Gold may out-shine diamonds in Sierra Leone

Gold may out-shine diamonds in Sierra Leone

Thursday, August 10th 2006

Chief Aiah Lebbie weighs a small but heavy pile of metallic flakes glistening in the palm of his hand.

It is gold, found by small-scale or artisanal diamond miners in the tailings of a diamond gravel pit in Lebbie’s Nimikor chiefdom, in Sierra Leone’s eastern province.

Unaware of soaring gold prices on international markets and more concerned with looking for diamonds, miners sell these flakes to the chief for a just a few dollars.

“People are so obsessed with diamonds in Sierra Leone, they overlook the value and abundance of this gold,” Lebbie said.

“They think in the short term, the quick fix of finding a single diamond, but really with gold the long-term potential is enormous.”

Sierra Leone is notorious for its “blood diamonds” which helped fuel a brutal 1991-2002 civil war, made famous by images of drugged up child soldiers and mutilated civilians.

Diamonds are now at the heart of a burgeoning post-war mining sector, but geologists say Sierra Leone’s untapped gold potential may even exceed that of diamonds.

Gold has been uncovered in the north, east and south of the country, but the size of the deposits is not yet known.

No gold mining licences have been issued and there are no official exporters — even though the Ministry of Mines and Mineral Resources reported 2005 exports of some $250,000 (132,000 pounds).

The government says it does not know how much gold is being produced. But it suspects production and exports are far greater than the amount being declared.

“Perhaps the rest is being smuggled,” said Mohamed Mansaray, director of the Geological Surveys Department.


In the absence of a regional single currency, gold allows trade between the poor nations of West Africa, offering security from the vagaries of local exchange rate fluctuations.

With no manufacturing industry of its own, Sierra Leone buys light manufactured goods from neighbouring Guinea, and experts say much of its gold heads north over the border in return.

That means the treasury misses out on any export levies, which could help fund government efforts to rebuild the country.

One mineral sector observer said the government may be reluctant to interfere in such informal transactions for fear of upsetting cross-border trade, which is essential to meet local demand and which provides a livelihood for thousands of traders.

“But it’s also possible that some people are getting a cut from trade between the two countries, or that gold is being exported illegally from Sierra Leone which would explain the low export figures,” said the observer, who declined to be named.

Official connivance in systematic abuse of mineral wealth should set alarm bells ringing in the former British colony.

Widespread government corruption is generally believed to have been a major factor in triggering the war, in which rebels backed by neighbouring Liberia’s leading warlord Charles Taylor seized the eastern diamond fields.

Gold never made many headlines during the conflict but some believe it played as significant a role as diamonds in bankrolling the fighting.

Since Sierra Leone began regulating its diamond industry and joined the anti-blood diamond Kimberley Process in 2003, illegal mining and smuggling have been reduced and official exports have risen from $1.2 million in 1999 to over $140 million in 2005.

That has helped the post-war economy grow by more than 7 percent per annum in the past three years.

But official gold production has failed to keep pace, and the lack of regulations is a hurdle.

“People are also getting away with (smuggling gold) as no questions are being asked,” said Lawrence Ndola-Myers, government diamond valuer at the Gold and Diamond Department.


Gold trading experts say that until official licences are issued or a buying office set up traders will continue to take advantage of a weak system which lacks effective monitoring.

Regulation of the trade is now overseen by the Gold and Diamond Department but formal controls have yet to be implemented.

In the meantime, industrial mining companies looking for diamonds in the east say they are also finding lots of gold.

None of these companies have gold mining licences, none of this gold has yet been officially exported and the companies are still analysing the deposits. But they are optimistic.

“From what I have seen you could be looking at half a kilo of clean gold per day,” said Danny Louw, metallurgist for Milestone Trading Ltd, a South African diamond mining operation in Kono district.

“The gold mining could cover the diamond expenses — or we could even end up being a gold mining company.”

Copyright © 2006 Reuters Limited. All rights reserved.

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