ANB-BIA SUPPLEMENT

ISSUE/EDITION Nr 466 - 15/11/2003

CONTENTS | ANB-BIA HOMEPAGE | WEEKLY NEWS

 Gabon
Replacing oil with diamonds

ECONOMY

While waiting for the discovery of new oil fields, Gabon’s diamantiferous deposits are being put to good advantage, thus providing hope for an economic revival

Gabon’s economic situation gives cause for alarm and at the same time, a three-year agreement with the International Monetary Fund (IMF) has been deferred. However, the discovery of major diamantiferous deposits in the south, has led the government to announce that Gabon is not exclusively an oil-producing country, and that the exploitation of the mining resources will make it possible for the nation to put right its economic situation.

On the advice of US representatives in the IMF, the board of directors has imposed on this small oil-producing country (with a population of just over one million), a probationary period until the end of 2003. Since April 2002, Gabon has been at loggerheads with the IMF. However, on 13 June, the government tried to mend bridges by dispatching a letter of intent to the IMF, so that a three-year Structural Adjustment Programme, supported by extended credit facilities could be set up.

According to an official source, the government counted on a quick positive answer so that by the autumn it could renegotiate its foreign debt, mainly with the Paris Club. But the signing of such an agreement was delayed by the IMF‘s American representatives, followed by their British and Danish colleagues. These wanted Gabon to be subject to a six-months additional probationary period and imposed stringent conditions on Gabon.

Diamonds must be quickly exploited

From now until 2004, the government hopes the country’s vast mining potential can be quickly exploited. This will offset the decline in revenue resulting from the fall in oil production and the lack of new mineral finds. The government says that revenue from mining will soon constitute the main part of Gabon’s earnings except for oil.

René Ndemezo’o Obiang is minister in charge of relations with Parliament. He says: «Exploiting Gabon’s mining resources will prepare the country for the time when our oil reserves dry up. Gabon isn’t exclusively an oil-producing country. It has abundant natural resources». He explains: «If oil production continues to fall, Gabon’s economic situation from 2003-2004 will be marked by a historical turn-around in its economic possibilities. For the first time, revenue from oil will be lower than from other resources».

Gabon’s sub-soil is rich in gold, iron, diamonds, manganese, uranium, lead, zinc, platinum, nickel, tin, phosphate, niobium, magnesium, potash, marble, etc. But in order to develop these mining resources, it’s necessary to establish appropriate industries and get hold of suitable equipment for extracting the ore. Also, qualified personnel will have to be quickly trained. Thanks to South Africa’s mining department, Gabon has up-to-date geological and metallogenic maps since 2001, indicating where mines could be located and where they are presently located throughout the country.

On 7 October, the Cabinet published the following communique: «In order to start mining operations again, Gabon will need some 3.9 billion CFA francs from the European Union, for an on-going programme to finance development projects. This aid will be indispensable for a number of years and will take the form of a necessary backup to recognised organisations, for the country’s economic and environmental requisites. The government’s priority is to capitalize on its diamond mining operations. The company, SouthernEra, has been earmarked for: Investigating the possibilities of diamond mining; turning to good account the results of its efforts. The fact is, Gabon depends on the diamond mining industry to offset the decline in its oil industry. Following the recent discovery of diamantiferous layers by De Beers and SouthernEra Resources, there’s a glimmer of hope. Gabon would like to see this «glimmer» developing into a profitable diamond industry.

Establishing an industry

Richard-Auguste Onouviet is Gabon’s Minister for Mines. He states: «There’s been encouraging discoveries of several ores, but the government is most interested in diamonds. De Beer’s and SouthernEra’s discoveries are very significant and let’s hope will lead to the quick emergence of a diamond industry in Gabon». Recently, the government asked the Minister for Mines together with the concessionary mining companies, to continue this all-important project in view of Gabon’s development.

In Central Africa, diamonds are found in Congo RDC and the Central African Republic. Australia, Russia, Congo RDC, Botswana and South Africa are the main regions where diamonds are mined. But other alluvial and kimberlite pipes have been discovered in Africa, especially in Namibia, Angola, Tanzania, Ghana, Sierra Leone, Liberia, Cameroon and Zimbabwe. The United States assimilates 60% of world production.

In July 2002, the Canadian company, SouthernEra Resources Limited, obtained from Gabon’s government a licence to prospect for diamonds, gold, platinum, copper and nickel. SouthernEra is South Africa’s second largest company for exploiting ore. The company began exploiting in Gabon in 2003 but has been in Gabon since 1999. It specializes in diamonds and metals of the platinoid group.

It’s reckoned that De Beers either mines or secures via its purchasing offices, 60% to 80% of world diamond production. The largest producers (in Australia, Southern Africa and Russia) are linked to De Beers by a supply agreement indexed to sales, thus limiting the risk of having too many diamonds on the world market at one time. If there’s a fall-off in sales, then the mines feel the effects. By way of compensation: In times of crisis, De Beers maintains prices by paying more for the stones than the average cost.

Other diamond-producing countries

  • Angola is another major diamond producer. The country exports nearly 2 million carats of good quality diamonds, but its uncertain political situation has prevented effective mining exploration and exploitation. However, with the signing of the recent peace treaty, Angola will certainly become a force to be reckoned with in the international diamond market.

  • Ghana has always produced more diamonds than its other West African neighbours, but the diamonds are small. Their value varies from US$10-20 per carat, compared with Sierra Leone’s US$250-300.

  • Sierra Leone‘s diamonds are of exceptional size and quality and have been mined since 1935.

  • Liberia is a small-scale diamond producing country but is a special case. Most of the diamonds exported from Liberia until mid- 2002 fall into the category of «blood diamonds» or «war diamonds». This means the diamonds were sold by the government or the rebels to finance their war campaigns, mainly in Sierra Leone. In a wider sense, the same applies to diamonds coming from Angola and Congo RDC.

  • The international community has been extremely worried about the negative impact some diamond sales have been having on consumers, and took a number of measures to end the «diamonds for weapons» trafficking. This was in an agreement signed in Interlaken, Switzerland, by more than 50 countries involved in the diamond trade. The agreement, known as the Kimberley Process, was launched on 1 January 2003. It is an independent international diamond certification scheme which enables the diamonds’ country of origin to be traced. The recent peace treaties in Angola and the withdrawal of foreign troops from Congo RDC should put an end to this kind of trafficking. Diamond cutting centres are found around the world but mainly in Belgium, India, Israel, South Africa, Thailand, China and the USA.

                                                                                                                                                   (A.L., Gabon)

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