Chain Analysis of Diamonds from Angola Produced by DeBeers - Essay Example

Chain Analysis of Diamonds from Angola produced by DeBeers Introduction Globalization has led the development of internationaltrade. One such trade involves diamond. De Beers is known across the globe for creating the finest engagement rings and wedding rings made from diamond as well as other elegant diamond jewellery. To that end, the firm deals in mining and trading of diamonds. However, the source of the diamonds has elicited ethical and environmental concerns, especially those sourced from African countries. Diamonds from these nations have been associated with arbitrary detentions, child labor, human rights abuses, and war. In this regard, the paper will discuss Diamonds from Angola produced by DeBeers Discussion An overview of DeBeer Diamond Company De Beer operates in over 25 nations and mining occurs in Namibia, Angola, South Africa, Botswana and Canada among others. In Botswana mining is done via the mining firm Debswana while in Namibia it occurs through Namdeb, which is a 50-50 joint venture with the Namibian government. Due to its massive market share, the firm has dominated diamond sale, mining, trading, and industrial manufacturing sectors. It is headquartered in Luxembourg and was founded in 1888 by Cecil Rhodes. In 2012, the company got revenue of $6.1 billion. It has over 20,000 employees. The key people in De Beer Group of Companies are Mark Cutifani as the Chairman and Philippe Mellier as the chief executive officer (De Beers Group, 2014). According to McConnell and Brue (421), De Beer used monopoloid practices all through the 20th century. However, there are numerous amounts of hours that are spent on examining the piles of rough diamonds, dividing them as well as subdividing them into over 7,000 categories. In the diamond industry, from to cutting to polishing is an art that requires several years of apprenticeship and skill. Subsequently, the stones are re-sorted into a further 5,000 categories. From the dealers, to cutters, to polishers, and to jewellery sellers, the price of a diamond usually increases by about 10-fold by the time it leaves the De Beers vaults in Charterhouse Street and arriving in the shop shelves. The diamond industry relies upon a standard supply at a stable price, and that is what De Beers provides. In this perspective, De Beer has been involved in various controversies including price fixing and acquiring diamonds from war torn nations, such as, Angola. Angola Angola is the seventh largest nation in Africa with a population of 21.47 million according to the 2013 World Bank statistics. The country measures about 1,246,620 km2. In relation to the socio-economic conditions of the nation, oil and diamond are the most crucial economic resources. The Angolan Civil War has significantly affected the Angolan economy. However, between 2001 and 2010, the country had an annual average gross domestic product growth of 11.1%. Oil together with diamonds makes up 60 % of Angola’s economy. Due to global recession, the economy reduced by an approximated -0.3% in 2009. Based on the 2014 census, the country has a population of over 24 million people (Iliffe, 68). Figure 1: Angola. Environmentally, Mulenga (32) affirms that Angola has been affected with overuse of pastures and subsequent soil erosion due to increase in population, desertification, inadequate supplies of potable water, deforestation of the tropical rain forest, in response to both international demand for tropical timber and for domestic use as fuel. This has led to a significant loss of biodiversity. Considering that most of the regions in Angola have been environmentally degraded, soil erosion has contributed to water pollution and siltation of rivers as well as dams. These environmental issues have impacted on humans as well other non-human early forms of life. The social and environmental issues associated with diamond production In Africa, there are various issues associated with diamond production. Most of the diamonds in Africa are termed as blood diamonds. As cited David, most of the diamonds in Africa are mined in war zones. The insurgents who control the mining areas sell the diamonds so as to purchase weapons and support other war related activities. The conflict diamonds are an enormous social issue in countries like Liberia, Angola, Sierra Leone, and the Democratic Republic of Congo. Figure 2: Diamond production in Africa. It is estimated that 4 million people have died mining diamonds in these nations. The rebel groups usually take families forcefully to work in the mining field. They are often forced to sift and dig through river searching for diamonds, and if they attempt to rebel or get tired they beaten mercilessly and even shot. These people work under very poor conditions are paid poorly and in some instances they are never paid. Child labor is a common feature in these diamond mining zones. Angola is the world’s fourth largest producer of diamond by value. It is also the sixth-largest producer of diamond by volume (Els). In the 1990s’ proceeds from the sale of diamonds financed the purchase of firearms. Most of the diamond was smuggled to European nations. The Union for the Total Independence of Angola (UNITA) controlled the diamond fields and traded weapons with diamonds. In 1991, UNITA sold diamonds that were valued at US$3.72 billion in order to finance its war with the government. When diamond is mined huge gullies are left which collect water that harbors disease causing organisms, such as, mosquitoes. Besides, these man holes are a safety hazard to workers since most of them work without proper mining working gear. The mining fields also produce gases that are harmful to human health. Besides that, there is huge amount of informal alluvial diamond digging which impacts negatively to the environment. Irresponsible mining has caused deforestation and forced local communities to relocate (Tamm 34-37). Diamond’s journey to Orange County Campbell (113) points out that the most of the diamond from Angola is shipped by means of air and water. Since Angola is bordered by the Atlantic Ocean, most of movement by water. From the mining fields, the rough diamonds are processed and packed for sale in international markets. This is a sustainable mode of transport since the pollution rates are reduced. On reaching Orange County, they are transported by road. The Angolan government loses about $370 million from diamond smuggling. Cartels are often linked with the smuggling of these diamonds. The value of chain of diamond includes exploration and production, rough-diamond sorting and valuation, rough-diamond sales, cutting and polishing, polished-diamond sales, diamond jewelry manufacturing, and diamond retail sales. Figure 3: Diamond deposits. Reflection For centuries, diamonds have symbolised love and eternity. I feel very sad when see people exchange vows and have diamond rings in their fingers and I remember that a person’s life was lost for the diamond to be produced. When I see a diamond on the shelves, what comes to my mind are thousands of displaced people in Africa. Due to globalization, international trade has tremendously improved and foreign investment. There has been intensified cross-border movement of products and services. In this case, the diamonds from Angola is able to find market in European nations. Diamonds are very costly. As a result of the children’s labor and forced labor of adults, the diamonds are produced to serve the needs of the wealthy people globally. However, since almost everyone uses the computer, microchips and computer processors are coated with diamond since they are semi-conductors of electricity. Diamonds are also used in the manufacture of watches. Since most people and I use computers and watches, connecting us to the conflict diamonds in Africa. The movie “Blood Diamonds” showed me how human rights are violated in the production of diamonds and also assisted me to appreciate the manner in which a mineral resource can fuel the oppression and death of thousands of people. Due the social and environmental problems associated with diamond production: Creation of consumer awareness on the source of diamonds and companies buying and trading in rough and polished diamonds need to find out if their purchases have funded conflict or abused human rights anywhere in the supply chain. Conflict diamonds represent about 4% of the global diamond production. Therefore, diamond firms to be encouraged to import diamonds from conflict free sources. Banning diamond trade that is not certified by the country of origin. Strengthening the Kimberley Process certification process, where diamonds crossing international border are supposed to put in tamper proof boxes, and put with a Kimberley Process certificate. Since over 74 nations are members of the Kimberley Process Certification System, this prevents the insurgent groups from selling diamonds mined under unbearable conditions to be traded across the globe. The diamond industry should continue working with governments, non-governmental organization, and the United Nations to reinforce the Kimberley Process and the System of Warranties. The top soil form the exploration sites need to be refilled and replaced Minimal soil amounts to be cleared during the sampling and drilling process. The large quantities of surplus waste rock, sand, and soil which accumulate in the immediate vicinity of mining area need to be managed accordingly and rehabilitated. The exploration firms to use sustainable form of energy, such as, electricity to reduce carbon emissions. Recycling the water used in diamond extraction since water is a scarce resource in Africa. When purchasing diamond products always be asking if it is conflict free. Conclusion The diamond industry is dominated by De Beer Group of companies. The firm operates across the world dealing in diamond trade. However, the diamond it acquires from Angola has been labeled as blood diamonds. These diamonds have impacted negatively to the society and environment. Diamond mining in Angola is associated with abuse of human rights, deaths, displacement of people, environmental degradation, and war. Therefore, diamond trading companies are encouraged to source diamonds in conflict free nations. The value of chain of diamond includes production, rough-diamond sorting and valuation, rough-diamond sales, cutting, polishing, polished-diamond sales, diamond-jewelry manufacturing, and diamond retail sales. Works Cited Campbell, Greg. Blood Diamonds: Tracing the Deadly Path of the Worlds Most Precious Stones. Boulder, Colo: Westview Press, 2008. Print. Campbell, R. McConnell, and Stanley, L. Brue. Economics: Principles, problems, and policies, New York: McGraw-Hill Professional, 2008. Print.  David, P. (2013). Blood Diamonds: Retrieved December 12, 2014, from https://townipproject.wikispaces.com/Blood+Diamonds Mulenga, Henry. Southern African climate anomalies, summer rainfall and the Angola low. Cape Town: University of Cape Town, 2011. De Beers Group. (2014). De Beers Group: Retrieved December 12, 2014, from http://www.debeersgroup.com/en/index.html Els, F. (2014, December). De Beers returns to Angola with new exploration deal, Retrieved December 12, 2014, from, http://www.mining.com/de-beers-returns-to-angola-with-new-exploration-deal-89344/ Iliffe, John. Africa: The history of a continent. Cambridge: Cambridge University Press, 2012. Print. Tamm, Ingrid. Diamonds In Peace and War: Severing the Conflict Diamond Connection, Cambridge, Mass: World peace foundation, 2010. Read More