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Value of DRC diamonds disappointing despite high volume

01 october 2012

The Democratic Republic of Congo has been one of the leading diamond producing countries not only in Africa but in the world.

It produced 19.2 million carats in 2011 making it the second largest producer in Africa by volume after Botswana, which produced 22.9 million carats, according to the latest Kimberley Process (KP) data.

DRC was also the world’s third largest diamond producer by volume. Russia topped that list with 35.1 million carats.

However, the performance of DRC in value terms was so disappointing to say the least.

The central African country exported 18.8 million carats in 2011 for a value of about $335 million carats.

Botswana on the other hand shipped 25.1 million carats worth $5.4 billion during the same period.

The southern African country’s diamonds attracted a price of $217.77 per carat compared to that of DRC, which were sold for a measly $17.77 per carat.

Although some cynics argued that DRC was understating its trade figures, the fact was that the huge chasm (in value terms) between the central African country and Botswana had to do with the quality of their diamonds.

DRC’s diamond mining was dominated by small scale miners, hence the poor quality.

According to All About Gems website, artisinal mining of placer diamond deposits in the DRC takes place along the Bushimaïe and Lubilash tributaries to the Sankuru River (Bakwanga Mine) near the town of Mbuji-Maye (formerly Bakwanga) in the Kasaï-Oriental province and along the Tshikapa River (Forminière Diamond Mine) in the Kasaï-Occidental province.

It was also believed that some 700,000 artisanal miners operate in the DRC, encouraged to some extent by a law passed in 1981 that forced Miniere de Bakwange (MIBA), a state-owned diamond mining company, to open up the majority of its fields to artisanal diggers.

Global Witness said the DRC’s industrial mining sector was in disarray that it cannot be in a position to produce such millions of carats every year without the help of small scale miners.

It said MIBA was not operating at a profit, and millions of dollars had been lost due to corruption, fraud and theft.

DRC was readmitted to the Kimberley Process in 2007 but a third of its diamonds were believed to be smuggled out every year.

The managing director of the state-owned SCIM diamond producer Hubert Kazadi also said that his company and MIBA, were threatened by independent artisanal diamond miners, whose operations were difficult to regulate.

So if the government of DRC was struggling to regulate the activities of independent artisanal miners then it means that there are some that were operating under its radar.

This in a way legitimizes the argument that most gems produced in DRC were coming from artisanal miners.

For DRC to realize improved revenue from its gems there is an urgent need to invest in large scale or industrial mining operations.

Kazadi said last year that an investment of $300 million was necessary to revive the country’s diamond mining sector.

It was encouraging that there are some international diamond mining companies that have obtained mining concessions and were carrying out exploration and prospection work despite the risk associated with a country under siege from a civil military junta.

Mbendi said there had been renewed interest by the international mining industry in the DRC as a result of the 2003 implementation of the new Mining Code, which was drafted in conjunction with the World Bank.

The Mining Code provides a permit holder with broad access to explore its properties under a transparent and efficient permitting process.

Some of the companies exploring for diamonds in DRC included Delrand, which formed a joint venture with the diversified mining group Rio Tinto.

The joint venture had already identified 10 targets for further detailed follow-up work after a 2011 stream sampling programme in the northern parts of the Democratic Republic of Congo produced 48 diamonds.

The northern DRC had a long history of good quality alluvial diamonds.

However, no primary sources, or kimberlites, for these diamonds had been found to date.

SCIM and MIBA’s diamond mining concessions in the country’s south-central region contained diamond reserves comprising some 328 million carats.

It remains to be seen if any of the companies prospecting for diamonds in DRC will be in a position to lift the quality of the country’s gems not just quantity.

As it is, the DRC will never get any meaningful gain from its diamonds despite being revered as the world’s third top producers by volume.

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