(Bloomberg) — As Ebola rages in Sierra Leone, the outbreak has claimed almost 2,000 lives and contributed to the collapse of the iron ore industry. Now the virus is hitting the diamond mines.
At the latest hotspot, in the gem-rich Kono district along the Guinea border, two workers at Octea Ltd.’s Koidu mine, Sierra Leone’s largest, were infected last week and are being treated. The outbreak may mean that production at the mine will miss its annual target — measured in carats — by as much as 20 percent, Chief Executive Officer Brett Richards said.
“Everyone thought this was under control and we were seeing the top of the curve,” Richards said in a phone interview yesterday. “It completely went out of control a couple of weeks ago. We may be uncovering a bit of an iceberg here.”
Health workers have rushed to the area to bury dozens of bodies and cope with more than 100 cases. Beyond the dreadful human toll, Ebola is also causing fuel-supply difficulties and production outages, Richards said. The district is under quarantine, barring entry to commercial traffic except for essential deliveries, and restricting people to their homes at night.
Sierra Leone is Africa’s fifth-largest diamond producer by value, according to Kimberley Process data, mining $184 million worth of the precious stones last year. A fall in diamond revenue would further damage Sierra Leone, a country already reeling from the collapse of its iron-ore mining industry.
Pile of bodies
As of Dec. 9, Kono district had 119 reported Ebola cases, according to the World Health Organization. Reacting to reports from the country’s ministry of health, the WHO sent a field epidemiologist to the region about 10 days ago, later joined by investigators from the U.S. Centers for Disease Control and Prevention.
In 11 days, two teams buried 87 bodies, which were piling up at the only hospital in the area, the WHO said in a report this week. The Red Cross is building a treatment center as the WHO advises surveillance investigators, community mobilizers and infection controllers.
The Kono region is renowned for the quality of its diamonds, including the 969.8-carat Star of Sierra Leone unearthed in 1972, the third-largest stone ever discovered. Israeli billionaire Beny Steinmetz’s BSG Resources Ltd. owns Octea.
The mine supplies Tiffany & Co. after the luxury retailer lent $50 million to the company in 2011 in return for a supply agreement. Koidu had been targeting production of 550,000 to 600,000 carats this year.
One of Octea’s infected workers contracted Ebola from a family member. He had been to work the previous day outside of the mine compound, Richards said. The company has isolated and tested everyone who worked with the infected employees, he said.
Most of the world’s diamonds are mined from carrot-shaped pipes known as kimberlites, such as Koidu. The remaining 10 percent to 15 percent are from alluvial mining, where stones are found in riverbeds or shorelines, after kimberlites erode. That form of mining, important to production in Sierra Leone, is particularly vulnerable to the Ebola threat, according to Edward Asscher, president of the World Diamond Council.
“If the disease is there, then the alluvial diamond production stops because people will get ill, and people don’t want to work together,” Asscher said in an interview today in New Delhi. “We don’t know how much the impact is. But yes, there will be an influence.”
India, the world’s biggest polisher of diamonds, hasn’t yet seen a decline in trade, said Vipul Shah, chairman of the Gems & Jewellery Export Promotion Council.
Sierra Leone’s iron-ore industry has already been devastated by a combination of falling prices and the Ebola virus.
African Minerals Ltd. ran out of cash last month and shuttered its Tonkolili mine. Rival London Mining Plc went into administration in October. The two companies have accounted for about 16 percent of gross domestic product in a country where output per person was just $809 last year.
Iron ore has tumbled almost 50 percent this year as the world’s biggest producers boost supply to squeeze out higher-cost miners.
The Kono district is under quarantine until Dec. 23, which will also have an effect on mining, Alpha Kanu, Sierra Leone’s information minister, said in a briefing yesterday.
“The economic impact is going to be far felt and long felt,” Richards said. “We’re just trying to balance things as best we can, keep our people safe, continue to contribute when and where we can, and try and stay this out. It’s awful.”
–With assistance from Swansy Afonso in Mumbai.