THE ENVIRONMENT
The Various Colours Of Diamond Works
By
Oct 29, 2007, 16:56

In Sierra Leone, together with the Company’s then 50/50 Joint Venture Partner, Magma Diamond  Resources Limited )”Magma”) in the Koidu Kimberlite Project, the re-development of the Koidu Kimberlite Mine started in February 2003 and the new 50 ton per hour treatment plant was commissioned in December 2003. Mining at the No. 1 Kimberlite pipe started in January 2004. In February and March 2004, 18 162 carats of gem quality diamonds were sold from this mine at an average price of US$224 per carat. Recovered grade and selling price realized in early 2004 is largely in lien with expectations and production is building up to full plant capacity.

In September 2003, the Company agreed to a rationalization of its position in Sierra Leone whereby a new company, Koidu Holdings SA (KH), was formed to acquire the assets and liabilities of the Koidu Kimberlite Joint Venture project.

At November 30, 2003 each of the Company and Magma held a 50% interest in KH. Subsequent to November 30, 2003, the remaining Sierra Leone exploration licenses held by Diamond Works through a subsidiary were transferred to KH, a new equity partner (BSG Resources Limited (“BSG”) was admitted to KH and KH made application for the exploration licenses to the Tongo Fields in Sierra Leone. In March 2004 KH was awarded a two year exploration license to the Tongo Fields, comprising approximately 89km2, 48 kilometers from the Koidu Mine and which contains four know diamondiferous kimberlite fissures.

Diamond Works after the post November 2003 restructure into KH remains the largest shareholder in KH at 40%, Magma 35% and BSG 25%, and all the Sierra Leone assets are now consolidated in KH under one management.

FLASHBACK

NETWORK MOVEMENT FOR JUSTICE AND DEVELOPMENT P.M.B. 798 FREETOWN SIERRA LEONE

TEL: 232-22.22993/223378 FAX: 232-22.225486

EMAIL: nmjd@sierratel.sl/abrima@sierratel.sl

Executive Director MIGA 1818H Street NW Washington, DC 20433 USA

February 9, 2004

Dear Sir,

Koidu Kimberlite Project in Sierra Leone, no transparency, poor environmental protection and violation of community rights

The Koidu Kimberlite Project operated by Koidu Holdings Limited (formally Branch Energy) is a project surrounded by much controversy and conflict at the moment. Every week for the past few months the local tabloids have had a lot to say about the potential danger it poses to the people of the area and the irresponsible manner in which Koidu Holdings is conducting the mining activities. As a civil society organization advocating for economic justice, Network Movement for Justice and Development has been closely monitoring the activities of mining companies, both local and foreign, in Sierra Leone. It is stated that it is to report that the conduct of Koidu Holdings Limited is both in contravention of national legislation and fraught with problems for the local community concerned as well as the environment.

Some of the problems facing the local community include:

1.              The local inhabitants are continually begin dislodged at irregular intervals as a result of the weekly blasting carried out by the company, leaving them with no peace and, as much, violating their basic human rights.

2.              The health conditions of the local inhabitants are seriously affected by the noise, pollution and rock particles flying about each time the blasting takes place and due to other activities of the company.

3.              The local population is not sufficiently informed about the potential impacts of these mining activities on their community and their environment, nor what their entitlements are under the scheme. No alternative plans were made to relocate the nearly 5,000 affected people. They are completely ignorant of any agreement made between the company and the government.

4.              As a result of the above, there have been serious misunderstandings between the local inhabitants and the company resulting in legal action (i.e. a court case).

5.              The local community was never consulted on the preparation of the EIA and as such never consented to it. It was only recently, in the last week of January 2004 that the people came to know about the EIA when it was announced by CEMMATS in the local newspaper. The EIA has not been made available to the local community, neither at the time of the announcement nor since then. Furthermore, the voluminous documents are in English while the local populace is 85% illiterate.

6.              The disclosure process for the EIA has been so bizarre that it leaves one wondering what the motives those behind the company have for the country. In Sierra Leone, the completion of the EIA was announced only in late January 2004 whereas the study was done and sent to MIGA back in October 2003.

The deadline given for public comments is February 16^th –far less than the minimum 6- week provision. Also, disappointingly, as of today (9^th February 2004) the EIA cannot be found at any public place like the government bookshop, government Library, University of Sierra Leone Geological Department etc.

Where then is the public disclosure process taking place? Even after formally requesting the EIA on January 26^th we still have not been provided with a copy. Instead a copy of the document is restricted only to the sponsor company/’s consultant and may not be taken out of their office.

We have brought this to the attention of the MIGA staff responsible for the project, but no serious attention has been given to the mater. This, indeed, has been a cause for concern to. It seems that there is no transparency in the activities of the company.

In this respect, we are therefore calling on your good office not to approve of the Project of Koidu Holdings Limited until the problems facing the community are addressed and proper transparency and accountability mechanism are put into place and made effective. Thereafter we will inform you accordingly of the status.

Thank you

Yours sincerely,

Abu A. Brima (National Coordinator)

The IMF and ths Extractive Industries Transparency Initiative (EITI) Multi-stakeholder Conference, 17^th June 2003, London

Statement by Mr. Peter S. Heller, Deputy Director Fiscal Affairs Departments,

It is a pleasure and honor to be here today, representing the Managing Director of the IMF.

The IMF welcomes the EITI. In our country work-especially with our less developed members- we have come to realize the fragility of good governance in countries that are richly endowed with natural resources. And to see a country rich in natural resources not progress in the fight against poverty, or even regress, is especially tragic. We fully agree with the central premise of the EITI that transparency will help foster the wise management of natural resources. Transparent reporting of natural resources revenues will help establish credibility, ensure accountability, and inform the political debate. It is for these same reasons that the IMF strongly promotes policy transparency more gene ally, including through its transparency codes for fiscal and monetary and financial policies.

Thus, the EITI is fully in line with our own transparency efforts, and we have every expectation that these efforts will reinforce each other. I would like to take this opportunity to outline specific ways in which the IMF will lend its support for the EITI.

First, where this is considered appropriate, our staff will advise country authorities to discuss participation in the Initiative with extractive industry companies operating in their territories.

Second, we are fully prepared to continue to assist with technical advice on design of the Initiative. Since our initial contacts with DFID last fall, we have had several consultations on technical aspects of the Initiative, in particular the design of the disclosure and reporting templates, and we are prepared to continue in this role. The pilots that are about to start should generate the experience necessary to tailor the Initiative so that it will be applicable to the wide variety of country situations and the differing degrees of complexity of their natural resource sectors.

Third, the Fund will be a most interested user of the information on resource revenues that emerges from this Initiative. It will allow our staff to make more comprehensive and accurate assessments of countries’ budgetary outlooks. That in turn will support more realistic policy discussions, including on the scope for poverty reduction and the need for donor support. Therefore, our country staff can be counted on to analyze the EITI data in details, and wherever significant issues arise, they will certainly raise them in their dialogue with the authorities.

Fourth and finally, as you know, the Fund provides extensive technical assistance to its member with fiscal policy implementation. Recognizing the important of the EITI, we are prepared to seek the resources, within our available TA budget, to be able to give priority attention to countries participating in the EITI that seek our assistance.

Thanks you.