By Christo Johnson

FREETOWN (Reuters) - The value of diamond exports from Sierra Leone fell by 20 percent year-on-year in 2009, a senior official at the ministry of natural resources in the West African country said on Tuesday 26 January.

Shipments of the precious stones, the poor country's main source of foreign currency, were valued at $79 million for 2009, down from $99 million in 2008.

Since then, prices on international markets have fallen as consumers who have found their disposal income reduced by reduced bonuses or job losses stemming from the global financial slowdown have turned away from diamonds.

In early 2009, the main index of prices published by independent news provider PolishedPrices fell to its lowest in four years, before partially recovering during the year.

"Another major factor is that there is less investment in alluvial mining, which has been supported by mostly Lebanese diamond (traders) ... who have closed down businesses as banks cannot afford to support them," the source said, speaking on condition of anonymity.

Traders also said moves made by the country, which is attempting to reverse years of economically debilitating mismanagment and corruption after a 1991-2002 civil war, would adversely affect the industry.

As of December 28 last year, the government charged a new export tax of 15 percent of the value of stones worth more than $500,000, while a law passed last November raised taxes on diamonds to 6.5 percent from 5 percent.

"The drop in diamond exports will continue because neighbouring countries have not increased taxes, so smuggling (out of Sierra Leone) has increased," said a diamond trader in the capital Freetown.

"Many of the diamond miners are turning from diamonds to gold. 2010 has just started but I don't believe it will yield much for diamonds in Sierra Leone," he said.

During its civil war, diamonds mined in Sierra Leone helped finance rebels who murdered and raped civilians, and the stones became a global symbol of the most destructive impact of the exploitation of natural resources in Africa.

Since the war ended, resources firms have stepped up efforts to find and dig iron ore, bauxite and titanium ore rutile, as well as gold and diamonds, in a country ranked third bottom of the United Nations' Human Development Index.