Weaker currency boosts diamond production

The depreciation of Brazil's currency, the real, has made the extraction of lower-grade diamonds more profitable, Luiz Augusto Bizzi, director of geology and mineral resources at the country's CPRM geology service, told BNamericas. The diamond mining regions of Mato Grosso state, center-west Brazil, which in the 1980s produced over a million carats a year, are experiencing another boom. "The diamonds of the Juina [mining district in the northwest part of the state] are low quality, but with the cheaper exchange rate production is increasing," Bizzi said. The real has fallen 50% compared to the US dollar over the past year, stimulating the informal activities of artisan miners known as garimpeiros. Bizzi did not have an estimate of informal mining production, but according to industry magazine Mining Journal, Brazil produces 1 million carats a year worth US$45mn. Much of this production comes from Juina where garimpeiros comb the region's river networks. The federal government's foreign export registrar Secex, however, only registered 9,100 carats sold abroad in 2001. ROOSEVELT Another factor contributing to increased extraction in the region is the rumor of a large diamond bearing kimberlite in the Roosevelt indigenous reservation that lies on the border of Mato Grosso and Rondonia state. According to a CPRM study, Roosevelt's geological features and age are similar to the Guaniamo kimberlite zone in Venezuela operated by Denver-based El Toco, which extracts 1 million carats a year. "If the presence of kimberlite is confirmed, Brazil's diamond production could hypothetically double. I am a little skeptical about this, but we cannot rule out such possibilities," Bizzi said. But further exploration in Roosevelt cannot be carried out since the deposit lies within an indigenous reserve of 2.6 million hectares. Although legislation to open indigenous areas to research and exploration is being debated in congress, current laws forbid the activity unless parliament gives explicit approval.