Rough diamonds run out

Dealers in rough diamonds have set their eyes on raw materials from other sub-Saharan African countries for the supply of the commodity to feed the diamond industry in the country.

This follows the decline of raw materials produced locally over the past three years -- from over a million carats a year to under-300,000 carats at present.

Already, rough diamond merchants have targetted and are in negotiations with other African countries such as Liberia, Sierra Leone, Guinea, South Africa, Angola, Namibia and Zimbabwe for the supply of raw materials to feed the diamond industry in the country.

The Kimberley Process Certification Scheme Coordinator for Ghana, Seth W.K. Klaye who is also a Board member of the Precious Minerals Marketing Company (PMMC), explained to the B&FT in an interview in Accra that actual talks with Zimbabwe and South-Africa are far advanced, in line with the tenets of the Africa Diamonds and Producers Association which wants to add value to rough diamonds before they are exported to the world market. 

“Actually, Zimbabwe and South-Africa are just waiting for us to launch the second phase of the PMMC’s Diamond Cutting and Polishing Centre for the handling of hard and larger stones.

“As soon as that is done, we will start receiving rough diamonds from those countries and add value to them.

“Unfortunately, our closest neighbour Cote-D’ivoire -- which is a strong producer of diamonds in the sub-region -- is under UN sanctions; and as soon as the sanctions are lifted, we will start dealing with them for raw materials,” he said. 

Diamond trade watchers will be keen to monitor trading of the commodity to ensure that only clean diamonds are traded. In 2006, the UN banned Ghana from exporting diamonds, as there was suspicion that the country was dealing with conflict diamonds. However, once the Kimberley Process authorities visited the country to check for compliance, the country was allowed to export diamonds again.

Mr. Klaye explained that diamond production in the country has dropped drastically, basically because of the unavailability of lands that are diamondiferous -- as well as the strong gold pricing regime, which has attracted many miners into the gold industry.

“These are the two major factors that have affected the production of diamonds in the country, which has fallen from a million carats a year to about 300,000 carats at present. This is such a worry to us in the industry, and we are looking at ways to reverse the trend,” he said.

Mr. Klaye said the PMMC as a marketing-concerned group has had interactions with the Minerals Commission and the Geological Survey Department as well as other stakeholders to address the declining fortunes of the industry, and is hopeful that a solution to the problem will be found soon.

He added: “That is how far we have gone, because at PMMC we are not actually into mining and therefore it is difficult to play a lead role in addressing this problem. We just have to raise this concern and hope that the relevant agencies that are actually involved in the formulation of policies for the mining sector will address such concerns.”

Mr. Klaye said the shortage of rough-diamond supply is also affecting operations of the PMMC’s Diamond Cutting and Polishing Centre, which relies on the local supply of the raw materials for its business.

So far, the PMMC has authorised about 11 companies to operate as licenced buying companies to purchase rough diamonds from small-scale miners, which helps to supply the Diamond Cutting and Polishing Centre with raw materials for value addition before the commodity is exported.

“By adding value to the rough diamonds, the revenue from the commodity can quadruple. So the shortage of raw materials is posing a challenge to the Centre. But we are not actually limiting ourselves to Ghana only, because in the sub-region and other parts of Africa rough diamonds abound.  So we have started talking to countries that produce diamonds to supply us with raw materials.

“We will then add value to them here in Ghana before the commodity is exported. We are taking a cue from India, which is not a diamond mining nation but is the world’s largest producer of cut and polished diamonds because of the raw materials that they purchase worldwide.

“That is why the whole concept of making Ghana a hub in West-Africa was part of the consideration in establishing the cutting and polishing centre,” Mr. Klaye said.

The 40-bench Diamond Cutting and Polishing Centre at the PMMC is operating at below 50% of its capacity, and the second phase of the project will also add 40 more benches to the current capacity.

Diamond mining in the country is concentrated in the Birim Valley, near Akwatia. Usually, these diamonds are mined by small-scale miners from mostly alluvial fields.

According to the Minerals Commission, proven reserves in the Middle and Lower Birim stand at 10.55 million carats, in addition to other areas, where partial exploration work has been done and is estimated to hold 3.49 million carats -- bringing the grand total to over 14 million carats of diamonds. The total excludes diamonds of less than 1mm diameter.

The near demise of the Akwatia-based Ghana Consolidated Diamond Company, which used to generate nearly two-thirds of the country’s diamond exports, has greatly affected the production position.

Diamond Exports 1989 - 2011

YEAR	CARATS (000)	VALUE (US$MILLION)	AV.PRIZE/CT (US$)
1989	151.61	2.11	13.92
1990	484.88	14.28	29.45
1991	541.85	17.44	32.19
1992	479.87	13.04	27.17
1993	368.19	11.57	31.42
1994	411.40	11.55	28.07
1995	335.17	7.31	21.81
1996	450.35	9.82	21.02
1997	558.90	11.75	19.99
1998	570.19	11.40	18.88
1999	490.40	9.26	16.96
2000	626.84	10.36	21.96
2001	870..49	18.51	21.26
2002	969.12	20.24	20.88
2003	926.68	21.75	23.47
2004	911.81	26.01	28.43
2005	994.88	33.13	33.24
2006	978.73	30.96	31.63
2007	865.61	27.86	32.18
2008	624.87	20.00	32.01
2009	367.06	7.32	19.94
2010	324.22	11.78	36.33
2011	281.24	15.74	55.97

Source: B&FT