Diamond industry conundrum: How to reform Kimberly Process

By | May 5, 2017

Source: Diamond industry conundrum: How to reform Kimberly Process | The Herald

Happiness Zengeni in PERTH, Australia
THOSE in the global diamond industry are agreed that the Kimberly Process Certification Scheme needs reform and review but a lot of debate has emerged on how to make the grouping more effective and relevant without deviating from its core principles.

This comes as the diamond industry is under threat over the rising market share of synthetic diamonds.

The gain has been attributed to the lack of differentiation by retailers between synthetics and natural diamonds although most Western countries would like to say it’s on the back of decreased appetite by consumers to purchase natural diamonds whose origins are questionable.

Synthetic diamonds (also known as an artificial or cultured diamonds) are diamond produced in an artificial process, as opposed to natural diamonds, which are created by geological processes.

There has been a strong resistance from African countries after the United States, Canada and the European Union together with the civil society coalition (which is under the control of Canada) proposed that the definition of conflict diamonds be expanded to include human rights violations and acts of genocide by state and non-state actors.

A conflict diamond is an uncut diamond mined in an area of armed conflict and traded illicitly to finance the fighting.

The process around redefinition was started in 2011/ 12 and has been constantly tabled before the meetings since then.

Zimbabwe’s Mines and Mining Development Minister Walter Chidhakwa told the KP Indaba held yesterday in Perth that while the country supported the concept of review, the grouping has to be clear on what it intends to achieve.

“We should be careful about what we want to achieve and to also acknowledge the work that the KP has done over the past 14 years since its creation. When we say we must redefine conflict diamonds to include human rights violations and genocidal acts by state and non-state actors, we should be clear on our intended objectives.

“We must understand that we cannot usurp the mandate of the UN mandated bodies specialised in the various areas that we now want to venture into- for instance; the KP cannot see genocide –where in fact other bodies of the UN cannot see genocide.”

Minister Chidhakwa added that it would also be difficult to add more environmental standards and specifically have money laundering units as all the member countries already have central banks and other bodies who have the same principles.

“There are central banks who already ensure that every organisation complies with money laundering laws and therefore is in not easier for the KP to go by what has already been established.

“Do we want KP to be a huge bureaucracy, which will be close to political as countries will always oppose each other? Diamonds are the most regulated mineral after uranium and we should not seek to stall the development of producer states by overregulating.”

Minister Chidhakwa said before conclusions are made that the shift to synthetic diamonds is due to ethical reasons around the source of natural diamonds, there was need for the industry to carry out an empirical study on what consumers really wanted.

Botswana called on countries who are manufacturing synthetic diamonds to fully disclose and differentiate when they sell to customers.

Most of the diamond producers are agreed that there is need to differentiate between synthetic and natural diamonds in a very obvious manner, i.e. the colour of certification while Angola, which also has its reservations against redefinition, said there was need to possibly call the synthetics by another name.

GJEPC India diamond panel convener Shri Sanjay Shah told the Special Forum on Diamond Equity – Retail Reality and the Diamond Pipeline on Wednesday that synthetic diamonds pose a threat to the natural diamond industry.

“The increased use of synthetic diamonds is eroding the value and confidence of the world diamond industry. There is need for a response on how natural diamond producers can deal with this.”

GJEPC’s Mr Shah said that his organisation had spent $500 000 to study the synthetic diamond industry to pre-empt and prevent the undisclosed mixing of diamonds.

The US feels the Kimberly Process is no longer a credible body and there is need to restore its functionality as an effective voice of industry.

David Bouffard, Signet Jewelers vice president, corporate affairs noted that there was an increasing gap between the definition and expectations of consumers.

“People care about human rights and the environment and naturally because of this, they would want assurance that the (diamond) industry is not associated with any violations.

”At present, we have to consistently provide assurance that customers are not buying conflict diamonds but it is increasingly becoming difficult. The KP has been a success in achieving its objective but its failure to reform, especially on the definition of conflict diamonds, makes it increasingly relevant. Producer countries should remember that we will not have a diamond industry if consumers lose confidence in natural diamonds”

Signet Jewellers is the world’s largest retailer of diamond jewellery. According to Bouffard the company refers to the OECD Due Diligence Guidance (DDG) for Responsible Supply Chains of Minerals from Conflict-Affected and High Risk Areas.

Ghana on the other hand supported the redefinition but like Zimbabwe emphasised that there was need to clearly state what constituted human rights violation while Guinea said the redefinition should not be a source of “new division” while adding that there was no need to change “something that already works”.

South African representative Sipho Manese, who is also the working group monitoring chairman called on KP to introduce two term-tenure on its chairmanship.

At present, the chair rotates annually and also hosts the bi-annual meetings of the groupings. The proposal was supported by Zimbabwe and Botswana who said it would ensure continuity and a proper grasp of issues affecting the industry.

The proposals will be further considered when the group meets at plenary sessions later this year.

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