Standards & Guidelines for Sierra Leone's Artisanal Diamond Mining Sector

40 Pages·2008·1.19 MB·English

DDI INTERNATIONAL
STANDARDS
& GUIDELINES
for Sierra Leone’s
Artisanal Diamond
Mining Sector
AAbboouutt DDDDII IInntteerrnnaattiioonnaall TTaabbllee ooff ccoonntteennttss
DDI is an international, nonprofit, Standards & Guidelines for Government..................... 3
charitable organization that aims to
About Government and Artisanal Mining................ 3
gather all interested parties into a
The Issues............................................................. 5
process that will address, in a com-
Standards & Guidelines for Investors........................ 13
prehensive way, the political, social
and economic challenges facing the Background.......................................................... 13
artisanal diamond mining sector, in Taxes.................................................................... 15
order to optimize the beneficial devel- Trade Unions........................................................ 16
opment impact of artisanal diamond
Land and Property Rights..................................... 17
mining to miners and their communi-
The Environment.................................................. 18
ties within the countries in which the
Money and Banking.............................................. 19
diamonds are mined.
The Kimberley Process............................................. 19
A major objective is to draw develop-
The Issues................................................................ 20
ment organizations and more devel-
Standards & Guidelines for Donors & Civil Society.... 24
opmentally sound investment into arti-
sanal diamond mining areas, to find Why Artisanal Mining is Important....................... 24
ways to make development program- The Issues............................................................ 26
ming more effective, and to help bring Ethical Questions.................................................. 28
the informal diamond mining sector
Lessons from Current and Past Initiatives.............. 28
into the formal economy.
The Challenge....................................................... 31
More information on DDI International Conclusions............................................................. 33
can be found at www.ddiglobal.org,
and we can be reached at PPhhoottoo ccrreeddiittss:: pgs. 12, 21, 28, 32, 33, inside back cover: Partnership Africa
Canada; cover, inside back cover, 2: Peter Andersen; 16, 26: De Beers; 24:
[email protected].
UNAMSIL; 8: Première Urgence.
ISBN 978-0-9809798-0-0
Contact us at: [email protected]
www.ddiglobal.org
International Head office
8110 Gatehouse Road, Suite 101W, Falls Church, VA 22042, USA
DDI International is registered in the United States as a Nonprofit 501(c)3 Organization (EIN/tax ID number: 51-0616171)
© DDI International, 2008
WHY STANDARDS & much greater involvement on the part of local
and international development organizations
GUIDELINES?
in this important and challenging sector.
Each section is self-contained, and refers to
The aim of this document is to provide prac- specific parts of other sections where there is
tical information and guidance to officials, additional information on a particular sub-
organizations and companies interested in ject. Users can therefore read the entire guide,
the world of artisanal diamond mining. or go directly to the section that interests
Communities are poorly informed about reg- them most, knowing that they will find refer-
ulations, and there are few accessible infor- ences to further information where it is rele-
mation points to inform and guide them. vant.
Lessons are not learned, and best practices
The guide represents the beginning of a
(and worst) are not remembered. As a result,
process rather than the end. It is short on
projects carried out by government, business
specifics in some areas because so few actors
and civil society frequently fail. The infor-
have approached artisanal diamond mining
mality, disruption and human insecurity that
and miners from a development point of
have surrounded artisanal diamond mining
view, and even fewer have recorded their
for half a century continues. By encouraging
experience. As a result, there remain as many
greater external involvement in artisanal
questions as answers, but in posing them, we
mining areas, and by helping those who are
hope to challenge a wider cross section of
interested to learn from experience, the DDI
government, business, civil society and
hopes that this guide will help to inform a
development organizations to become more
better quality of investor, more educated
constructively engaged in the issue and with
interventions, and in the longer term, more
each other.
development, better returns to the communi-
ties where diamonds are mined, and sustain- Investment and management in the extrac-
able activities that engage with, and con- tive industries is subject to an increasing
tribute to the country’s formal economy. number of different international standards,
guidelines, codes and recommendations. This
The guide is divided into three main sections:
is particularly true of the diamond industry,
Standards and Guidelines for Government
not just in Africa, but globally. Because of the
make the case for a more coherent, whole-of-
luxury nature of diamonds and because of
government approach to artisanal diamond
the conflicts that they have helped to fuel,
mining, miners and investors – an approach
this industry is perhaps more vulnerable to
going far beyond the Ministry of Mineral
criticism than others. Conversely, much of
Resources. Standards and Guidelines for
the industry has embraced a constructive
Investorstells exploration and mining compa-
new approach to corporate social responsibil-
nies, buyers and exporters what they need to
ity, one that deserves a concomitant quality
know and what they need to consider when
of engagement from governments and from
working in Sierra Leone’s diamond industry.
civil society organizations concerned about
Section three, Standards and Guidelines for
development and social justice.
Donors and Civil Societymakes the case for
1
Despite the wealth they generate, the arti- be directed elsewhere. This view is seriously
sanal diamond mining areas of Sierra Leone mistaken, since the revenues are rarely
are less developed, have greater health prob- invested in areas where the diamonds are
lems, more illiteracy and greater poverty than mined – for the reasons stated above. Thus a
others. As many as 120,000 diamond diggers vicious cycle of underdevelopment occurs
subsist on less than a dollar a day, and yet without anyone appearing to notice.
after agriculture, diamond digging involves
This guide benefited greatly from a workshop
more people than any other form of work in
organized in Freetown in January 2008 by
the country. And diamonds, of course, were
DDI, the Network Movement for Justice and
the focal point of the country’s ten year civil
Development and Partnership Africa Canada.
war.
It brought together government departments,
chiefs and community leaders, civil society,
representatives of the diamond industry and
artisanal miners to discuss the issues raised
in this guide.
The DDI would like to thank the many organ-
izations, companies and individuals who
made this guide possible. Lansana Gberie
conducted the field research and was assist-
ed in completing the final text by Ian Smillie
and Brian Rowe. Partnership Africa Canada
provided coordination, editing and produc-
tion facilities. Many individuals in Sierra
Leone and elsewhere assisted with important
and constructive comments on early drafts.
Financial contributions were received from
Partnership Africa Canada, the Communities
One reason for all of this is the informal
and Small Scale Mining Secretariat, Foreign
nature of the diamond economy and the
Affairs and International Trade Canada, Irish
paucity of development organizations work-
Aid, the International Development Research
ing in mining areas – both governmental and
Centre, and from several companies and
non-governmental. Diamond mining areas
organizations in the diamond industry:
are difficult places to work: they are socially
Cartier International, BHP Billiton, De Beers,
fractious, often violent, and standard com-
the Signet Group, the Rapaport Group,
munity development approaches are rarely
Jewelers of America, Rio Tinto Diamonds
successful. New private sector investors also
and the International Diamond Manufac-
have limited success. In addition, there is a
turers Association. DDI is also grateful to
view among some donors that because so
Inter Pares, Ted Jackson and friends for their
much wealth is generated from diamond
support.
mining areas, development assistance should
2
STANDARDS & GUIDELINES FOR
GOVERNMENT
ABOUT GOVERNMENT mond mining, whether on a large or small
scale, protects the rights and interests of all
AND ARTISANAL
Sierra Leoneans.
DIAMOND MINING
In line with a now-almost universal trend,
the GoSL has disavowed any intention of par-
ticipating financially in diamond mining. It
The government has primary responsibility
has instead encouraged private sector invest-
for ensuring that communities where dia-
ment in the minerals sector. In 2003, the
monds are mined benefit from the process. It
GoSL published a CCoorree MMiinniinngg PPoolliiccyystating
must ensure that the country as a whole ben-
that ‘The Government of Sierra Leone is com-
efits as well. The government must take the
mitted to a “free market” approach and eco-
lead in establishing policies and standards
nomic policies, which will ensure the devel-
that encourage developmentally sound
opment of the minerals sector in accordance
investments which protect and enhance local
with international best practice, and within
infrastructures and land use. The govern-
an enabling environment competitive with
ment must also develop systems for project
other countries that have similar exploration
monitoring and evaluation to ensure that dia-
AAnn AAggeennddaa ffoorr GGoovveerrnnmmeenntt
The government must create an enabling environment for ‘responsible’ mining, one that benefits the coun-
try as a whole, as well as those who mine diamonds. To do this, it must:
1. Ensure that high standards of corporate social responsibility are met by all investors and diamond
traders, local and foreign;
2. Ensure that laws governing the sector, including environmental and labour laws, are understood and
are fairly and scrupulously enforced;
3. Guarantee property and land rights, making them as simple and clear as possible;
4. Clarify the roles and responsibilities of government departments, chiefs, councils and communities;
5. Clarify overlap and contradictions between the Minerals Act and the Local Government Act, and
between statutory and customary laws and systems;
6. Ensure that taxes are fair and that they are paid;
7. Ensure high standards of probity among officials tasked with governing the sector;
8. Mediate and prevent conflict among the various players – investors, mining companies and artisanal
miners, chiefs, law enforcement bodies and civil society;
9. Provide the educational infrastructure and the incentives needed to attract children away from mining;
10. Ensure that mining communities, particularly those in Kono District, benefit directly from the diamond
industry – through improved health, education and infrastructural development, and through incentives
for the creation of alternative livelihoods.
3
and mining potential. The Government will Sierra Leoneans, and foreigners are by law
ensure the sector is managed in a transpar- not permitted to reside in artisanal mining
ent, open and accountable manner.’ areas, or to engage in artisanal mining. Larger
scale industrial mining, because it needs con-
The approach has been to create a wide-open
siderable capital, is dominated by foreign
field for all investors, local as well as foreign,
firms. Here, the challenge has been to attract
while at the same time providing certain lim-
credible, large scale companies with capital
ited preferential privileges for Sierra
and interests substantial enough to create
Leoneans. Artisanal mining licenses, for
positive spin-offs and sustainable jobs in
example, may be granted only to indigenous
other sectors.
TThhee aaddmmiinniissttrraattiivvee ffrraammeewwoorrkk
Government in this guide refers to the Government of Sierra Leone (GoSL). By law, the GoSL owns the right
to all minerals in the country, but it does not, itself, engage directly in diamond mining. It is responsible for
both passing and enforcing the laws and regulations that govern mining in the country. The key instrument
in this is the 1994 Mines and Minerals Act, as amended in 1996. The GoSL also issues mining licenses and
leases, and it collects fees and taxes on the proceeds.
Administration of the diamond industry falls largely under the Ministry of Mineral Resources. Other govern-
ment departments are important players as well: the National Revenue Agency (NRA), under which the Gold
and Diamond Department (GDD) operates; Excise and Customs; the Police; and the Law Officers
Department. Other ministries of importance include the Ministry of Lands, Country Planning and the
Environment (responsible for all issues relating to land and property rights and the environment), and the
Ministry of Local Government and Community Development, which is responsible for a host of issues,
including land tenure, local government administration, the arbitration of issues at the local level, including
disputes over property rights. Where farming is constrained by mining, the Ministry of Agriculture and Food
Security has a responsibility. Sierra Leone’s multi-party Parliament, with its vocal opposition parties, can
provide key additional oversight of this important industry. More detail on the administrative and regulato-
ry framework for the mining industry can be found in Guidelines for Investors, below.
An ongoing process of decentralization, which has been devolving power from Freetown to authorities at
the provincial, district and chiefdom levels, has meant that local councils have become increasingly impor-
tant with regard to many mining-related issues. The decentralization process was set in place by the Local
Government Act of 2004. The Ministry of Gender and Children’s Affairs has a tangential role in issues relat-
ing to child labour, a persistent problem in the mining sector. The Anti-Corruption Commission (ACC) inves-
tigates and prosecutes cases of corruption across all sectors. The Ministries of Labour, Health and
Education have responsibility for all Sierra Leoneans, including artisanal diamond miners and their families.
The Ministry of Mineral Resources, headed by a cabinet-level minister, has two professional departments
supervising its functions: the Mines Department, which monitors and regulates the mining and marketing of
precious minerals; and the Geological Surveys Division (GSD), which provides geological information.
4 * Sierra Leone: Adding Value through Trade for Poverty Reduction, a Diagnostic Trade Integrative Study(October 2006), v,
available at http://siteresources.worldbank.org/SIERRALEONEEXTN/Resources/DTIS_Final.pdf
Trends and the Challenge for go up, down, or remain stable. There are as
Government many as 120,000 of them in Sierra Leone,
working on poverty-level incomes in
A recent IMF/World Bank study notes that unhealthy, unsafe conditions. Historical
artisanal diamond exports have constituted by efforts to regulate them out of existence
far the most important avenue for ‘direct have always failed, and will continue to do
poverty reduction through trade’ over the last so. Proper regulation of the sector, however,
five years, and will continue to do so for the remains vital, for economic as well as socio-
next five.* This trend, however, is not sustain- political reasons. In 2007, Sierra Leone
able. Diamond deposits are finite, and the officially exported $141 million worth of
advent of mechanized mining will hasten the diamonds; over $100 million of this was
depletion of reserves. The GoSL, therefore, produced by artisanal miners. The govern-
needs to create an enabling environment, both ment, with assistance from trade unions,
legal and political, to attract capital investment civil society, development organizations
into the mining and other sectors, and it must and the formal diamond industry, has a
regulate the operations of mining companies responsibility to deal with this issue in a
in a fair and rational way. At the moment, the clear and forthright manner.
signs are not entirely encouraging.
Addressing and solving these problems, dis-
Historically, the government has been insen- cussed at greater length below, is important
sitive to artisanal mining and to the commu- for other reasons. The huge increase in min-
nities where it takes place. Government has ing activity since the war ended in 2002, and
limited knowledge of what happens on the especially the recent proliferation of mecha-
ground. As a result of the 2007 elections, nized mining companies, has led to an
Sierra Leone’s new government is in a good increase in competition for land between arti-
position to reach out to these communities, sanal diggers and mining companies. There is
however, and to contribute to a participatory a diminishing need for the massive labour
dialogue on ways forward. force employed in the artisanal sector, and
there is growing friction around environmen-
According to the World Bank’s 2006
tal and property rights. All of this suggests an
country index, Sierra Leone
increased role for government, the need for a
ranked 168th out of 175 coun-
joined-up approach that extends far beyond
tries for ease of doing busi-
the Ministry of Mineral Resources, and stan-
ness. The same year saw the
dards of a significantly higher level than has
country slipping from 126th
been the case historically.
place to 142 on Transparency
International’s perception of
corruption rating. Any strategy for
THE ISSUES
long-term development, economic growth
and job creation which has the private sector
at the centre is, therefore, at risk. Mining and related laws
In addition, the problems of artisanal miners The key mining sector legislation is the
must be addressed, whether their numbers MMiinneess aanndd MMiinneerraall AAccttof 1994, amended in
5
1996 and again in 2003, when specific penal- added activities, to improve exports and pro-
ties dealing with smuggling were added. The vide employment opportunities, and general-
main Act can only be accessed in hard copy ly to create an environment conducive to pri-
(at the Government Bookstore in Central vate investment, and to provide for other
Freetown) but the 2003 supplement can be related matters.’ The Act can be found at:
accessed on line at: http://www.daco- http://www.sierra-leone.org/Laws/2004-
sl.org/encyclopedia/4_strat/4_3/GoSL_Act03 10p.pdf. The CCoorree MMiinneerraall PPoolliiccyy of 2003
Amd_Mines.pdf. The government should pledged to encourage the ‘establishment of
make the entire act available online as well. jewellery manufacturers and retailers, dia-
The ‘Core Mineral Policy’, which was mond cutting and polishing facilities,’ and in
designed in 2003 as an instrument to help late 2006, the GoSL passed legislation to this
revive the mining sector, called for a review effect. The legislation is not available online.
of all mining laws and regulations to make
All of this legislation adds up to a lot of detail,
them internationally competitive, to reduce
which can be confusing. And the laws do not
illegal diamond mining and smuggling, and
yet address the complicated issues of land
to improve the social, environmental, and
and property rights. Comprehensive legisla-
economic performance of artisanal and
tion, which aims to modernize and rational-
small-scale mining.
ize land and property rights, has been drafted
In 2004, the GoSL invested the NNaattiioonnaall by the LLaaww RReeffoorrmm CCoommmmiissssiioonn (LRC), but
RReevveennuuee AAggeennccyy (NRA) – the state tax col- at the time of publication (early 2008) it had
lector – with responsibility for implementing not been passed by Parliament. The GoSL
Sierra Leone’s participation in the KKiimmbbeerrlleeyy should move quickly with this legislation. In
PPrroocceessss CCeerrttiiffiiccaattiioonn SSyysstteemm (KPCS) its absence, there remains huge potential for
http://www.kimberleyprocess.com/. The confusion and conflict. Moreover, the Mines
NRA then effectively took responsibility for and Minerals Act does not set out, in a ration-
the operations of the Government Diamond al way, requirements for the granting of
Department (now the GGoolldd aanndd DDiiaammoonndd industrial-scale mining licenses as distinct
OOffffiiccee – GDO). A Banking Act had already from artisanal mining licenses. Officials map-
been passed in 2000, partly to facilitate the ping out a cadastre system for mining in
valuation work of the GDD, including the Sierra Leone reckon that artisanal miners cur-
export of diamonds and the payment of a rently pay four times more in license fees
three per cent export tax. The Act can be than industrial-scale miners for the same
found at: http://www.sierra-leone.org/ plot-size of mining land.
Laws/2000-3.pdf.
There are, however, semi-formal mechanisms
Another important piece of legislation is the designed to reduce conflict over mining land,
2004 IInnvveessttmmeenntt PPrroommoottiioonn AAcctt, which is and to regulate the issuing of mining licenses
designed to attract foreign investment in all ‘on the ground’. Where artisanal and small-
sectors, including mining, and to add value scale mining is concerned, the GoSL created
to the production of minerals and in other CChhiieeffddoomm MMiinniinngg AAllllooccaattiioonn CCoommmmiitttteeeess
sectors. The Act aims to ‘promote and attract (CMAC) to address the problem of foreigners’
private investment both domestic and foreign access to artisanal mining licenses. The com-
for the development of production and value mittees screen potential mining license hold-
6
ers through an informal system before licens- total work force. This has been Map of Sierra
Leone showing
es are approved. In each chiefdom, the true historically. Since com-
Kono District
Paramount Chief heads the Committee, with mercial exploitation of dia-
technical advice provided by the Government monds began in the
Mining Engineer. Local councils, largely 1930s, artisanal miners
dominated by opposition parties in early have produced billions
2008, are now playing an increasingly impor- of dollars worth of dia-
tant role in CMAC. The committees also act monds. Yet Kono, the
as a dispute and conflict prevention mecha- main diamond district in
nism, since they examine the legitimacy of Sierra Leone, has a small and
landholding claims involving mining sites, wholly inadequate hospital, no
and they settle disputes at the community decent roads, and according to the
level. This is important, but such mecha- Poverty Reduction Strategy Paper of 2005,*
nisms are vulnerable to corruption and its people are far poorer than others in the
abuse. They are not a substitute for concrete country.
legal provisions, backed by the cadastre sys-
This should be of paramount concern for the
tem which is now being rolled out across the
government and others. Diamond mining
country.
areas are difficult places to work, and devel-
opmental NGOs – many of whom labour
under the mistaken view that diamond areas
Infrastructural development
do not actually need development assistance
An important consideration in promoting a – are less active there than elsewhere. The
more developmentally sound approach to recent proliferation of industrial-scale compa-
artisanal diamond mining is the dire econom- nies, and the work of the United Mine-
ic and infrastructural condition of the areas workers Union (UMU) may, in the long-run,
in which diamonds are mined. The GoSL make mining areas more stable and more
officially designates the following districts as amenable for aid agencies and NGOs. But in
areas where diamond mining licenses and the short run, the government must invest
leases may be located: Kono, Kenema, Bo, more itself, and should encourage NGOs to
Bombali, Bonthe, Kailahun, Kambia, move to mining districts like Kono. One way
Koinadugu, Moyamba, Port Loko, Pujehun, of doing this would be for government to tar-
and Tonkolili. These districts cover more get the district for more of its rebuilding
than half of Sierra Leone’s land area. By far efforts through the National Committee for
the most important of these, accounting for Social Action (NACSA). It should make this a
more than 60 per cent of all mining licenses priority. Kono District has a high concentra-
and leases granted in 2006, is Kono District. tion of young people, making it a potentially
But this district is poorer and less economi- volatile place. Engaging these young people
cally developed than almost any other, rais- in development-related work and helping
ing serious ethical and practical issues. with the creation of alternative livelihoods –
Artisanal diamond mining accounted for rather than leaving youth in the usually unre-
nearly 70 per cent of Sierra Leone’s exports in warding diamond fields – has to become a
2006, and employs close to 10 per cent of the strategic priority.
* Available at 7
http://web.worldbank.org/WBSITE/EXTERNAL/COUNTRIES/AFRICAEXT/SIERRALEONEEXTN/0,,menuPK:367837~pageP
K:141132~piPK:141123~theSitePK:367809,00.html
Health Education
Primary education in Sierra Leone is free, and
the GoSL has in recent years registered impres-
sive gains in expanding school enrolment –
currently more than double the pre-war figure.
Since 2003, hundreds of primary and second-
ary schools have been built or rehabilitated. A
good number of these schools, however, are in
low population density areas, and diamond
mining areas such as Kono and Tongo are still
inadequately serviced. In 2007, when research
for this document was conducted, Kono
District, with a population of 335,000, had
37,900 boys and 33,500 girls attending 194 pri-
mary schools and 20 secondary schools. It has
Alluvial mining areas are more vulnerable only 849 government-salaried teachers – an
than others to infectious diseases. They are average of one teacher for every 84 school-
over-crowded and lack basic housing, sanita- children.
tion, water and health facilities. Diseases like
Encouraging children to go to school in a place
malaria and HIV/AIDS proliferate more easi-
like Kono, however, requires much more than
ly in such an environment. The health infra-
school buildings, teachers and free enrolment.
structure in Kono District – the main dia-
Diamond mining can be seductive in an econ-
mond mining area – is severely limited. The
omy that has few options: it holds out the false
government has recently refurbished the
promise of quick money. And over the years a
Koidu Government Hospital, long in a dys-
culture has taken root in the alluvial mining
functional state, but its facilities are inade-
areas that puts little premium on the slow
quate for the tens of thousands of people in
return-on-investment that education seems to
the town, let alone the entire district. There
represent. This accounts in part for the phe-
are also 57 ill-equipped ‘peripheral health
nomenon of child miners. Legislation protect-
centres’ in the district and one small private
ing the rights of children, including safeguards
hospital. But the entire district has only two
against labour exploitation, has now been
medical doctors, 97 maternal and child
passed, but enforcement remains problematic.
health nurses, four staff nurses, and eight
A coordination of efforts bringing together offi-
community health officers. In a situation
cials of the MMiinniissttrryy ooff GGeennddeerr aanndd
where the lives of tens of thousands of young
CChhiillddrreenn’’ss AAffffaaiirrss,, EEdduuccaattiioonn and the PPoolliiccee
people and whole communities are at stake,
will be necessary to enforce the legal frame-
the GoSL’s MMiinniissttrryy ooff HHeeaalltthh – which has
work, to get children into school, and to
since 2003 (impressively) constructed or
change the prevailing mindset about the value
rehabilitated 76 hospitals or health centres
of education. Other incentives, including free
across the country – ought to make Kono a
meals and free uniforms for school children,
priority area for investment in health infra-
should be actively considered by the govern-
structure.
ment, donors and NGOs.
8