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Cablegate: Kimberley Process Tackles Artisanal Mining

VZCZCXRO3834
RR RUEHBZ RUEHDU RUEHGI RUEHJO RUEHMA RUEHMR RUEHPA RUEHRN RUEHTRO
DE RUEHSA #2142/01 2731206
ZNR UUUUU ZZH
R 291206Z SEP 08
FM AMEMBASSY PRETORIA
TO RUEHC/SECSTATE WASHDC 5856
INFO RUCPDC/DEPT OF COMMERCE WASHDC
RHEBAAA/DEPT OF ENERGY WASHINGTON DC
RUCNSAD/SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUEHZO/AFRICAN UNION COLLECTIVE
RUEHBJ/AMEMBASSY BEIJING 0857
RUEHRL/AMEMBASSY BERLIN 0640
RUEHBS/AMEMBASSY BRUSSELS 1339
RUEHBY/AMEMBASSY CANBERRA 0734
RUEHOS/AMCONSUL LAGOS 1324
RUEHLO/AMEMBASSY LONDON 1607
RUEHMO/AMEMBASSY MOSCOW 0862
RUEHOT/AMEMBASSY OTTAWA 0700
RUEHFR/AMEMBASSY PARIS 1443

UNCLAS SECTION 01 OF 02 PRETORIA 002142

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E.O. 12958: N/A
TAGS: EMIN ENRG ETRD SENV EINV SF CG
SUBJECT: KIMBERLEY PROCESS TACKLES ARTISANAL MINING

REF: A) PRETORIA 781
B) 07 PRETORIA 3836

1. SUMMARY: The Kimberley Process (KP) for certifying rough diamond
trade is recognized as broadly successful in combating conflict
diamonds. In order to improve its control over alluvial diamond
trade, particularly in Africa where this is prevalent, KP has sought
to identify best practices for increasing government capacity to
monitor, regulate, enforce, and protect alluvial mining and trade so
that it is fully under the KP mantle. Artisanal miners are
inherently difficult to organize, but the best prospect is for
governments to implement identity schemes and worker cooperatives,
which will also improve their ability to get a larger share of rough
diamonds' value. KP's relevant workshop is validating expert
reports in preparation for presenting recommendations at the
November plenary. End Summary.

2. Minerals/Energy Officer attended day one of the September 15-16
Validation Workshop for the Artisanal Diamond Mining Project under
the Kimberley Process (KP). The workshop took place at the Didimala
Game Lodge north of Pretoria. The Kimberley Process has
successfully implemented a certification scheme among almost 50
member countries to combat traffic in conflict diamonds (Ref B).
The KP established the Working Group on Artisanal and Alluvial
Production (WGAAP) to promote more effective internal controls on
the production and trade of alluvial diamonds. The WGAAP aims to
identify best practices for bringing small scale "diggers" into the
formal sector in order to put in place stronger traceability and
regulation of artisanal mining and trade. The Belgian Government
and the Egmont - Royal Institute for International Relations have
funded and implemented a special project to generate recommendations
on artisanal mining to be presented at the KP Plenary in New Delhi
in November 2008.

---------------------------------
How to Organize the Unorganizable
---------------------------------

3. The Angolan Chair of the WGAAP opened the workshop by pointing
out Africa's ample share of world-wide alluvial production.
Moreover, war-torn, poor countries like Angola, the DRC, Sierra
Leone, and Liberia exhibit large quantities of irregular artisanal
miners. The validation workshop format provided for presentation of
a number of papers for discussion that would inform subsequent
identification of recommendations and best practices. Experts
identified and discussed special challenges associated with
trans-border dynamics and deficient internal controls and
transparency. Artisanal miners are subject to abuse from
middle-men, dire poverty (sometimes scraping by on less than one
dollar per day), deteriorating health, and socio-environmental
problems and and often exploit child.

4. Many experts identified promotion of government-supported
cooperatives as the most viable solution. At the same time, many
recognized that the diggers are by nature suspicious, evasive, and
loathe to be organized. They work uncertain ground with uncertain
Qloathe to be organized. They work uncertain ground with uncertain
status, they do not trust government, or they do not want to share
the elusive hoped-for big find. Some of the expert findings crept
into the issue of improving the situation and income of diggers as a
means of increasing control and because it is the right thing to do.
Independent researcher Shawn Blore cited dramatically lower incomes
in Africa compared to Latin America and questioned the magnitude of
diamond trade mark-up in Dubai. De Beers representative Simon
Gilbert pointed out that the diggers were in fact laborers with a
limited stake in the diamonds in the ground. He acknowledged the
need to improve the digger's situation, but pointed out the layers
and complexity in diamond mining, valuation, and trade. There was
consensus that the government had primary obligation for assuring
that artisanal miners get a reasonable share and situation, in
conjunction with implementing effective controls on mining and
trade. A minimal first step would be government regulation
involving issuance of identification cards.

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We Still Need Kimberley and Zero-Tolerance

PRETORIA 00002142 002 OF 002


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5. The discussion expanded to more fundamental existential issues
for KP. The De Beers representative asked if KP could ever accept
or tolerate the fact that any country's certified diamonds will
never represent 100 percent provenance from that country. Diamond
Development Initiative Executive Director Dorthee Gizenga and
Working Group of Diamond Experts Mark Van Bockstael asserted that KP
could never willingly accept such an abuse to the system and
stressed that there must be zero tolerance for mis-application of
the procedures and controls. Even if an individual government is
not able to provide 100 percent assurance, the KP statistics and
process would raise a red flag of concern and deterrence. South
African Diamond and Precious Metals Regulator CEO Luis Selekane and
Chatham House Director Alex Vines made strong interventions on the
importance of maintaining and expanding the KP. Bockstael cited
recent seizures in Belgium and Mali (although not a KP participant)
as prime examples of the success and criticality of KP. Bockstael
said KP participants should convince their governments to share more
information on actual convictions for illicit diamond trade.

6. COMMENT: Workshop participants recognized the inherent challenge
of controlling the uncontrollable. Much of the discussion sounded
like it had been said before. Artisanal mining in countries
experiencing capacity shortfalls in governance, transparency, and
resources will always be difficult to monitor and regulate.
Nevertheless, KP and its Working Group on Alluvial and Artisanal
Production need to gain greater control over this key contributor to
diamond trade, and address socio-economic challenges faced by the
small-scale miners. De Beers appears to be an active advocate and
participant in the KP process, as noted in previous meetings
(Refs).

BOST

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