African producers expected to back diamond pact

JOHANNESBURG, South Africa (Reuters) -- Key diamond producing governments and firms in sub-Saharan Africa are expected to back measures proposed by the industry to stop the flow of so-called "conflict diamonds," analysts and officials said on Thursday.

Industry groups in Antwerp on Wednesday proposed a system of international certificates and called for laws in countries exporting and importing diamonds to ensure penalties and bans on individuals who trade in conflict diamonds.

The measures, drawn up by the International Diamond Manufacturers Association and the World Federation of Diamond Bourses, seek to put to a stop the illegal trade in gems which has fueled wars from Sierra Leone, the Democratic Republic of the Congo to Angola.

Laws will be needed in diamond exporting countries, those buying polished diamonds and those importing rough stones to ensure criminal penalties for anyone trading in conflict diamonds, the backers of the proposals said.

South African diamond giant De Beers, which also operates some of the world's largest gem mines in close partnership with the governments of Botswana and Namibia, said African governments would move to putting the proposals into law.

Governments seen pressing for legislation

"Governments will want the proposals put into law. If anyone is to lose from the diamond industry suffering from "conflict diamonds" it is the governments of Botswana, South Africa and Namibia," said De Beers spokeswoman Tracey Peterson.

De Beers' joint venture with the Botswanan government produced 21.3 million carats of gems last year, the world's most valuable source of diamonds.

De Beers fully supported the Antwerp recommendations and called for their implementation as soon as possible, Peterson said.

"It may be cynical, but De Beers can only benefit by keeping conflict diamonds off the market because it allows them to reduce their stockpile," said Keith Bright, analyst at FedSure Asset Management in Johannesburg.

Backers of the Antwerp pact are pressing for legislation to be implemented by the end of this year.

South African officials were in London on Thursday to discuss the Antwerp proposals at a meeting of the International Working Group (IWG) on African Diamonds hosted by Britain's Foreign Office.

The IWG, consisting of leading producing and importing countries, met to draw up guidelines on bringing illegal gem trade to an end.

These guidelines, centering on a coordinated international regulatory framework to control and monitor the flow of diamonds around the world, will be discussed and ratified at a regional ministerial conference in Pretoria in September, said a spokeswoman for the South African department of mines.

South African and Botswanan government officials have previously stated their desire to stamp out the trade in conflict diamonds which could threaten regional economies if the legitimate diamond trade became tainted.

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