Pronouncements by Natural Resources Minister Robert Persaud that his ministry will seek to bring more order to the country’s natural resources sector includes an assertion that the administration intends to institute stronger monitoring measures to ensure that the country’s diamond exports comply with the requirements of the United Nations-sanctioned Kimberly Process poses a challenge that may well cause those difficulties confronting the gold industry to appear small by comparison.
The ministry’s challenges as far as the gold industry is concerned are confined, primarily, to ensuring that the country’s commitment to its Low Carbon Development Strategy (LCDS) can unfold in harness with the growth of a gold-mining industry which, given the sustained price increase on the global market, has become an increasingly important player in the local economy. Another key challenge is that of ending or at least reducing what is widely believed to be corrupt transaction involving miners and officials of the state-run Guyana Geology and Mines Commission (GGMC). The gold-mining sector may face other problems but those are believed to be among its major ones.
Diamonds present challenges of a different magnitude. Guyana diamond production is miniscule compared with countries on the African continent; Zimbabwe and the Ivory Coast, for example. It is not, however, the volume of diamonds which the country produces that is the issue but the conditions under which they are produced.
The Kimberly Process Certification Scheme (KPCS) came into effect in 2003 with the objective of bringing an end to the international trade in so-called blood (conflict) diamonds. Conflict diamonds are diamonds that originate from areas controlled by forces or factions opposed to legitimate and internationally recognized governments, and are used to fund military action in opposition to those governments, or in contravention of the decisions of the UN Security Council.
The KPCS, which seeks to ensure that traders and consumers could identify blood diamonds and prevent their trade, requires each nation to certify that diamond exports are produced through legitimate mining and sales activity. All rough diamonds exported from these nations are to be accompanied by certificates stating that the diamonds were produced, sold and exported through legitimate channels. The certification process accounts for all rough diamonds, through every step of their movement, from mine to retail sale. Countries acceding to participation in the KPCS are prohibited from trading with nations that do not subscribe to the agreement.
Much of the attention of the Kimberly monitoring mechanism is directed at the rich diamond-yielding fields of southern and western Africa, and in recent years the Marange mines of Zimbabwe have been at the very centre of Kimberly process; and for good reason. Experts believe that Marange could be, up until now, the largest single diamond deposit discovery in human history; its known value having been estimated at in the region of a trillion United States dollars. Potential revenue for Zimbabwe is estimated at US$1 billion to US$1.7 billion annually.
The problem with Marange is that the harvesting of its diamonds has been the subject of widespread controversy associated with military control of mining operations and the reported brutal beatings and killings of miners.
Guyana may not boast – at least as far as we know – diamond deposits even remotely comparable to Marange nor does local diamond production proceed under circumstances of such conflict. That, however, is hardly the point. Countries seeking to circumvent the Kimberly Process have developed sophisticated ways of concealing the origin of their diamond exports by routing them through other diamond-exporting countries. Guyana is one of several diamond-producing countries in the hemisphere and some diamond-producing countries have become embroiled in controversy associated with the Kimberly Process. Diamonds from Brazil have been seized in the United States under suspicion that they may have sought to circumvent the Kimberly Process. Venezuela, another diamond-producing country, does not currently subscribe to the KPCS.
Minister Persaud himself has pointed out that alluvial diamonds mined in Guyana, Venezuela and Brazil are virtually indistinguishable from each other, even to experts, though he appears to have confidence in what are reportedly the exacting checks put in place by the GGMC to ascertain the origin of diamonds. More than that the minister appears to have a considerable measure of confidence in the country’s tracking system for determining the origins of diamonds.
While, as recently as its 2011 General Assembly, the United Nations General Assembly continued to throw its weight behind the Kimberly Process as the standard to follow, there is evidence that its credentials are coming under increasing scrutiny. Not that the Kimberly Process has become widely discredited. Its work is believed to have contributed to the reported reduction of the blood diamonds on the global market to 1 per cent, a significant decline from around 15 per cent in the 1990s, though experts continue to question the efficacy of its monitoring mechanisms.
KPCS suffered a significant blow to its credentials with the recent exit of Global Witness, a prestigious non-governmental organisation that had originally lobbied both governments and the international diamond trade for the establishment of a mechanism to staunch the flow of blood diamonds onto the global market. “Nearly nine years after the Kimberly Process was launched the sad truth is that most consumers still cannot be sure where their diamonds come from, nor whether they are financing armed violence or abusive regimes,” Founding Director of Global Witness, Charmian Gooch, declared late last year.
Critics of the Kimberly Process have said that it has failed to tackle key issues that attend the blood diamonds’ trade, particularly, that it has failed to do enough to clear up the murky distinction between conflict-free and blood diamonds.
In 2009, amidst repeated reports of army control of the diamond deposits and the use of the revenue earned from the sale of diamonds to buttress the Mugabe administration in Zimbabwe, the Kimberly Process finally ordered a review mission which concluded that diamond mining was indeed linked to serious human rights violations. Kimberly’s response was to impose a ban on Marange diamond exports. In June last year, however, much to the consternation of lobbyists who insisted that no great change had occurred in the Mugabe regime’s posture towards mining at Mirange, Kimberly announced that it would allow the resumption of diamond exports from two mines in the Marange area. That notwithstanding, the United States Government, last December, announced that it was prohibiting both its companies and its nationals from doing business with Marange Resources.
Local officials are usually less than forthcoming when commenting on the origins of some diamonds exported from Guyana, though it would appear that their lack of public comment is as much a function of ignorance of the origin of the diamonds as it is a function of a reluctance to pronounce on the diamond trade. Diamonds are said to be smuggled into Guyana from Venezuela in considerable quantities – presumably to circumvent the Kimberly Process – though industry intelligence is unable to say just what quantities are smuggled.
Keen as he is to have his ministry taken seriously by the mining sector, Persaud has called for diamond miners to conduct their operations within the confines of international rules of diamond trading and the UN-backed Kimberly Process is as good a benchmark as he can point to, though it would be well worth his own while and that of the industry as a whole to note that Kimberly itself is under scrutiny at this time.
