(Rapaport…May 10, 2005) The Israel Diamond Institute (IDI) hosted a rough diamond seminar at the Israel Diamond Exchange in Ramat Gan on May 9, to focus upon market opportunities in Sierra Leone.
|(Left) Simcha Lustig, IDI chair, (Right)Mohamed Deen, Minister of Mineral Resources, SL
Keynote speakers included Mohamed Deen, Sierra Leone’s Minister of Mineral Resources, and Paul Temple, of the Peace Diamond Alliance (PDA) support project aiming to ensure Sierra Leone’s diamond industry is better managed and regulated. L.J. Tanni Pratt, managing director of mining consulting company Cemmats Group Limited was the third speaker.
Deen invited Israel’s diamond leaders to Sierra Leone to work together for the mutual benefit of Sierra Leone and Israel. He discussed how the Sierra Leone government is putting forth policies to reform the diamond sector and eliminate smuggling and therefore make the industry more attractive to serious investors and took the opportunity to “let people know that the door is open to Israel.” Belgium imports between 90 to 95 percent of Sierra Leone’s rough production while Israel imports between 5 to 8 percent. “We want to change this around,” said Deen, “We want to use this platform to officially invite the IDI and all the other organizations that deal with diamonds to come to Sierra Leone and see what is happening there and see whether they can take part in mining productions and marketing of Sierra Leonean diamonds.”
Pratt said that Sierra Leone’s Human Development Index is last out of 175 countries, and the average lifespan is 34 years, and the population is 30 percent literate. He described the practice of selling illegal diamonds, which began with immigrants from West Africa and the Lebanon in the 1930’s. In order to combat the problems of conflict diamonds, smuggling, and poverty; Pratt stressed the need for an improved legal and regulation framework, a core mineral policy with strategic objectives and new laws in place by 2006.
“I would like to reiterate that the link between artisan mining, and terrorism, and smuggling is a known problem,” said Pratt. However, “I think one lesson we’ve learned from before is that if you have institutional operations that have social contracts, you’ll be less likely to smuggle,” he said. He offered several suggestions for improving the situation in Sierra Leone and ending what he termed “the diamond curse,” such as injecting new players to break Lebanese exporters, joint venture arrangements, and value adding to cutting plants. In return, Pratt spoke about the rewards investors would receive in return, such as; the satisfaction of the reduction of poverty in Sierra Leone, and access to Sierra Leone diamonds “which are the best in the world,” he said. Pratt provided sage advice to dealers in the audience, “you need a lot of capital, probably about $15 million working capital, and you need patience…you need lots and lots of capital and this is a case where there could possibly be a need for government intervention.”
Temple emphasized the need to bridge the gap between the production in Sierra Leone and the diamond exchange in Israel. To combat problems in the alluvial diamond sector such as lack of investment, diamond transactions through unofficial channels and barriers to entry (for outside traders,) Temple stressed the importance of a new way of thinking about competitive advantages in Sierra Leone. Through organizations like Temple’s Peace Diamond Alliance, the cooperative vision is now a reality where there is a collective responsibility and transactions are transparent. “We are currently looking to expand coops from five to twenty,” said Temple, “we have endorsement by local chiefs and the president of Israel.” Currently, the Peace Diamond Alliance only has mandate to be in Sierra Leone for one more season and some analysts suggest that the official figure of exports could be doubled with international support. Temple stressed that the presence of the Peace Diamond Alliance creates a massive entry point for investors and that the average return per site for a $15,000 investment can expect $47,000 return. “Embrace the opportunity to cut out the middle man for a long term diamond partnership,” said Temple.
Chaim Even-Zohar, diamond industry analyst, moderated the seminar.
Also present were Simcha Lustig, chairman of the IDI; Schmuel Schnitzer, president of the World Federation of Diamond Bourses; Avi Paz, president of the Israel Diamond Exchange; and Motti Ganz, president of the Israel Diamond Manufacturers’ Association.