who work knee-deep in mud.

Mr Kallon says he gives his labourers a cup of rice a day and a cut from the sale of any diamond they find: 40 per cent goes to the workers and 60 per cent to him, he says.

The government says the authorities lack the resources to regulate the industry or to ensure earnings from gems benefit the region. An official plan to give 0.75 per cent of the diamond revenues directly to gem-rich areas was suspended last year amid concerns over how local chiefs were using the cash. "That's the long and short of the story," says Salia Kamara, the senior government official in Koidu until last month. "Where does the money go?"

Nobody knows how many diamonds are still being smuggled, partly because there is no mechanism for collating production from surface mining and comparing it with the size of legal exports. The increase in official exports from $6.5m in 2000 to $76m last year is seen as a good sign, but it reflects in part a large increase in mining activity: the number of licences issued for surface mining is estimated to have risen from 844 in 2001 to 2000 last year.

The small size of precious stones makes them easy to hide and Sierra Leone has direct flights to Belgium, the world's principal diamond trading centre and the destination for most of Sierra Leone's official exports. At the airport in Freetown, the capital, a customs official checking bags for a flight to Nigeria inquires about "anything of police interest - weapons, diamonds?" but asks no more questions after receiving a negative reply. The electronic bag-scanner is not working and the hand search is cursory.

The government's attempts to control the industry by encouraging big companies to invest are also controversial. Koidu Holdings, the only company operating a deep mine in Koidu, is 40 per cent owned by Energem Resources, a Canadian group headed by Tony Teixeira, a South African businessman.

In 2000, Peter Hain, then the UK's Africa minister, claimed in parliament that Mr Teixeira had broken United Nations sanctions by helping send supplies to Angolan rebels: Mr Teixeira denies the claim, which he says relates to the activities of another Tony Teixeira.

Diplomats and other observers have expressed concern about the connection between Koidu Holdings and Executive Outcomes, the now-defunct South African private military company that protected the Koidu mine during the civil war.

Jan Joubert, Koidu Holdings' chief executive, says he and a small number of staff used to work for Executive Outcomes, but adds that this is the only link between the two companies.

Opinions in Koidu of what Executive Outcomes did in the town are mixed: many people praise the company for delaying the rebel occupation, although some say it concentrated on protecting the mine and did little to help locals.

One of Koidu's many diamond dealerships has a mural depicting Mickey Mouse showing off diamonds in his outstretched hand alongside the statement "best buyer".

The claim means little to Mr Sesay and his colleagues shovelling earth, who say they have found few gems and have had little success in attaining good prices.

Mr Sesay says the best diamond his team has unearthed in two years earned them just 500,000 leones ($185) from a dealer. "We live in the bush," he shrugs. "They know much better than us."