1. 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

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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 $ 7,238.48
18-Jan $ 26,286.90
30-Jun $
20-Jul $ 15,084.18
4-Sep $ 7,238.78
4-Sep $ 26,286.90
25-Sep $
5-Mar $
Shawn Blore - Independent Researcher

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

9. 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

10. Guyana Miners Wages
Shawn Blore - Independent Researcher

11. Checks on Data
Shawn Blore - Independent Researcher

12. Summary – Wage Comparison
Shawn Blore - Independent Researcher

13. 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

14. 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

15. 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

16. 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

17. 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

18. 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%

19. 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