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Sierra Leone mulls setting up entity to buy diamonds from artisanal miners

16 march 2020

julius_mattai_xx.pngSierra Leone will revise its Mines and Minerals Act that will, among other issues, pave way for the establishment of a State entity that can buy diamonds from artisanal miners, an official has said.

The National Minerals Agency of Sierra Leone director-general, Julius Mattai, told Rough & Poished’s Mathew Nyaungwa in an exclusive interview that the State was only evaluating diamonds at the moment, but change was in the offing.

Currently, artisanal miners were selling diamonds to agents, who in turn sell to dealers. The dealers also sell the stones to exporters who finally ship them to either Antwerp or the Middle East.

Mattai also hailed De Beers’ GemFair pilot project, which seeks to formalise the artisanal and small-scale mining (ASM) sector in Sierra Leone by raising standards and opening up a new source of ethical diamond supply through the group’s industry-leading distribution channel.

The project started with 16 participants and there are currently 94 sites participating in GemFair, all of which align with the group’s minimum ethical and operating requirements.

Below are excerpts from the interview:

When most people talk about diamond mining in Sierra Leone, they always make reference to the years of the so-called blood diamonds. What is it that your government is doing or has done to clean the image of the local diamond sector?

You are absolutely correct. Sierra Leone has been tainted with the nomenclature of blood diamonds, as you know we had a civil war in Sierra Leone from 1999 to 2001. During those days, illicit diamond mining was going on artisanally. The money was used to buy weapons and fuel the war. But what has happened over the years, the world reacted to that issue. In 2003 we had the Kimberlite Process Certification Scheme and that has helped greatly in terms of the chain of custody, in terms of export of diamonds. Prior to 2003 we were getting about $40 million per annum from both artisanal and industrial mining of diamonds and in 2019 we got about $69 million from artisanal alone. So, what the government has done is that we have taken the KP extremely seriously, provided training. We have also tried to formalise some elements of artisanal mining by providing them training. However, the biggest challenge is the definition itself, which is very restrictive. People are only supposed to mine half a hectare and not more than 10 metres deep, they are using basic tools. Resource depletion is a fact, so it is now becoming difficult to find diamonds, which are extensively mined artisanally. Some of them have been illegally using tractors and some of them irresponsibly. That has led to a whole lot of environmental degradation. So, the steps that we have taken to ensure that productivity increases, health, safety and environmental issues is to provide training to formalise the sector. Also, we are working with neighbours in Liberia and Guinea to ensure cross border smuggling of diamonds is minimised. The ECOWAS (West Africa) region is also looking into that. We have also employed mining monitors to [monitor] artisanal mining in the country. We developed systems to make sure we clearly map, develop information systems to keep tabs on the artisanal miners…

How many artisanal miners have you licenced in the country?

We licenced 1500 artisanal miners in 2019, but a whole lot of people are employed in the sector, directly or indirectly. It is difficult to give you a spot figure, rather we have a range of between 300 000 and 500 000. The reason why we have that big range is because artisanal mining is very sporadic, people rely on anecdotal evidence and sometimes spiritual and emotional sentiment. So, they move on. In the rainy season, it goes down and then up in the dry season. So, we have people employed directly and indirectly in that sector.

How long is the artisanal mining licence?

The licences are normally given for one year, renewable on three occasions for three years consecutively.

Are you facing the problem of illegal mining in the country, if so, what are you doing to stem this challenge?

Though a lot of focus had been on illegal mining, we have more challenges not with illegal mining, but with irresponsible mining.

What do you mean by irresponsible mining?

Those that have been given licences to operate within their area, they should not exceed the half hectares given to them. So some of them do exceed it, they are supposed to be at least to be rehabilitating the area and they are not doing it, because its sporadic, they just do it and move on. Now because we have put some stringent measures in place to monitor those who are mining illegally so our monitoring and licencing process has been improved. So the number of illegal miners has actually gone down, but the number of irresponsible miners has gone up. That’s where we have the challenge, most of the environmental degradation is actually taking place in areas where they have genuine licences where people have finished and didn’t see what they wanted to see and they just abandoned the place and move on.

So, what are you doing to stop this irresponsible mining?

We first tried to sensitise the miners, so let them know that they have rights to mine and also have obligations. They should respect the law, where they are supposed to mine and where they are supposed to rehabilitate, they should. They should not employ child labour and use chemicals they are not supposed to be using. So, for us sensitisation and education are important, but nonetheless we still use the carrot and stick approach. We give you a carrot to encourage and if you are a persistent offender, we revoke your licence.

Where are the artisanal miners taking their diamonds to?

Most of the diamonds are exported officially, they actually go to Belgium, Antwerp and the Middle East.

Before they take them to Antwerp, is there any State-owned entity that buys the rough stones from them or they just export on their own?

This is what am saying, in that artisanal area, we just give them licences to mine, but there is a whole chain of custody. So those who are mining the pits have a support system, people who provide them with financial support and these supporters also do sell to agents, the agents do sell to dealers and the dealers sell to exporters along this chain.

So, the State doesn’t have any hand in all this?

No, the State currently doesn’t buy any artisanal diamonds rather we evaluate. But that’s something we are looking at in our revision of the Mines and Minerals Act to ensure there is a State entity that can actually buy from these artisanal miners. At the moment some of them are even smuggling diamonds across the border to Guinea and Liberia. So, we are reviewing …to harmonise the law and bring some transparency. There is a lot of illegality in some of the trading and these are the things that we have just taken policy measures in 2019 we released the Sierra Leone artisanal policy and we are translating that into law and regulations to ensure that we have a good sector.

In 2018, we saw De Beers coming up with a pilot project that they call GemFair and have so far partnered with a lot of artisanal miners in your country. What is your comment on this development?

Interesting enough, De Beers came to me last year, they did a presentation, am a big fun of technology, the blockchain technology, am fully aware of how it can be used in the chain of custody especially in the supply area. I have also looked at the KP, which is good at the point of export, but what we need to do is pit to export. This is a concern, so the De Beers GemFair pilot programme makes sense and its good. I have witnessed the pilot project and have seen the difference that it is making in Sierra Leone, but again it has been a pilot project, everything has its advantages and disadvantages. We need to look at it keenly and if there are values, we can extract those values and see how we can roll it out across the country and even the sub region or in Africa. So, I think we need to work with De Beers and not only as Sierra Leone, but KP and those keen on innovation to make sure things improve in that sector, should come together and make use of the latest technology. If we have to use drones for monitoring purposes, big data analytics or artificial intelligence, so be it. So am happy with the steps that De Beers has taken, but again they cannot do this in isolation and they also have to work with the host country and communities. Bringing in a sophisticated technology in areas where the people themselves are illiterate or cannot even understand or appreciate technology creates bottlenecks. So, I think it has to be seen from a win-win perspective.

You seem to be talking a lot about artisanal diamond mining, are there any operations being done on an industrial scale?

We only have one large scale industrial diamond mining company that is Koidu Holdings, a subsidiary of Beny Steinmetz Group. They got a mining lease agreement in 2012, initially started with an open cast and then three years ago they transitioned to underground. They are doing well. As I said that is the only large-scale mining licence that we have today in diamond mining. In 2019 they exported diamonds valued for $105 million. I can’t tell you the total carats, but I think it was above 600 000 carats. A year before that, they did something like $93-94 million. So, they are doing well, they provided a lot of jobs to people, they brought some sanity to the sector as well, so I think we also need to work with them closely. We want to create competition, we want to attract other investors who will come and compete with them.

I was actually going to ask if there any other large-scale diamond miners interested in Sierra Leone (interrupted)…

There had been a lot of interest in this sector. Currently we have Sierra Diamonds, we have Tonguma diamond project, we have Meya Mining, I think they are based in Namibia. They have also expressed interest. There are new discoveries in terms of dykes and most of these are now either preparing to go into production or are doing their bankable feasibility studies. We firmly believe that in the next couple of years, we will probably have two or more large scale mining entities in the diamond sector.

What is the future of diamond mining in Sierra Leone like?

The future of diamond mining is challenging as our biggest menace is technology. We know about artificial diamonds, we are also fully aware that the population dynamics are changing, the millennials maybe might not have the same propensity for natural diamonds like the old generation (interrupted).

You mean the baby boomers?

Yes, the baby boomers, so the quality of artificial diamonds is improving and diamonds that are produced from the lab are even becoming very difficult to distinguish from the natural ones. It’s difficult to predict the market, but all I can say is that there is competition. So artificial diamonds are something that we need to look at keenly and start thinking about the ramifications on countries that rely on diamond exports for their broad-based sustainable developments. That could be a challenge, but we just have to do the best at the moment…

Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished