Egmont Diamond Chain
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Transcript of Egmont Diamond Chain
The Misery & the Mark-up
Miners’ Wages and Diamond Value Chains in Africa and South America
Shawn Blore - Independent Researcher
The Royal Institute for International Relations
Why Compare?
Similar geology
Inputs comparablypriced -diesel/gasoline -food
International price for diamonds constant
Wage differencesdue to difference in value chain
Shawn Blore - Independent Researcher
Why This Study Growing interest in artisanal diamonds as engine of
development, particularly in Africa To evaluate potential size of development impact
1 million diamond diggers in DRC making US$1/day Even just doubling this wage will have an enormous impact Establish realistic benchmark, based on real world example
Indicate which actors in diamond chain are capturing what percentage of wealth embodied in a diamond
With percentages identified, can work on adjusting those percentages in favour of producers
Shawn Blore - Independent Researcher
Methodology Determine wages of African artisanal miners
Literature Review Determine wages of South American artisanal
miners through field research Brazil Guyana
Compare wages Investigate mark-ups in diamond chains in
Brazil, Guyana, DR Congo Who is capturing how much?
Shawn Blore - Independent Researcher
African Diggers’ Wages Rich Man, Poor Man; Development
Diamonds and Poverty Diamonds: The Potential for Change in the Artisanal Alluvial Diamond Fields of Africa (PAC/GW)
Angola, DR Congo, Sierra Leone Diggers paid in food, sometimes a daily wage
(0-50cents), plus a share of proceeds (30-50%/number of diggers = +/-0.5%-1%)
Macro mathematics to determine average wage
(Export Value Artisanal Production*Estimated Discount)/ Estimated population of diggers
Angola = $1/day DR Congo = $1/day Sierra Leone = $1.25- $1.5/day (profit
sharing) = $2/day for semi-
mechanized (straight wage – relatively rare)
Shawn Blore - Independent Researcher
Brazilian Garimpeiros-Artisanal
Paid a monthly minimum wage by financial backer (R$415/US$250)
Financer is not diamond buyer Garimpeiro and backer share proceeds
equally, after expenses Garimpeiro share of production +/-
30% 30% to garimpeiro 30% to financer 10% to landowner 25% to earthmover 5% for water
Yield (income) from percentage difficult to determine
Relatively rare in Brazil (Coromandel)
Shawn Blore - Independent Researcher
Garimpeiros:Semi-mechanized Larger Jigs (Coromandel) Garimpeiro (worker) paid a monthly
minimum wage (R$415/US$250) Four workers per jig each receive 1%
share each Can be lucrative
Shawn Blore - Independent Researcher
Date Sold Size Garimpeiro Share (cts) US$18-Jan-07 21.93 $ 7,238.48 18-Jan-07 134.36 $ 26,286.90 30-Jun-07 18.78 $ 470.59 20-Jul-07 263.13 $ 15,084.18 4-Sep-07 21.93 $ 7,238.78 4-Sep-07 139.36 $ 26,286.90 25-Sep-07 123.68 $ 865.29 5-Mar-08 27.1 $ 201.18
The Resumidor, Jig or Dredge
Shawn Blore - Independent Researcher
4 inch – 8 inch dredgesCrew: one man + 1 per inch
Guyana Data Set Weekly production of each dredge recorded in on-site
production sheets Sheets travel with diamonds to point of export GGMC enters data from sheets into excel In other tables, GGMC records dredge size, export price
of diamonds Linking tables gives access to vast repository of
production and price data
Shawn Blore - Independent Researcher
Dredge No of Data Production Dredge Income Individual Miner Income
Size Crew Points Cts/Wk Per Week Per Week Per Month All 1429 Average 39.56 $ 4,367.68 $ 223.69 $ 958.65 Median 15.41 $ 1,700.44 $ 89.37 $ 383.02 Max 1098.23 $ 111,498.44 $ 6,171.86 $ 26,450.84 Min 0.44 $ 48.59 $ 3.41 $ 14.61 StDev 90.29 $ 10,024.65 $ 513.35 $ 2,200.09
3" 4 8 Average 19.86 $ 2,286.72 $ 223.69 $ 958.65 Median 10.55 $ 1,201.41 $ 90.11 $ 386.17 Max 58.84 $ 6,973.80 $ 6,171.86 $ 26,450.84 Min 0.44 $ 48.59 $ 3.41 $ 14.61 StDev 21.02 $ 2,468.65 $ 513.35 $ 2,200.09
4" 5 630 Average 30.90 $ 3,454.14 $ 207.25 $ 888.21 Median 13.15 $ 1,435.21 $ 86.11 $ 369.05 Max 867.90 $ 102,864.38 $ 6,171.86 $ 26,450.84 Min 0.50 $ 56.80 $ 3.41 $ 14.61 StDev 75.06 $ 8,581.52 $ 514.89 $ 2,206.68
5" 6 465 Average 41.79 $ 4,695.47 $ 234.77 $ 1,006.17 Median 16.52 $ 1,829.71 $ 91.49 $ 392.08 Max 891.56 $ 101,488.06 $ 5,074.40 $ 21,747.44 Min 0.74 $ 81.16 $ 4.06 $ 17.39 StDev 92.20 $ 10,486.68 $ 524.33 $ 2,247.15
6" 7 307 Average 52.30 $ 5,615.05 $ 240.64 $ 1,031.33 Median 20.33 $ 2,165.12 $ 92.79 $ 397.68 Max 1098.23 $ 111,498.44 $ 4,778.50 $ 20,479.31 Min 1.15 $ 106.35 $ 4.56 $ 19.53
StDev 112.45 $ 11,925.09 $ 511.08 $ 2,190.32 8" 9 19 Average 74.41 $ 7,357.76 $ 245.26 $ 1,051.11
Median 26.27 $ 2,882.53 $ 96.08 $ 411.79 Max 296.98 $ 26,500.02 $ 883.33 $ 3,785.72 Min 3.89 $ 461.28 $ 15.38 $ 65.90
StDev 92.75 $ 8,632.11 $ 287.74 $ 1,233.16
Guyana Miners Wages
Shawn Blore - Independent Researcher
Checks on DataFIGURE 1: DREDGE AND INDIVIDUAL MINER INCOME AS A FUNCTION OF DREDGE SIZE
Dredge and Individual Miner Median Weekly Income
$1,829.71
$2,165.12
$2,882.53
$1,435.21
$1,201.41
$90.11 $92.79
$91.49$86.11
$96.08
$-
$500.00
$1,000.00
$1,500.00
$2,000.00
$2,500.00
$3,000.00
$3,500.00
3 4 5 6 8
Dredge Size (inches)
.
Dre
dg
e I
nc
om
e
.
$50.00
$60.00
$70.00
$80.00
$90.00
$100.00
$110.00
$120.00
$130.00
$140.00
$150.00
(All Values in US$)
.
Min
er
Inc
om
e
.
Median Gross Prod/W k Median Miner Income/W k
Shawn Blore - Independent Researcher
Summary – Wage ComparisonTable 3: Summary of types of artisanal mining and miner compensation in West Africa and South America
Location Type of Miner Compensation Formula Net Income
Per day (US$)
Net Income Per Month
(US$)
Sierra Leone
Fully Artisanal (hand miner)
US$0.50/day wage plus daily allowance of rice plus
30% of gross diamond production, divided among all diggers
(approx 0.5-1% each)
$1.25-$1.50 $45
Sierra Leone
Small Scale Mechanized
US$2.5/day No share of proceeds $2.5 $75
Brazil Fully Artisanal Minimum wage (US$250/mo),
plus 40% share of gross diamond production
$7.5
$250, plus
diamond production
Brazil Artisanal Miner – Mechanized Earth
Moving
Minimum Wage (US$250/mo), plus 30% of gross diamond
production $7.5
$250, plus
diamond production
Brazil
Unskilled labour on stationary small scale
diamond jig
Minimum wage (US$250/mo), plus 1% of gross diamond
production $7.5
$250, plus
diamond production
Brazil Guyana
Venezuela
Worker on small scale Resumidor-style jig
All meals plus 30% share of gross diamond production, divided
between 5-7 workers (4.3%-6% each)
$12.75 $383
Shawn Blore - Independent Researcher
Value Chain Analysis If Africans getting less, implies that
some other actor in value chain is capturing more of diamonds’ value
Analysis of mark-ups within chain to determine which actors gain what percentage
Shawn Blore - Independent Researcher
African Chain and Mark-ups
The Dynamics of Diamond Pricing and Marketing in Sierra Leone (Levin & Gberie) DDI
Mapped complex pathways of diamond chain
Four Step Pathway (simplified) Digger License Holder (Miner)
Licensed Buyer Exporter Overseas Buyer
Mark-ups: License Holder to Licensed Buyer
(200%) Licensed Buyer to Exporter (50%) Exporter to overseas buyer (10%)Caution as numbers based on interviews
Shawn Blore - Independent Researcher
Guyana/Brazil Chain and Mark-ups Guyana as open a system as exists
Exports 300,000 carats, but 50 registered exporters (i.e. competition)
Licensing/citizenship barriers to trading/exporting minimal Buyers do not finance miners (no forced sale)
Diamond Chain as follows Miner Field Buyer Exporter Overseas BuyerFinal Buyer
Mark-ups Investigated Field Buyer to Exporter - field investigation
(2-5%-Guyana; 50% Sierra Leone) Exporter to Overseas buyer – estimate (assessed)
3% Guyana; 10% Sierra Leone Overseas Buyer to Final Buyer – Diamond Exchange Records
18% Guyana; 900% Brazil (Cinta Larga); 700% Congo
Shawn Blore - Independent Researcher
Mark-up: Field Buyer to Exporter
Field investigation Watching sales Creating price
tables 2%-5%-Guyana 50% Sierra Leone
Shawn Blore - Independent Researcher
Guyana – 2-5%Sierra Leone – 50%
Mark-up: Exporters, Overseas Buyer
Exporter to Overseas buyer – estimate (assessed) 3% Guyana; 10% Sierra Leone
Overseas Buyer to Final Buyer – Dubai Diamond Exchange Records
Track parcels into DDE, Track back out again Done to avoid taxes Difference gives Markup 18% Guyana 900% Brazil (Cinta Larga) 75%-700% Congo
Shawn Blore - Independent Researcher
Summary of Mark-upsCountry Field
Buyer to
Exporter
Exporter to Overseas
Buyer
Overseas Buyer
To Polishing
Sierra Leone
50% 10% n/a
Guyana 2%-5% 3% 13.5%-18%
Brazil Cinta Larga
n/a n/a 28%-928%
Congo*(PAC report)
n/a n/a 58%-750%
Results of Study South American miners make from 7 to 10
times more for the same diamonds Mark-ups for middlemen and exporters in
situations where miners semi-legal and ignorant of prices (i.e. DR Congo, Cinta Larga) are high
75%-900% Mark-ups in middlemen and exporters in
situations where miners relatively knowledgeable, relatively unconstrained (i.e. Guyana) are more reasonable:
2% - 15% Study does not suggest how to change these
percentages, merely demonstrates that there is significant room for readjustments, without bankrupting middlemen and exporters
Shawn Blore - Independent Researcher