TIMOTHY MOK
http://www.diamineexplorations.com/web/index.php?id=147 International Monetary Fund. “World Economic Outlook (WEO): Financial Stress, Downturns, and Recoveries.” International Monetary Fund. 2008. Print. 3 Oomes, Nienke and Matthias Vocke. “Diamond Smuggling and Taxation in Sub-Saharan Africa.” IMF Working Paper 03/167. 2003. Print. 4 United Nations. “Second special report of the Secretary-General on the United Nations Organization Mission in the Democratic Republic of the Congo.” United Nations Security Council. May 2003. Print. 5 NGOs such as Global Witness and Partnership Africa have often likened the diamond industry to a “casino economy.” Apart from the gamble the diggers take, parallels extend to the harassment of diggers by license holders and the shady deals between exporters. However, this paper focuses mainly on the problems of below subsistence wages and wage inequality that are rife throughout the industry. 6 There are various wage schemes for diamond diggers. The figures above are estimates for the “casino system” scheme where there is a large variable component based on the quantity of diamonds mined. An in-depth analysis of the different schemes and detailed quantitative treatment of the figures can be found in the following report. Global Witness. “Rich Man, Poor Man: Development Diamonds and Poverty Diamonds.” Report. 2004. Print. 7 Global Witness. “Reforming the DRC Diamond Sector.” Annual Report. Jun 2006. Print. 8 It should be noted that the price of rough diamonds increase exponentially with price. Many rough gems are much smaller than one carat and, as a result, diggers receive considerably less per carat than the figures stated above. Levin, Estelle and Lansana Gberie. “The Dynamics of Diamond Pricing and Marketing in Sierra Leone.” Partnership Africa Canada. March 2006. Print. 9 Global Witness. 10 Although the exporter gets a small percentage of the value of the diamond, he makes up for this by sheer volume alone. Additionally, it is often hard to determine the distribution of profits among supporters and exporters as, in many instances, the same person fills both roles. 11 Birchall, Johnston. “Rediscovering the cooperative advantage: Poverty reduction through self-help.” International Labour Organization. 2003. Print. 12 Although not quite in his exact words, the above quote, or at least the idea behind it, is often attributed to Aristotle. Aristotle. “Aristotle’s Metaphysics.” Trans. Joe Sachs. 2nd ed. Santa Fe, N.M.: Green Lion. 2002. Print. 13 A distinction should be noted between this higher national average figure and the US$130 per carat stated earlier. This figure refers to the proceeds received by the entire cooperative and not merely the diggers alone. Levin, Estelle Agnes and Ansumana Babar Turay. “Artisanal Diamond Cooperatives in Sierra Leone: Success or Failure?” Diamond Development Initiative, Jun 2008. Print. 14 DeBeers Family of Companies. “Report to Society, 2008.” Annual Report. 2009. Print. 15 At present, there are four broad justifications for CSR: moral 1
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obligation, sustainability, license to operate and reputation. These appeal more to intuition and emotion and inadequately capture the specific nuances between a particular company and its impacts on society. To achieve competitive advantage, Porter argues that CSR must be inseparably aligned with operational strategy. Porter, Michael E. and Mark R. Kramer. “Strategy & Society: The Link between Competitive Advantage and Corporate Social Responsibility.” Harvard Business Review. Oct 2006. Print. 16 The traditional argument is that De Beers is a monopoly and should be broken-up or regulated. However, it should be noted that throughout its history, De Beers was more concerned with a stable than a high diamond price. In fact, it took efforts to reduce prices when speculation by Israeli merchants threatened to skyrocket the price of diamonds. Unlike other commodities, diamonds depend on stable prices; short-term shifts in prices lead to detrimental long-term shifts in consumer perception. Having a cartel control prices, from a utilitarian perspective, is thus not naturally a cause for concern. For a more detailed analysis, refer to the following. Spar, Debora L. “Continuity and Change in the International Diamond Market.” Journal of Economic Perspectives-Volume 20, Number 3. 2006. 195–208. Print. 17 Melman, Yossi and Julio Godoy. “The Influence Peddlers.” Center for Public Integrity. Nov 13. 2002. Print. 18 Mining Review Africa. “Diamond Industry Review.” Report. 2004. Print. 19 It is worth pointing out that DeBeers already has a long-standing partnership with the world’s second largest exporter—Botswana. In fact, the government of Botswana owns 10% of DeBeers. The world’s largest exporter is Russia, whose government is adamant about distributing its diamonds in ways it sees fit. Thus, in a way, a partnership with the DRC is arguably the best option for DeBeers. 20 The following recommendations are adapted from the Global Witness report and relate to a wage scheme under the “casino system.” Assuming they receive their fair portion of the diamonds mined, the average digger is estimated to make between US$1.5–2 a day. This almost doubles their current wages. 21 The following law was slated to take effect beginning Jun 2010. More details can be found in the following article. Reuters. “DRC to require “clean” diamond exports by mid-June.” 24 Apr 2010. Web. 22 Goldstein, Fran. “An Introduction to Beneficiation.” Israeli Diamond Industry. Feb 2008. Web. 23 DeBeers Family of Companies. “Report to Society, 2008.” Report. 2009. Print. 24 From a cursory point of view, there appears to be a correlation between diamond beneficiation and the literacy rate of a country. The DRC has a literacy rate that is much higher than other diamond-producing nations; namely Ivory Coast and Serra Leone. These nations have yet to benefit from diamond beneficiation. However, in Botswana and South Africa—where diamond beneficiation is taking place—the literacy rate is higher than in the DRC. Central Intelligence Agency. “The World Factbook.” Report. 2009. Web.
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