How should Cameroon package/structure the diamond mining license? Should the country issues revenue bonds (securitized by the expected mining output) and use the proceeds to develop the area?

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Permalink Reply by Marie-Flore Poulsen on May 11, 2009 at 1:27am

You might think It is odd for me to reply to my own discussion, but I speak to myself all the time, so I guess it doesn't matter.
I feel the country should issue sovereign guarentee revenue bonds for let's say 25% of the annual anticipated prduction revenue and use the proceeds for further development. Why?
1) It should limit corruption as there will be pressure for a minimum level of produced output annually. It is true that the price of diamond fluctuates, but it is easy to enter in a forward contract,( although they usually don't have very long maturity, they can be customized), again pressure to honor delivery.
I can think of many other arguments, but will save them for your comments.
Thx
Marie-Flore

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Permalink Reply by Joel on May 12, 2009 at 5:53pm

Story in today's New York Times talks about Russia stockpiling its diamonds -- keeping them off the very depressed market. Upon rebound between Russia's and DeBeers's large inventories, the opportunity for a significant new supplier to enter the market seems constrained.

Best short term option might be to leave them in the ground

http://www.nytimes.com/2009/05/12/business/global/12diamonds.html?_...
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Permalink Reply by Eyembe Elango on May 13, 2009 at 7:30pm

[My beloved]Cameroon could learn from Botswana

Une heure sur terre - Botswana
Uploaded by radio-canada. - Up-to-the minute news videos.

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Permalink Reply by Femi Animashaun (Larez) on May 14, 2009 at 7:33pm

Sorry Joel, but I have to disagree with you on this. At the very least Cameroon should use this diamond discovery to leverage it's mining sector. The Russians have not stopped mining, but stockpiling. Meanwhile Australia still aggressively mines it's Kimberly deposit. For an impoverished country like Cameroon, it will have to be offered incentives such as intensive exploration and development of it's other mineral resources.

DeBeers, which markets the illusion of diamonds was forced to make a deal with the Russians. The Russians got incentives, and have basically handed the issue to DeBeers to handle. Africa should not always be presumed as the natural partner to hold the short-end of the stick. I will advice the Cameroonian government to begin mining and negotiate with DeBeers to purchase and manage it's need to control the prices.

The Russians gain from OPEC's manipulation of Oil prices, yet they are not part of OPEC. Cameroon should follow Russia's example for a few years and then could come to a pact where diamond sales will be managed as in the case of OPEC in exchange for foreign Investments into it's infrastructure and growth of it's mining industry.

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Permalink Reply by Torsten Mandal on September 14, 2009 at 8:57am

Require re-vegetation

I think requirements of revegetation of areas where mining have cleared vegetation are needed. I know of cost effective ways on doing it partly based on my own research on direct seeding in w. Kenya and Brazilian revegetation methods.

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Permalink Reply by Nwakego Eyisi on September 15, 2009 at 4:59am

In my opinion Cameroon should start selling their diamonds as soon as possible. There is no need to keep it in the ground when an impovershed country could be richer for it. Isn't that what resources should be for???As long as there is demand for it, which makes it worth it to go through the capital intensive process of extraction. Bear in mind that there might be insufficient demand to mine it tomorrow! Yeah Cameroon might be the big thing today in terms of Diamond reserves but what about tromorrow??. I am certain that in another 2-5yrs there will be another diamond find somewhere in Africa. Let the Russians do what ever they want to do with their diamonds. I think Cameroon can do what is best for Cameroon with her diamonds.

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Permalink Reply by Joe Bolla on September 22, 2009 at 2:39pm

I think the main question is how much of the riches sold by the cameroonian government benefits its people.
If the company exploiting the mines takes for instance 70% of the revenu in sold diamonds and the remaining 30% are also spread out among the top dogs of Cameroon then only some left-overs are seen by the people. This will be another great shame and disgrace to see a country so naturally gifted but when you look at people in poverty you begin to wander if there is any money left anywhere in that country.
I hope the government will be wise this time and take good avantage of this discovery and help the people of Cameroon.

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