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 
 
SIPDIS 
 
STATE PLEASE PASS USAID 
STATE PLEASE PASS USGS 
DEPT FOR AF/S, EEB/ESC SUE SAARNIO 
DOE FOR SPERL AND PERSON 
 
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. 
 
------------------------------------------ 
We Still Need Kimberley and Zero-Tolerance 
 
PRETORIA 00002142  002 OF 002 
 
 
------------------------------------------ 
 
¶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