Congo Prepares to Become Diamond Hub

Rapaport Magazine: How far back does the DRC go with this decision to have staff trained by an external source?

Henri Mova: It actually goes back to the first general elections held in 2006 and the new president, Joseph Kabila Kabange’s initiation of the “Five Pillars of the Republic” program for reconstruction. As President Kabila said during his address to the nation in 2008, “It’s time that the Congolese people know where the profits from its national riches go.” He was referring to the necessity of using DRC’s resources to achieve our country’s goals to help our own people. As the world’s second-largest industrial diamond producer, the accurate certification of DRC’s diamond resources is essential for the good of the population. Moreover, the troubled period that DRC has been through for the past 20 years didn’t allow for the education or the upgrading of our diamond experts. It took the intervention of the Centre of Expertise, Evaluation and Certification of Precious Minerals and Semiprecious Stones of Congo (CEEC), which was established in 2003 by the decree of President Kabila, for the Congolese state to acquire the capacity to achieve better certification of our diamonds on the global market. The diamond market is in a constant state of evolution so what’s more natural for us right now than to turn to those who possess state-of-the-art know-how in order to update ourselves?

RM: Could you briefly explain what led to a collaboration between the European Union (EU), the Congo and IGI?

HM: The starting point was the DRC government’s will to improve the recovery process of revenues from mining resources so they can be used for the benefit of our citizens. It’s thanks to the excellent relationship DRC has with the EU that the EU agreed to sign on as a sponsor of the partnership between IGI and CEEC on December 13, 2010. That same agreement provided for the establishment of a gemological school in Kinshasa. The education of 20 CEEC agents by IGI is only the first step in this partnership.

RM: I’ve come to understand from the Congolese representatives and from the press that the Congo itself realized that weaknesses and valuation mistakes were detrimental both for the country’s image as well as for its finances. I’ve heard that those errors consisted mainly of undervaluations of goods. What’s been happening exactly?

HM: As I already mentioned, the valuation staff is not up-to-date in its training or knowledge of the market, and consequently, in a very dynamic diamond market, undervaluations are inevitable and carry fiscal consequences for the seller of those diamonds, as we have seen. However, with the gemology school being built, we have hopes that this fiscal hemorrhage will be stopped for the benefit of the DRC population. Believe me, the DRC government is fully committed to a global beneficiation endeavor for the exported stones. A better education means, for example, that from now on, our diamond ore will have to be better treated before export in order to achieve better prices abroad. This is also the case for other minerals, such as pewter or copper, which can’t be exported anymore below a certain degree of refining.

RM: During the IGI graduation ceremony, you said that it was time for the diamond world’s gravity center to move to the Congo. Do you think that is realistic in terms of production, since other countries such as Botswana and South Africa would come before the Congo, don’t you agree?

HM: Indeed, due to its geo-strategic position at the heart of Africa, DRC is in the middle of the diamond export channels and belongs to the same economic region as such big producers as Angola, Botswana and South Africa. The country could become the continental hub for the diamonds originating in Johannesburg, Luanda, Gaborone or Freetown, to name only a few. To establish such a hub, a strategic win-win partnership within the framework of the Belgian-Congolese relationship could be established with Antwerp.

RM: How do you see the future of the Congo diamond relationship? Where do you see the country in 10 to 20 years? How do you see its emancipation and its link with Antwerp and the other diamond centers evolving?

HM: Those expectations are described in a document designed by the Ministry of Mines, entitled “Vision of the Ministry of Mines 2010-2015.” The document addresses the various elements of the diamond sector, especially in two areas: first, the assessment of the mining reserves with the creation of a databank, identification and certification of those reserves in order to attract investors and production tools, and second, developing the knowledge of the Congolese entrepreneurs and its mining industry so that they would be able to negotiate win-win contracts. In addition, there is emphasis on the development of a skilled Congolese labor force and financial incentives to encourage the creation of medium and small Congolese mining companies.

The first actions toward these long-term goals are the establishment of the gemology  school and the reopening of the MIBA mine, which is operational again. That is due to the involvement of President Kabila, who granted the funding for the certification of the mine’s ore deposits and for the acquisition of the required equipment for the exploitation process and its monitoring. We expect to control our production step by step and exert an increasing influence on the global market, along with the other main diamond centers and Antwerp in particular.

RM: Do you expect that in the longer term, companies such as De Beers will become obsolete because they won’t be producing anything by themselves, except for a marketing program, and even that may be drastically reduced over the years? Do you expect the Congo to ever set up its own distribution and marketing arm along the lines of what Rio Tinto, BHP Billiton and ALROSA have done?

HM: The Ministry of Mines’ strategic plan is clear in this respect: The goal is developing Congolese know-how of the mining sector and creating globally competitive Congolese companies able to cope with the market and industry standards. Why wouldn’t the DRC cover the complete diamond supply and production chain in the  future, from extracting to the final sale in the retail shop? The country will certainly reach that stage some day, but we don’t need to be in too much of a hurry to do so.

 “Nowadays, virtually every major corporation has a corporate sustainability strategy,” explains Nattrass.  “Most companies realize that doing business in the 21st century means that you are not just concerned about your own profits, but are instead interested in creating ‘shared value’ with your customers and with the people who produce your merchandise.”