Central African Republic Launches Major Reform of Diamond Mining Sector

Mining and Exploration
03/10/2019 14:11

Ahead of the Annual General Membership (AGM) meeting of the World Diamond Council (WDC) in Antwerp, the Government of the Central African Republic launched a "full overhaul of the country’s alluvial diamond mining sector", the government stated in a press release today. "Going forward," it reads, the government "will stand for a bold new and drastic approach where full transparency and proper due diligence protocols, traceability of individual parcel and OECD Due Diligence Guidance will be crucial." The statement adds emphatically, "The country direly needs diamond production to return to the formal market."

Outlining the downward spiral of CAR's diamond mining sector in recent years, the government wrties, "while in 2012, the total production was about US$62 million, in 2018 only US$2.3 million was reached. In 2017, after the partial lifting of the embargo, things went well for a while and 113,000 cts. were exported. In 2018, that fell again to almost nothing, just 12,000 cts. This is 3% of 2012." Now, they write, "Following the adoption of a Presidential Decree (PD) signed by President Faustin Archange-Touadéra on 30 September 2019, all existing buying houses can participate in demonstrating their capability to formalize exports and [intention] to withdraw from any engagement in the informal circuit. Above all, there will be an obligation for each buying house to export at least US$3 million per quarter," failing which there will be a "withdrawal of the license in case of failure of the minimum amount of exports."

After a trial period which will end on 31 December 2019, the buying houses that have passed the conditions will enter into a contract with the CAR Government which will stipulate the due diligence sourcing protocols. In the same spirit, the PD further stipulates severe conditions on foreign buyers whose licenses will also be withdrawn in cases of non-compliance. Also, it continues, the tax revenues of the State "need a re-start", which they will try to accomplish by reducing the total exportation tax rate to 4% to be competitive and in line with neighboring countries. Further, this will be accompanied with a reinforcement of the Mining Police and the local KP structures in place.

"The Central African Republic thanks the international community for the assistance it has received. In particular, the Kimberley Process Certification Scheme where especially the work of the CAR Monitoring Team is applauded. The decision to shorten Kimberley Process (KP) approval procedures to 7 days was crucial in the context of the on-going reform. It is the CAR Government’s hope the reform process in particular the peace agreement of Khartoum of 6 February 2019 will bring the first positive results already in 2019 at the KP Plenary in New Delhi and will lead to a new Operational Framework which will allow a normalisation of the country’s exports.

The reform’s intentions were announced already at the KP Intersessional in Mumbai in mid-June 2019 and are highlighted in a presentation which can be viewed here : https://www.youtube.com/watch?v=hxIVDnn-vPA.