Identifier
Created
Classification
Origin
06FREETOWN586
2006-07-19 08:45:00
UNCLASSIFIED
Embassy Freetown
Cable title:  

SIERRA LEONE DIAMOND EXPORTS DOWN FROM 2005

Tags:  ECON EMIN ETRD EAID SL 
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VZCZCXRO3033
RR RUEHMA RUEHPA
DE RUEHFN #0586 2000845
ZNR UUUUU ZZH
R 190845Z JUL 06
FM AMEMBASSY FREETOWN
TO RUEHC/SECSTATE WASHDC 0058
INFO RUEHZK/ECOWAS COLLECTIVE
UNCLAS FREETOWN 000586 

SIPDIS

SIPDIS

DEPT FOR AF/W, AF/EPS
DEPT AL SO FOR EB

E.O. 12958: N/A
TAGS: ECON EMIN ETRD EAID SL
SUBJECT: SIERRA LEONE DIAMOND EXPORTS DOWN FROM 2005

REF: FREETOWN 247

UNCLAS FREETOWN 000586

SIPDIS

SIPDIS

DEPT FOR AF/W, AF/EPS
DEPT AL SO FOR EB

E.O. 12958: N/A
TAGS: ECON EMIN ETRD EAID SL
SUBJECT: SIERRA LEONE DIAMOND EXPORTS DOWN FROM 2005

REF: FREETOWN 247


1. The most recent GoSL statistics show diamond exports down
from last year despite early 2006 forecasts of an 8.5%
increase for the full year. January to June 2006 diamond
export value has fallen 12.23% from the same period in 2005.
This decline in export value is partially explained by a drop
in average price per carat to $214.90 in 2006, down 2.06%
from 2005. Total exports are down about 10% to 312,342
carats, compared to the first half of 2005. Exports of
alluvial diamonds are down over 10% while kimberlite exports
are down 6%.


2. Comment: The diamond and mining sector presents a mixed
outlook. The drop in export income is a concern for the GoSL
as historically diamond exports have accounted for 70 percent
of Sierra Leone's export and hard currency earnings. With
Sierra Rutile and its associated bauxite mining swinging into
full production and other mineral projects moving forward,
the share of exports accounted for by diamonds will go down
sharply in the coming years. The cause of the decline in
alluvial exports is unclear, but it is possible that the
diamond deposits in alluvial fields are being depleted. A
further likely hypothesis is that continued diamond smuggling
has contributed to a decrease in official exports, and there
also may be fewer diamonds from nearby countries coming into
SL to be exported with Sierra Leone Kimberley certificates.
If smuggling is up, it is despite the Kimberley process being
well administered by the GoSL (per the Kimberley visit last
year) and despite reforms aimed at regularizing the alluvial
diamond sector funded by the U.S. and other donors. Local
and international companies, including some US concerns, have
mechanized their working of the alluvial gravels along
rivers. That will process more ground faster and presents
the prospect of increased overall production, as long as
there are diamonds to be found, as there may well be.
However, some of these ventures have failed as operators were
short on capital and seemed to be looking for a quicker
return than was realistic. The down side is that as the
trend toward greater capitalization of alluvial diamond
mining continues more low-skilled pick-and-shovel operators
will be displaced, further increasing youth unemployment.
Despite uncertainty in alluvial production, in the medium and
long term increased output from existing and new Kimberlite
diamond mines will buoy national output and important export
earnings. End Comment.
HULL