Diamond Trade and Environment (DIAMOND)

          CASE NUMBER:        181
          CASE MNEMONIC:      DIAMOND
          CASE NAME:          Diamond Trade and Environment

A.   Identification
1.        The Issue
     The world's trade in diamonds is a cartelized, multi-billion
dollar industry, that has damaging human rights, environmental and
legal repercussions that have world wide impact and effect.  The
issues have so far eluded a legal solution and are an example of
the limits of international law.  This is especially true in
Australia, the world's largest diamond producer.
2.        Description
     Diamond mining is conducted in Angola, Tanzania, Zaire, Sri
Lanka and recently in Canada, but most mined diamonds come from
South Africa, Russia þ and the largest producer þ Australia. 
Australia's Argyle mine in N.W. Kimberley yields roughly thirty
million carats per year on its own.  The bulk of the world's gem-
quality diamonds flow through three countries: Israel, Belgium and
India.  Israel and Belgium dominate sawable, or regular, medium,
diamond shaped stones that are easily cut and faceted.  India
specializes in makeable diamonds, small cheaper stones that require
fine manual work that cannot be performed economically anywhere
else.  About seven in ten of the world's diamonds set in jewelry
are cut and polished in India (due partly to their small size),
which makes gems and jewelry its biggest foreign exchange earner at
US$3.3 billion, and employs some 600,000 people.  Most of the
workforce is comprised of farmboys from Saurashtra who earn tiny
wages at small diamond-cutting sweatshops in the slums of Bombay,
Surat and Ahmadabad.  The stones these boys cut and polish are as
small as 150 stones per carat, each of which has 56 facets.  The
largest customers for India's gems and jewelry are the US at 27%
and Hongkong at 19%.
     The world's diamond trade is dominated by the De Beers
controlled Central Selling Organization (CSO) which is one of the
world's most successful cartels (handling 70% of global rough
diamond sales) and is responsible for maintaining stable markets
and controlling prices.  De Beers and Anglo American group have
formed a tangled web of cross ownership and joint venture
partnerships that reaches every corner of the world's diamond
industry.  For example, the Argyle mine is owned by Conzinc
Riotinto of Australia Ltd. (CRA)(56.8%), Ashton Mining Group
(38.2%) and the Western Australia Diamond Trust (5%).  But 52.3%
of CRA is owned by Rio Tinto Zinc (RTZ) and 46% of Ashton is owned
by the Malaysian Mining Corp. (MMC) which in turn is controlled by
the Malaysian government.  Minority holdings in RTZ and MMC are
in turn owned by Charter Consolidated, the European arm of the
South African Anglo American and De Beers.
     The De Beers cartel first came up against US anti-trust law
during WWII when the US accused it of limiting its supply of
industrial diamonds, critical to machine tools and therefore the
war effort.  Because US anti-trust law was ineffective against De
Beers' overseas operations, it aggressively pursued the development
of synthetic diamonds which were first actually produced by General
Electric (GE) in the 1950s.  The world production of synthetic
diamonds now outstrips mining three to one.  The second time De
Beers came up against US anti-trust law was in February of last
year when GE and De Beers Centenary AG, a De Beers affiliate in
Switzerland, were indicted on charges of price fixing of industrial
diamonds.  The two companies account for nearly 80% of the world
sales of industrial diamonds.  But the case was thrown out of
court for lack of sufficient evidence when a whistleblower witness
settled out of court, subpoenas for overseas documents were
ignored, and only one (GE) out of four defendants showed up.
     Mining interests in Australia have traditionally had few
qualms about mining on reservation land and displacing Aborigine
inhabitants (the Rorvana Land crisis of 1969 is one example). 
But in 1992 "...the High Court decided that a few square kilometers
of land in an island in the Torres Strait had been originally
settled by Aborigines and that there descendants, led by an
Aborigine leader called Eddie Mabo, were holders of `native
title.'"  Before the "Mabo" decision, Australian common law
relating to Aborigine land claims rested on the legal concept of
terra nullius, the notion that Australia was not occupied when
Captain Cook arrived in 1770.  The court did not specifically
define where "native title" applied in other parts of Australia,
but the Mabo decision could set a precedent which could stop mining
on Aborigine land and stop the destruction of their hunting grounds
and traditional culture.
     The environmental impact from diamond mining is much like any
other open pit mine, the problems stem from waste disposal,
leeching and ground water pollution.  Once vegetation and soil is
stripped away, salts, irons and other nutrients are not naturally
filtered as water seeps into the ground.  This allows organisms,
nutrients, plus oil and other machine related waste, to enter
ground water.  Species and habitat loss would change dramatically
from site to site and continent to continent, but would always be
present.
3.        Related Cases

See COBALT Case
See BRAGOLD Case
See VENGOLD Case
See BOLIVIA Case

4.        Draft Author - David Bew
5.        Discourse and Status: DISagreement ALLEGE
6.        Forum and Scope: AUSTRalia and UNILATteral
          :    (1) US Federal courts (cartel)
          :    (1) Commonwealth Endangered Species Protection Act
               of 1992 (for Australia) 
          :    (4) GATT (potential forum regarding cartel)
          :    (4) Convention on Biological Diversity (for
               Australia)
7.        Decision Breadth:
     The parties affected by breaking the cartel could be roughly
ten diamond producing countries, and the consumer countries (for
gem-quality, industrial and synthetic industrial), mostly wealthy
industrialized countries in W. Europe, N. America and E. Asia.
8.        Legal Standing: LAW
     Law: Sherman Anti-Trust Act (for cartel in the US)
The last case against De Beers and its affiliates was thrown out of
US court in February 1994 due to lack of evidence.  The "Mabo"
decision (for land rights in Australia) said in 1992 the High Court
of Australia decided that the Torres Islands had been originally
settled by Aborigines and that they were holders of "native title."
The court did not spell out where "native title" might apply
elsewhere in Australia, but his decision could have a profound
impact on Aborigine land rights and therefore mining interests.
9.   Geography
     The international diamond industry is unbundled in the sense
that mining, cutting and faceting, distribution and marketing, all
take place in different countries as the product makes its way to
the customer.  For instance, diamond roughs, mined in Australia
could go to Israel to be cut and faceted, then to the wholesale
market in London, then sold to American jewelers who set and sell
the gems.  Therefore the geographic impact of anti-trust and land
rights cases would effect N. America, Asia, the Middle East, Africa
and Europe.
          Geographic Domain: AUSTRalia
          Geographic Site: Western Australia [WAUSTR]
          Geographic Site: AUSTRalia
10.  Sub-National Factors
          SUB-STATE: NO
11.  Type of Habitat: DRY
12.  Type of Measure: REGSTD (US only)
13.  Direct vs. Indirect: INDirect
14.  Relation of Measure to Impact
      Directly Related   :  YES  DIAMond
      Indirectly Related :  NO
      Not Related        :  NO
      Process            :  YES  HABITat 
15.   Trade Product Identification: DIAMond
   Raw, Hard Mineral - Angola, Tanzania, Zaire, Sri Lanka,
   Canada, S. Africa, Russia, Australia.  
   Intermediate, Hard Mineral - (Synthetic Industrial and mined
   Industrial) US, S. Africa, Germany, Japan, S. Korea; (Gem-
   Quality) Israel, Belgium, India and the UK.
   Final Product, Hard Mineral - Virtually every country: for
   machine tools, abrasives, etching and jewelry.
16.   Economic Data
17.   Degree of Competitive Impact: LOW
   The environmental impact on the gem-quality diamond trade is
potentially high if the cartel is sustained and the environmental
impact is minimized, because the price would increase and the
demand for gem-quality diamonds is relatively elastic.  If the
cartel is broken, the demand for gem-quality diamonds would
probably plummet since the price would sink and the allure of a
rare gem would be lost.  The industrial diamond market is already
80% synthetic and therefore would be minimally effected by
environmental regulation.  If the cartel is broken, their price
would likely drop and demand would rise.
19.   Industry Sector:   (M) STONE
20.   Exporters and Importers:  AUSTRalia and USA
      Leading Exporter(Raw)              : Australia US$3 billion
21.   Environmental Problem Type:  HABITat
22.   Species Information
   The species loss would vary dramatically form site to site.  The
initial Kimberley pipe of the Argyle mine (the world's largest) had
surface dimensions of 1600 metres long by 150-600 metres wide, so
many organisms would be effected on the surface area and the
surrounding area through vehicles, roads, ore crushing and
separating equipment, and worker accommodations.  The species
effect from underground water pollution could be much broader.
   The ERIN database (based in Australia) listed the Eucalyptus
Deuaensis, Goodenia Durackiana, Goodenia Kakadu and Scaevola
Graminea as flora which are in danger in this area.  Please see the
attached Annex for further details on each of these species.
23.   Impact and Effect: MEDium and PRODuct
24.   Urgency and Lifetime: LOW and 100s of years
25.   Substitutes:  SYNTHetic
   Synthetic industrial diamonds have been used for forty years and
have become the dominant source.  Synthetic, gem-quality, C-13
carbon diamonds have been produced but are too expensive to be
economically viable.  Other cheap synthetics have been available
for years.  There are many other choices of gems to replace
diamonds.
25.   Culture: YES
   In Australia (the largest exporter), land rights and
deterioration of indigenous culture for the Aborigines are
significant issues.  The material culture of the US is also at the
heart of the gem-quality diamond trade as we are the largest
consumer.  Furthermore, their utility is strictly symbolic.
26.   Human Rights: YES
   India has a thriving diamond trade only because it is willing to
cut and polish diamonds that other countries would discard as
industrial quality, and are able to use child and other
disadvantaged labor to make trading economically viable.
27.   Trans-boundary Issues: NO
   The De Beers/CSO cartel has been successful, at least partly,
due to their ability to spread operations out over a number of
countries. This cartel distorts the demand for gem-quality diamonds
by limiting the supply and creating an image of rarity þ
perpetuated by advertising þ that creates its own market.
28.      Relevant Literature
Cooper, Nigel, "Bougainville Reconsidered: The Role of Moral Re-
Armament in the Rorovana Land Crisis or 1969," Journal Of Pacific
History, v26n1 (June 1991) p.57.

Economist, "Winning ways," October 23, 1993, p.44.

Epstein, Edward, The Rise and Fall of Diamonds, NY, Simon and
Schuster, 1982.

Environmental Resources Information Database (ERIN)
Internet Address: koas.erin.gov.au

"Fatal Flaws," Wall Street Journal, 28 December, 1994.
"How GE plays for keeps in diamonds," New York Times, 18 September,
1994.

Kafner, Stefan, The Last Empire: De Beers, Diamonds, and the World,
NY, Farrar, Straus and Giroux, 1993.

Kaye, Lincoln, "Sticks and carats: Competition forces India to
modernize diamond industry," Far Eastern Economic Review, v139
(February 1988) p.64.

McDonald, Hamish, "A cut above the rest," Far Eastern Economic
Review, v137 (September 1987) p.67.

________. "All that glitters: India carves a market niche with
small stones, Far Eastern Economic Review, v156 (August 1993) p.74.

Multinational Monitor, "Martu battle RTZ," v15n3 (march 1994) p.6.

Rich, David, "A different Kimberley: A new diamond mine in
Australia," Geography, v71 (January 1986) p.76.
      
Wilmsen, Edwin, We Are Here: Politics of Aboriginal Land Tenure, UC
Berkeley Press, 1989.
                              Annex


Flora of Australia Volume 19, Eucalyptus Deuaensis
Australian Biological Resources Study

Eucalyptus Deuaensis 
Reference: Boland, Gilmour & Brophy, Brunonia 9: 105 (1986) 
Type: T: near Mongamulla Mtn, Deua Natl Park, N.S.W., 8 June  1984, G.F.J.
Moran 51; holo : FRI; iso: AD, BRI, MEL, NSW, PERTH. 

Illustrations: D.J.Boland, P.M.Gilmour & J.J.Brophy, op. cit. 106--107 (1986). 

Description: Mallee or small tree to 4 m.  Bark smooth, grey to white
throughout, shedding in recurving strips.  Juvenile leaves opposite at
first, becoming alternate, petiolate becoming sessile, oblong-ovate,
discolorous.  Adult leaves narrowly lanceolate or slightly falcate, apiculate,
erect; lamina 7--10 cm long, 1.1--1.7 cm wide, dark green, prominently
glandular, concolorous; lateral veins faint at 40--50; intramarginal vein
indistinct; petiole more or less flattened, 3--8 mm long.  Umbels 7-flowered;
peduncle absent or to 2 mm long; pedicels absent.  Buds fusiform or
diamond-shaped, angular; operculum conical, 3--4 mm long,  4--5 mm wide;
hypanthium obconical, 4--5 mm long, 4--5 mm wide. Fruits sessile,
depressed hemispherical, 6--10 mm long, 10--14 mm wide; disc broad,
ascending; valves 3--5, usually 4, exserted.

The only known population is on steep, crumbling cliffs ENE of Mongamulla
Mtn, N.S.W.  Region: HOWE.

Deua Natl Park, P.M.Gilmour (FRI); Deua Natl Park, D.J.Boland 2027 (FRI).

Distinguished by smooth bark, prominently glandular erect narrowly
lanceolate or slightly falcate leaves, diamond-shaped buds and usually
sessile buds and fruits.   Differs from E. alpina especially in the smooth
buds. 

Flora of Australia. Volume 35: Goodeniaceae - Goodenia Durackiana
Australian Biological Resources Study

Goodenia Durackiana
Carolin, Telopea 3: 559 (1990)
T: Kimberley Research Stn [near Kununurra], W.A., 6 Mar. 1963, M.Lazarides
6743; holo: PERTH; iso: CANB.

Erect to decumbent herb to 50 cm tall, with scattered hairs. Leaves mostly
cauline, elliptic to oblong, auriculate, coarsely dentate, often glabrescent;
lamina 3-6 cm long, 1-2.5 cm wide. Flowers in racemes to 40 cm long; bracts
leaf-like; pedicel 2-5 cm long, not articulate; bracteoles absent. Sepals
narrowly elliptic, c. 7 mm long. Corolla c. 15 mm long, pubescent in throat,
without enations; abaxial lobes c. 5 mm long; wings 1-1.5 mm wide. Indusium
depressed-obovate, 1 mm long. Ovules 20-30. Fruit globular, 8-10 mm diam.
Seeds orbicular, 3-3.5 mm wide, smooth, dull, brown-yellow.

Occurs in the north-eastern Kimberley, W.A., in cracking clay soil, in
grassland. Flowers c. Mar.-May. Map 357.

W.A.: Ord R., Apr.-May 1945, K.M.Durack (PERTH).

Corolla yellow. Pedicels divergent in fruit, with hairs mostly on the adaxial
side. Differs from other species in the section in having smooth, dull seeds
and the hairs on the pedicels almost restricted to the adaxial side.

Flora of Australia. Volume 35: Goodeniaceae - Goodenia Kakadu
Australian Biological Resources Study

Goodenia Kakadu
Carolin, Telopea 3: 566 (1990)
T: Kakadu National Park, Site 80, N.T., 30 May 1980, L.A.Craven 6176; holo:
CANB; iso: SYD.

Prostrate herb; stems to 20 cm long, stoloniferous; hairs soft. Leaves in
rosettes on stolons, narrowly oblong, tapering basally, thick, glabrescent;
lamina c. 3 mm wide. Flowers solitary in leaf axils; pedicel to 12 mm long, not
articulate. Sepals lanceolate to ovate; adaxial one c. 1.5 mm long; others c.
0.5 mm long. Corolla to 2 mm long, with few hairs inside; lobes equal, ovate,
c. 1 mm long; wings obsolete. Indusium globular, to 0.4 mm diam. Ovules c.
30. Fruit obovoid, attenuate; valves entire. Seeds not seen. Fig. 86C.

Occurs at scattered localities in the Kimberley, W.A., and Arnhem Land, N.T.
Grows in open herbfields in damp situations. Flowers Apr.-May.Map 377.

W.A.: Camp Ck Gauging Stn, Mitchell Plateau, G.J.Keighery 4774 (PERTH); 2
km N of Kalumburu Mission, P.A.Fryxell & amp  L.A.Craven 4133 (CANB, SYD).

Corolla red; ovary attenuate towards base. Similar to Gooden-pumilio which
has an obtuse ovary, petiolate leaves, and stellate hairs.

Flora of Australia. Volume 35: Goodeniaceae - Scaevola Graminea
Australian Biological Resources Study

Scaevola Graminea
Ewart & amp  A.Petrie, Proc. Roy. Soc. Victoria n.s., 38: 181 (1926)
T: Taylor Well, N.T., June 1924, A.J.Ewart; holo: MEL.
Illustration: A.J.Ewart & amp  A.H.K.Petrie, op. cit. fig. 4.

Erect subshrub to 50 cm tall, glabrous. Leaves sessile, acute, linear to
narrowly oblong, usually entire; lamina 7-20 mm long, less than 2 mm wide.
Flowers in interrupted spikes to 15 cm; bracts leaf-like;  bracteoles linear,
5-7 mm long, c. 1/3-1/2 length of flower. Sepals to 1 mm long, connate.
Corolla 14-17 mm long, glabrous outside, densely bearded inside, yellowish
to bluish pink sometimes with a yellow throat; barbulae few, simple; wings
to 0.4 mm wide. Ovary 2-locular; indusium to 2 mm long, dense purple beard
exceeding lips. Fruit ovoid, 4-5 mm long, rugose, pubescent. Fig. 43B.

Occurs in the Kimberley, W.A., and parts of N.T., in rocky situations.
Flowering unknown. Map 164.

N.T.: Mt Liebig area, 23 17'S, 131 18'E, P.K.Latz 2277 (CANB).

This species is most similar to S. laciniata which, however, has leaves 3-23
mm wide.