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Blood Diamond rattles African gem trade

The film has revived controversy over so-called 'conflict diamonds' used to fund civil wars in Africa

india Updated: Jan 31, 2007 13:07 IST
Ralf E. Krueger (Indo-Asian News Service)
Ralf E. Krueger (Indo-Asian News Service)

"Diamonds are forever," Shirley Bassey once sang, and the diamond industry wants it to stay that way. The potential threat now is the film "Blood Diamond", which has revived controversy over so-called 'conflict diamonds' used to fund civil wars in Africa.

Fearing harm to their business - annual sales of nearly 10 billion euros ($12.9 billion) for rough diamonds and 14 billion euros for polished ones - the industry's public relations and marketing specialists quickly manned their battle stations.

Since the value of diamonds essentially depends on their image, Johannesburg-based De Beers, the world's leading diamond company, mounted an image campaign together with African partner governments to counter any taint to its reputation from the film.

Sales of conflict diamonds have provided rebels and armies the money needed for weapons used in bloody civil wars, costing hundreds of thousands of lives, in countries such as Sierra Leone, Liberia, Angola and Congo. Two-thirds of all diamonds are produced in Africa.

The diamond industry responded to the problem several years ago. Diamond companies, governments and NGOs, facing global pressure to end the smuggling of rough diamonds used to fund wars, met in 2000 in the diamond-mining town of Kimberley, South Africa, to devise an international diamond certification scheme. It was launched in 2003.

Called the Kimberley Process, the scheme has been endorsed by the UN and includes 71 participating countries and all major diamond mining, processing and trading centres.

According to De Beers, the certification process covers about 99 percent of all the diamonds produced. This year the EU plans to plug the remaining hole, and to harness the diamond industry more tightly to measures aimed at preventing the sale of conflict stones.

Since the end of civil wars in countries like Angola and Liberia, the debate over conflict diamonds has become less intense. Among the issues today is how diamonds can benefit the development of the countries producing them.

Botswana and Namibia, for example, share profits with De Beers. Hundreds of thousands of people depend on diamond mining for their livelihoods. The number in Namibia, where the first diamond was discovered nearly 100 years ago, is 5,000 workers and their families. The contract between Namibia's government and De Beers is currently up for renewal.

In 2006, Botswana's government extended the licenses of De Beers' four diamond mines in the country - which account for more than half of the company's business - for another 25 years. In return, Botswana was able to increase its share of De Beers' stock from seven to 15 percent.

In addition, De Beers agreed to help set up diamond-cutting operations and distribution centres in Botswana so that precious stones from outside the country can also be prepared for the market.

Botswana, which at 30 million carats annually is the world's biggest producer of diamonds by value, is trying to reduce its dependence on diamonds. To date, its diamond sales have accounted for about 70 percent of its income.

The former British protectorate of Bechuanaland, Botswana, produces a quarter of the world's diamonds and has been seen as a giant economic success story since the first precious stones were discovered there shortly after it gained independence.

Botswana and De Beers have 50/50 stakes in the joint venture Debswana - the country's largest private employer.

First Published: Jan 31, 2007 13:07 IST