Liberia: UN Panel Raises Concerns Over Diamond Trade

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The NEWS (Monrovia)

3 September 2008
Posted to the web 3 September 2008

Monrovia

The UN panel of experts on Liberia in its June report to the Security Council raised concerns over diamond trade in the country relative to the implementation of the minimum requirements of the Kimberley Process Certification Scheme. The Panel reported that: The legal framework for the Kimberley Process Certification Scheme in Liberia is the New Mineral and Mining Law, passed in 2000. In September 2004, an Act was passed that added provisions for controls on the export, import and transit of rough diamonds. It prohibits the exporting authority from issuing a Kimberley Process certificate until the exporter has provided conclusive evidence that the rough diamonds meant for export have been mined in the Republic or imported in compliance with law. Liberian law includes provisions for non-industrial alluvial mining licenses intended only for Liberians (class C), industrial alluvial mining (class B) and industrial hard-rock/alluvial mining operations (class A). There are also provisions for exploration licenses and mineral development agreements.

The Liberian system requires licensing of diamond brokers and dealers, as well as compulsory documentation of every transaction in the rough-diamond trade chain, from production to export. Holders of class C mining licenses can sell only to licensed brokers or licensed dealers who are parties to a mineral development agreement. Brokers are required to sell only to licensed dealers.

The Ministry of Lands, Mines and Energy is the lead ministry on Kimberley Process implementation. The Department of Exploration issues class A mining licenses and exploration licenses, while the Department of Mines issues class B and class C mining licenses, as well as the diamond broker and dealer licenses.

The Government Diamond Office receives and values shipments intended for export. Personnel verify all paperwork. The highest of three values (provided by the exporter and Government and independent valuators) is used to determine the 3 per cent Government royalty. Once the dealer verifies payment of the royalty, the Government Diamond Office issues a Kimberley Process certificate and authorizes export. The Office also maintains a computerized, relational database.

Regional Diamond Offices issue vouchers to certify origin. The regional officers must verify that the miner has a license, register the characteristics of the diamonds and issue an authentication voucher. At each exchange, the buyers and sellers must complete a sales receipt that records license numbers for the seller and buyer, and the volume and value of the transaction. In terms of trade in diamonds, the law specifies that diamond miners are able to sell their diamonds to licensed brokers who can sell to licensed dealers. Only licensed dealers can export rough diamonds.

The Ministry of Finance also plays an important role in the system of internal controls. Exporters pay royalties to the Central Bank and obtain necessary receipts from the Ministry of Finance. The Department of Customs in the Ministry of Finance monitors exports and imports through Roberts International Airport.

Diamond exploration and mining activities are on the increase. Ten companies have licenses for diamond exploration. Five applications for new diamond-related mineral exploration licenses have been forwarded to the Inter-Ministerial Concessions Committee for consideration. Three of nine existing mineral development agreements are for diamond exploration companies, including Italgems, Kpo and AMA, although the legal status of the latter's 1984 concession agreement is unclear.

Since recommencing the issuance of diamond-mining licenses in late July 2007, the Ministry has issued 13 class B licenses, five in 2007 and eight in 2008, as at 2 May. It has also issued a total of 519 class C licenses for artisanal diamond mining, 287 in 2007 and 232 in 2008 up to early May. There are considerable variations between counties and mining agencies in terms of issuance (see annex X).

There are no class A diamond-mining licenses. The Ministry had issued 30 diamond broker licenses and 21 diamond dealer licenses as at 29 April 2008. Illicit mining continues in many areas. For example, illicit miners are operating in Kumgbor, Gbarpolu County, and the Panel was informed that in Paris Camp, Sinoe County, there were only 12 licensed class C miners even though there is a population of 10,000 in the camp (information provided by the Bureau of Mines indicates there are only eight diamond-mining licenses in Sinoe County).

As at 12 May 2008, the Government Diamond Office had issued a total of 43 Kimberley Process certificates, although four of them were then cancelled. Thus, 39 shipments of rough diamonds have left Liberia with Kimberley Process certificates. This total includes the five stockpile parcels exported in September and October 2007. The 39 valid certificates have authorized the export of 39,971.37 carats of diamonds valued at approximately $5,452,485 (see table 7). Liberia has earned approximately $163,876 in 3 per cent export duties from these shipments.

The Government Diamond Office statistics gathered so far have indicated the absence of large and valuable stones from exported shipments. The few large stones that were present were mostly of inferior quality.

A major setback occurred on 25 February 2008, when part of the building housing the Government Diamond Office caught fire. While the Office was not affected initially, the fire left the building without a roof and rains later flooded the database room, damaging the computers that store the database. The events affected the functioning of the Office for over a month. The Government prioritized recovery, and reconstruction was completed by early May 2008. Restoration of the digital database was undertaken in March 2008 and the database was fully operational by the time of the Kimberley Process review visit.

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