Diamonds

The government also is trying to expand Ghana's diamond mining industry, which has produced primarily industrial grade gems from alluvial gravels since the 1920s. More than 11 million carats of proven and probable reserves are located about seventy miles northwest of Accra. The main producer is the state-owned Ghana Consolidated Diamonds (GCD), which operates in the Birim River Basin. In the 1960s, the company mined 2 million carats of diamonds a year, but annual production in 1991 amounted to only 146,000 carats. This downturn resulted from technical problems and GCD's weak financial position. Production from all mines came to 688,000 carats in 1991 and to 694,000 carats in 1992. In the early 1990s, the government announced plans to privatize its diamond-mining operations and to expand production. At Accra's invitation, De Beers of South Africa agreed to undertake an eighteen-month feasibility study to determine the extent of the Birim River Basin diamond reserves. The survey was to cost US$1 million. A De Beers subsidiary will be the operator and manager of GCD, while Lazare Kaplan International, a New York-based diamond polishing and trading company, will produce and market the diamonds. In 1989 the government established the Precious Minerals Marketing Corporation (PMMC) to purchase minerals from small producers in an effort to stem diamond smuggling. Estimates suggested that as much as 70 percent of Ghana's diamonds were being smuggled out of the country in the mid-1980s. In its first sixteen months of operation, the PMMC bought 382,423 carats of diamonds and 20,365 ounces of gold and sold 230,000 carats of diamonds worth US$8 million. The corporation also earned ¢130 million in 1991 on its jewelry operations, up 48 percent from the previous year, and it planned to establish joint marketing ventures with foreign firms to boost sales abroad. Nevertheless, because of new complaints over raw gem sales, the government in March 1992 ordered an investigation into the operations of the state agency and suspended its managing director.