Only U.S. diamond mine sparks a conflict in Arkansas State ponders whether to reopen mine at the Crater of Diamonds State Park.


MURFREESBORO, Ark. -- Crater of Diamonds State Park contains the only diamond mine in North America, and the only one in the world where visitors can keep any gems they find.

More than 400 diamonds were found last year in the crater of an ancient volcano around which the park was developed, making it a unique tourist attraction.

But the quiet park is becoming a battleground as state officials wonder if diamonds are their best friend in solving the state's fiscal problems.

And presidential hopeful Gov. Bill Clinton put himself in the middle of one of Arkansas' leading environmental conflicts in 1987 by approving exploratory drilling or commercial mining there.

The crater was born 95 million years ago, when a fiery volcano erupted, shooting diamonds and molten rock 100 miles up from the Earth's interior.

The crater, strewn with gems and semiprecious stones, was discovered in 1906.

Commercially mined from 1906 to 1952, producing about 400,000 diamonds in that time, the 73-acre crater was converted to a private tourist attraction and then sold to the state in 1972. It is estimated that visitors or tourists have walked off with another 70,000 gems since 1952.

The 887-acre park attracted 70,133 visitors last year.

"This is where the public can come and experience the most unique opportunity in the world -- to search for, find and keep genuine diamonds," said Mike Hall, the park superintendent.

The search area, covering 37 acres, looks like a plowed field. It is churned up every so often to bring gems to the surface. Usually they are pea-size or smaller, although some giants of up to 40 carats have been found.

The fee to hunt all day is $3.50 for adults and $1.25 for children.

Arkansas features a diamond in its state flag because of its unique mine.

For years, the state rebuffed attempts to open the park to commercial mining -- a move that opponents say would destroy it.

Then Mr. Clinton signed legislation authorizing testing or mining in the park -- opening a Pandora's box of legal conflict and charges of political intrigue.

State officials emphasize that no one has actually approved commercial mining in the park, only tests to determine the richness of the diamond lode.

Critics argue that is a prelude to a diamond rush, especially if state officials see mining royalty riches as a way to solve budgetary woes.

The Sierra Club, Arkansas Wildlife Federation and Friends of Crater of Diamonds State Park filed suit in 1990 against state and federal officials to bar mining in the park.

"In Arkansas, Governor Clinton's political ambition has clearly unbalanced the scales of public policy against environmental control, in favor of business interests," said Dean Banks, a spokesman for Friends of Crater of Diamonds State Park, which promotes business and tourism in nearby Murfreesboro.

Mr. Banks points out that Bruce R. Lindsey, Mr. Clinton's longtime friend and presidential campaign director, has served as an attorney for Arkansas Diamond Development Company.

Arkansas Diamond is one of four mining companies drilling in the park in 1990 to explore its commercial diamond potential when the work was halted by a federal court injunction. The injunction was overturned early this year and test drilling could begin this month.

Mr. Lindsey is a partner in a powerful Little Rock, Ark., law firm, Wright Lindsey & Jennings, which confirmed his involvement with Arkansas Diamond. Stephens Inc., a Little Rock investment house that claims to be the largest of its kind outside Wall Street, also is involved in the venture.

As a result, park defenders believe powerful political forces are arrayed against them.

Mining companies are eager to get started.

"It's probably considered a world-class mine right now," said Gandy Baugh, a lawyer for Continental Diamonds Inc. of Little Rock, one of the companies in the mining venture.

The others are Kennecott Exploration Co., Camden, S.C.; Capricorn Diamonds Ltd., West Perth, Australia; and Sunshine Mining Co./Arkansas Diamond Development Co., Little Rock.

Mr. Baugh said Crater of Diamonds could contain $5 billion to $15 billion in diamonds, although critics dispute that, pointing out that the park was heavily mined in the early 1900s.

Jean-Raymond Boulle, a director of Arkansas Diamond, said if mining went forward, developers had agreed to spend up to $5 million to build a diamond mining and processing tourist attraction.

The result of all this is a quandary of unusual proportions.

Greg Butts, director of Arkansas State Parks, acknowledges that preservation of natural resources is his agency's mission. But there is the big picture.

"The question Arkansas will have to answer is: Is there a great economic benefit [from mining] that will solve Arkansas' needs -- education, human services and correctional institution reforms?" he said. "If this is a great panacea, then maybe it should be done.

"On the other hand, if this is a short-range project where mining companies could come in, dig a big hole and take all the diamonds and walk away in five years, and the state got small severance taxes and royalties -- is it worth doing? We end up with a hole in the ground."

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