29 July 2009

Sierra Leone: Tap Into Power of Artisanal Mining, Analysts Say

Koidu — As the Sierra Leone government, donors, mining companies and union members discuss how to reform industrial mining, analysts say they are overlooking the need for change in the informal or "artisanal" diamond mining sector, which employs some 100,000 people in the country.

This is the second of two IRIN reports on reforming the artisanal diamond mining sector.

"Efforts to overhaul mining legislation and to make the industry more transparent focus only on foreign-owned, large-scale, industrial mining but ignore the artisanal mining sector," said Patrick Tongu, head of the NGO Network Movement for Justice and Development, which monitors the mining industry in Koidu, capital of Kono district, Sierra Leone's principal diamond-producing area.

"Unless that is addressed these changes will not lead to real sustainable growth," he said.

Artisanal mining is currently inadequately regulated, with the national minimum wage, health and safety standards, as well as environmental rehabilitation requirements being minimally enforced, Estelle Levin, co-director of consulting firm Resource Consultant Services. "The sector remains largely informal with corruption, theft and smuggling continuing to be serious challenges," she said.

In Kono district most artisanal mining - which generally entails digging a pit and sifting for diamonds - is done by individuals or by groups of landowners who provide workers food and accommodation with a promise of a share in earnings.

Diamonds and other minerals made up 90 percent of Sierra Leone's export earnings before the 1991-2002 civil war - most of the diamonds from artisanal mining. But production plummeted during the conflict as rebels and government soldiers fought over diamond-producing areas.

The value of artisanal diamonds is difficult to calculate, said Samba Ceesay, Koidu-based government diamond monitor. The World Bank puts artisanal diamond mining as the country's second-biggest employer after subsistence farming.

Among the world's top 10 diamond-producing nations, Sierra Leone ranked last of 179 countries in the UN's latest index based on human development indicators.

About half of Kono's artisanal diamonds are smuggled into Guinea, Liberia and Côte d'Ivoire, according to a license-holder who requested anonymity. Government monitor Ceesay told IRIN: "Most diamonds are not documented."

Ceesay estimated that as a result the government ends up with just 0.65 percent of the 3 percent in royalties and taxes it should be earning from artisanal mining.

While a few get rich from secret deals and smuggling, many communities involved in artisanal mining get poorer, the National Advocacy Coalition on Extractives (NACE) says in a report, Sierra Leone at the Crossroads: Seizing the chance to benefit from mining.

Regulation

Regulating the informal mining sector would involve applying transparency criteria such as the Extractive Industries Transparency Initiative (EITI) to small-scale cooperatives, applying environmental rules and instituting work standards such as a minimum wage and health and safety rules, said Ezekiel Dyke with the National Mineworkers Union.

If well-managed, the sector could improve the lives of thousands of Sierra Leoneans, increase social spending and reduce corruption, which could boost economic growth and social services, analyst Levin said.

The US Agency for International Development in 2005 set up a project to regulate a group of mining cooperatives by helping diggers become financially independent - in part by diversifying their livelihoods. But the cooperatives did not find enough diamonds to pay back loans or turn a profit, so USAID abandoned the project after one season, according to a project evaluation.

Levin, who helped assess the project, said the scheme too complex and short-term; and the initiative failed to take into account relationships between financiers and diggers.

The project could have succeeded had USAID applied lessons learned from the first go, she said. Even in a short period, she said, the scheme boosted employment rates among those involved, improved access to healthcare, enabled families to educate their children and led some cooperatives to work together to build schools or set up revolving agricultural funds. USAID did not comment on the project.

While regulating artisanal mining is not currently a priority for government, according to Ministry of Minerals official Mohamed Conteh, some partners are taking small steps.

The UK Department for International Development (DFID) and the Mineworkers Union have created terms and conditions for artisanal diggers and miners, which have been taken up by one in five license-holders, said DFID head in Sierra Leone, Dominic O'Neill.

DFID has also introduced land surveys that use computer mapping to identify plot sizes, reducing the potential for corruption and conflict when negotiating licenses, O'Neill said.

"People think it is impossible to govern this sector," Levin told IRIN. "But it has its own internal logic, which could be tapped to make it more economically viable and potentially socially productive. Partners just need to understand it better."

[ This report does not necessarily reflect the views of the United Nations ]

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