|RAPAPORT… U.S. State Department Report: Extractives Partnership between Guinea and the United StatesG-8 Transparency Advisory Group1. OverviewGuinea, which has a population of 10 million in an area the size of the UK, has vast mineral resources, many of which remain undiscovered or undeveloped. It is the world’s largest producer of bauxite, and is set to become the third largest source of iron ore. Guinea also produces a range of other minerals, from gold to cement. Undeveloped mineral resources include: graphite, limestone, manganese, nickel, and uranium. Guinea’s mining sector alone generates more than 80 percent of all export earnings, and 26 percent of GDP, making transparency and good governance of the mining and extractive industries sector a critical goal to ensure these resources are used to sustainably develop the country, strengthen the economy, and lift its citizens out of poverty.Guinea’s oil and gas sector is under exploration, with indications that there is offshore potential. Exploration is ongoing by a handful of small companies, but no discoveries have yet been made.Guinea is an Extractive Industries Transparency Initiative (EITI) candidate country, and has until April 2014 to achieve EITI Compliance or faces suspension of its candidacy. In early 2013 the government took the notable step of publishing all of its mining contracts, a move encouraged but not required by the new EITI rules. Guinea’s mining contracts can be found at: http://www.contratsminiersguinee.org/about/projets.html.Guinea is also an important source of alluvial, artisanal diamonds, producing over 300,000 carats in 2011, for a total value of approximately $30 million; industrial production of diamonds is in the development phase with the potential to add significantly to this total. Guinea hosts several known kimberlites, and exploration is ongoing for additional primary kimberlitic source rocks for diamonds. The Guinean government has been a participant in the Kimberley Process Certification Scheme (KPCS) for rough diamonds since 2003. The KPCS was established to ensure that the trade in rough diamonds does not finance rebel movements seeking to undermine legitimate governments.Between 2006 and 2012, rough diamond production in Guinea twice exceeded the total estimated carat production capacity. The unusually high production figures reported in 2007 and 2008 specifically led to the passage of an Administrative Decision on Guinea by the KPCS, requesting an assessment of Guinea’s deposits to determine a realistic production range, and requiring Guinea to strengthen internal controls on their diamond exports. Since the implementation of this decision in 2009, production figures have significantly improved in accuracy and Guinea has improved its overall controls.
Nevertheless, data gaps, uneven enforcement, limited technical capacity and regulatory deficiencies in the artisanal mining sector persist, and Guinea continues to serve as a reported transit point for conflict diamonds from neighboring countries to international markets. These challenges not only deprive Guinea of needed revenues for development, but threaten the credibility of Guinea’s enforcement of the Kimberley Process Certification Scheme.
2. Partnership Objectives
Specific partnership objectives related to the Kimberley Process Certification Scheme, and in particular the Washington Declaration (which was approved at the 2012 Plenary meeting and seeks to improve the formalization and economic development of the artisanal mining sector), include:
*Ensure more Guinean rough diamonds enter the legal chain of custody by strengthening the property rights/land tenure of artisanal miners and improving the miners’ skills and range of complementary livelihoods of artisanal diamond miners;
*Raise awareness and skills through training and public education about the Kimberley Process Certification Scheme at national and local levels;
*Increase information transparency with respect to Guinea’s alluvial diamond resources; and
*Strengthen the capacity of government officials, mining associations, and civil society to work collaboratively to assess Guinea’s diamond production capacity and minimize the risks of trade in illegal diamonds.
Transparency reduces the risk of corruption, and helps citizens to hold their governments accountable for spending natural resource revenues. Recognizing the importance of promoting such transparency in all countries, the U.S. is seeking to join Guinea and the 38 other member countries in implementing EITI. Specific partnership objectives related to the EITI include to:
*Share Guinea and U.S. experiences to date in working to implement the EITI;
*Support diplomatically Guinea’s implementation of EITI, including the new EITI standard, in order to achieve EITI compliance by Guinea’s April 2014 deadline;
*Continue Guinea’s political support to implementation of EITI, including support to relevant government ministries, civil society groups, and other stakeholders; and
*Identify how EITI can continue to contribute to public discussions on responsible management of the extractive sectors in Guinea.
3. Achieving objectives
The U.S. proposes partnering with the Guinean Ministry of Mines and Geology (MMG) to conduct a study to determine how USAID’s Property Rights and Artisanal Diamond Development (PRADD) project could be restarted, building off its prior investments during the 2008-2009 timeframe. The study will focus on the applicability of the PRADD model in Guinea, including strengthening property rights of artisanal miners in order to ensure more diamonds enter the legal chain of custody, and facilitating training and public education and KPCS compliance at national and local levels.
The U.S. will also build on previous collaboration between the Unites States Geological Survey (USGS), the Ministry of Mines and Geology (MMG) and Guinean civil society to assess the potential and production capacity of Guinea’s alluvial diamond deposits and continue to monitor the artisanal mining sector. Developing local capacity to measure and analyze Guinea’s rough diamond production capacity is critical for ensuring increased transparency and enforcement of the KPCS. The objective of the partnership is to enable the Guinean government and civil society to work collaboratively to minimize the risks of trade in illegal diamonds and Guinea is complying with the requirements stipulated by the KP, and increase information transparency with respect to Guinea’s alluvial diamond resources.
The U.S. will also work directly with the Guinean government and the Gemological Institute of America to conduct a rough diamond evaluation training for government officials as part of strengthening the KPCS system.
Regarding EITI, the U.S. will coordinate with donor and partner organizations providing technical assistance in the areas of extractives transparency, (including the World Bank Multi-Donor Trust Fund to which the U.S. contributes, AfDB, GIZ, and Revenue Watch Institute) in order to maximize resources and engagement with the Government of Guinea.
4. Government and Partner consultation
The U.S. Embassy in Conakry held preliminary consultations with the Guinean Minister of Mines and geology to discuss the proposed partnership. U.S. officials from the National Security Staff and the State Department will meet with representatives from the Guinean government in Washington D.C. (May 31) to preview the partnership. Additional consultations will also occur at the Kimberley Process Intersessional meeting in South Africa (June 4-7).
5. Deliverables on June 15th 2013
*Announcing the Partnership and action plan.
The KPCS includes 80 Participants, accounting for approximately 99.8% of the global production of rough diamonds. Participants include, but not limited to Brazil, China , Russia, the EU, the U.S., Japan, Indonesia and others. African participants include: Angola, Botswana, Cameroon, Central African Republic, Congo (Brazzaville), DR Congo, Cote D’Ivoire, Ghana, Guinea, Lesotho, Liberia, Mauritius, Namibia, Sierra Leone, South Africa, Swaziland, Tanzania Togo and Zimbabwe.
The 39 EITI candidate and compliant member countries are: Afghanistan, Albania, Azerbaijan, Burkina Faso, Cameroon, Central African Republic* (*suspended), Chad, Cote d’Ivoire, Democratic Republic of the Congo*, Ghana, Guatemala, Guinea, Honduras, Indonesia, Iraq, Kazakhstan, Kyrgyz Republic, Liberia, Madagascar*, Mali, Mauritania*, Mongolia, Mozambique, Niger, Nigeria, Norway, Peru, Republic of the Congo, Sao Tome and Principe, Sierra Leone, Solomon Islands, Tajikistan, Tanzania, the Philippines, Timor-Leste, Togo, Trinidad and Tobago, Yemen*, and Zambia. Nearly a dozen other countries including the United States, France, Myanmar, Senegal, Ukraine and the United Kingdom have committed to join.