Steinmetz to Develop Sierra Leone Diamond Mine

April 7, 2004

Steinmetz to Develop Sierra Leone Diamond Mine

Israeli diamond dealer Beny Steinmetz received a new two-year license from Sierra Leone to develop the Tongo Diamond Fields there, reports Business Day of Johannesburg. The license was granted to Koidu Holdings, majority controlled by Steinmetz. Koidu is a sealed off diamond deposit in Sierra Leone operated by Steinmetz. He also holds exploration licenses in other parts of the West African nation. Eleven potential foreign investors reportedly applied for the Tongo license through a tender process.

The move by the government to grant mining and exploration licenses to legitimate entities in recent years underscores Sierra Leone's ongoing struggle to overcome its recent reputation as a producer and conduit of conflict diamonds. Sierra Leone is only a few years into its return to peace following over a decade-long civil war, to some degree funded by trading in conflict diamonds. Sierra Leone's President Ahmad Tejan Kabbah went on record last year acknowledging problems with the diamond trade in his country, but also committed himself to following advice from the World Bank and industry experts (Sierra Leone Plans for Diamond Expansion).

Because Sierra Leone's many alluvial diamond sources are hard to control, they were subject to exploitation by opposing sides during the civil war. The Revolutionary United Front, a guerilla movement, has since committed to laying down its arms and undergoing a repatriation program through a peace process. Sierra Leone began a certification program for its diamonds in 2000, but it was widely seen as flawed and untenable. Lack of control by the government over its alluvial production continues today. The U.S. State Department Bureau of International Narcotics & Law Enforcement Bureau recently expressed fears that these sources will be subject to money laundering operations (Diamond Trade Still Vulnerable to Money Laundering, Says U.S. Report).

Sierra Leone is known in the diamond trade for producing high-quality diamonds with high yield rates. Rough diamonds are often described as large well-shaped octahedral crystals, making Sierra Leone diamonds highly desirable in world markets. The majority of Sierra Leone's production is alluvial, though rich kimberlitic deposits have been identified.

by Robert Weldon, G.G.

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