Sierra Leone diamond miners go for gold

Fri Mar 20, 2009 7:41am EDT
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By Alexander Woollcombe

FREETOWN (Reuters) - Diamond mining in Sierra Leone, for years a symbol of the worst form of exploitation of Africa's natural resources, is following a global economic trend with miners turning to gold.

Gold prices have risen as investors look to shelter from crashing financial markets in its safe glow, while cash-strapped consumers are shunning diamonds, a shift being felt from London jewelry boutiques and Antwerp dealing rooms to Africa's mines.

"The impact of these changes is very serious," said Edward Sandy, Deputy Director at the Ministry of Mines. "Investors are turning their backs on diamonds. We have issued hardly any licenses for exporting diamonds this year."

What the country loses in revenue from diamonds, a cornerstone of its economy, it hopes to gain in gold.

"Already in 2009 we have issued 10 licenses for gold, which is a large increase on last year, and we expect to issue more. Gold mining has always been a small industry in Sierra Leone but hopefully now it will grow," he told Reuters this week.

Earlier this month London-listed Target Resources said it was cutting its losses and suspending diamond mining in Sierra Leone, but would start alluvial gold production along the Teye River, east of the capital Freetown. [nBNG412988]

Diamond prices have fallen 7 percent already this year according to PolishedPrices, an independent news and price list provider.

By contrast, spot bullion traded above $960 per ounce on Friday, up 10 percent from the start of 2009, and analysts expect it to rise to $1,000 per ounce in the near future.   Continued...