Saturday, July 01, 2006

INTERVIEW-Sierra Leone gem exports fall as mining costs rise

FREETOWN, June 29 (Reuters) - Diamond exports from Sierra Leone fell close to 20 percent in the first six months of the year with higher mining costs contributing to the decline, a senior official in the West African country said on Thursday. Official exports dropped to around $62.6 million in the first half of the year compared with $75.3 million by the same stage a year ago, Lawrence Myers, head of the Sierra Leone government gold and diamond office, told Reuters. He said diamond mining had become more expensive in the country with costly technology needed to plumb ever deeper mines and a 3 percent tax eating into exporters' profits and potentially encouraging smuggling. "I believe that our successes after the war in increasing diamond exports were due to keeping taxes in line with our competitors in neighbouring Guinea and Liberia," Myers said. Official diamond exports from the former British colony were worth just $10 million six years ago as rebels and government forces fought for control of mines in one of the most brutal wars in Africa's modern history. Liberia is still under a diamond export ban imposed by the United Nations towards the end of its parallel 14-year gem-fuelled civil war, which ended in 2003. Sierra Leone's conflict, which became synonymous with drugged-up child soldiers and mutilated civilians, killed 50,000 people before being declared over in 2002 after the intervention of one of the world's biggest U.N. peacekeeping forces. Government revenues from diamonds have risen following the removal of a U.N. ban on gem exports -- which helped pay for weapons during the war -- but experts have said there is still much work to be done on the management of the industry. "In my opinion ... the smuggling that was brought under control has resumed again seriously because of the tax," one Lebanese diamond exporter, who requested anonymity, told Reuters. The chairman of global diamond giant De Beers, Nicky Oppenheimer, told an industry conference this week that the trade in black-market diamonds was still flourishing in West Africa and jewellery stores were not tracing the source of gems.