The Misery & the Mark-up The Royal Institute for International Relations The Misery & the Mark-up Miners’ Wages and Diamond Value Chains in Africa and South America Shawn Blore - Independent Researcher

Why Compare? Similar geology Inputs comparably priced -diesel/gasoline -food International price for diamonds constant Wage differences due 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$250) Four workers per jig each receive 1% share each Can be lucrative Date Sold Size Garimpeiro Share   (cts) US$ 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 Shawn Blore - Independent Researcher

The Resumidor, Jig or Dredge 4 inch – 8 inch dredges Crew: one man + 1 per inch Shawn Blore - Independent Researcher

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

Guyana Miners Wages Shawn Blore - Independent Researcher

Checks on Data Shawn Blore - Independent Researcher

Summary – Wage Comparison 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 BuyerFinal 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 Sierra Leone – 50% Guyana – 2-5% Shawn Blore - Independent Researcher

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-ups Country 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 28%-928% Congo* (PAC report) 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