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Rough Diamond Valuation Is Critical For The Industry

The issue of creating a mechanism for the valuation of diamonds produced by artisanal and other miners in Africa in order to provide them with fair value for their stones was one of the major debates that took place at during the KP Plenary meeting in Dubai last week — and rightly so. The KP Chair and his team have been working hard on this issue during 2016, inviting a wide range of industry experts to meetings on the subject.

The aim is, of course, to make a positive impact in African producing countries and to enable African countries to get the most from their resources and to create a more formalised approach to diamond valuation. One could not help but be impressed with the work put in by the UAE team which suggested that the valuation programmes be based on principles including solid governance, that it be independent and objective and universally applied, based on up-to-date transactions, factors in market fluctuations and make use of 'reverse engineering' with formulas developed to arrive at sales figures. Clearly, a major element in evaluation is being totally aware about the state of the market otherwise you will buy/sell at the wrong level.

It is also clear to me that we need to make every effort to help artisanal miners often working and living in conditions of poverty. Ensuring that these miners receive a fair price for their diamonds is critical. Imagine such a miner working part of a riverbed with nothing more than a shovel and a sieve. If he is lucky, he has a parcel of stones to sell once a week and with this paltry amount of money he must feed his family. It is obvious that such miners, of which there are 800,000 operating in the Democratic Republic of Congo alone, and 1.5 million worldwide, according to the Diamond Development Initiative, must be our focus. 

When we add in family members, we can see that we are talking about several million people. That is why they need to be at the centre of our efforts. Not only is this the right thing to do on a human and moral level, it is also part of ensuring that there is greater transparency in our trade and that the public is aware of our efforts to bring about a greater level of fairness throughout the diamond pipeline. This is an issue that the World Federation of Diamond Bourses has been promoting for the past several years. 

Of course all members of the diamond trade are looking to make a profit. Of course we all try to buy at a price that enables us to make money on the trade, otherwise there's no point being in business. But we must also recognise the importance of operating the right way, and that means paying a fair price for goods to enable miners to live a life of dignity.

The problem is with the proposed methodology and we need to take a long-term view to make sure we get it right. It is clear that not everyone will agree on the methods used, but that should not stop us from trying. There are also questions concerning how to ensure miners receive the information that will aid them in receiving fair value. Educating an illiterate miner who spends his life by a remote riverbed is probably unrealistic, but there has to be a way of ensuring that he has access to up-to-date data or that government or other officials can help him with his decisions regarding selling goods. In a modern, inter-connected world, there has to be a way of ensuring that training is given.

Another issue is the need to teach artisanal miners how to clean goods by removing the dirty coating and thus giving the potential buyer a view of the right colour of the diamond and the seller a better price. A man who mines diamonds just as his father and grandfather did before him is not aware of the extra value that can be gleaned by selling clean stones and needs to be taught how to do so. We are talking about people whose very survival depends on the money they receive for diamonds which are marketed as symbolising the very best human qualities of love, commitment and long-lasting relationships.

The Kimberley Process Certification Scheme has achieved so much since it began operating in 2003, and now we have a situation where less than 0.2 percent of diamonds are from conflict areas. We can be rightly proud of this achievement and the way we have taken the initiative in policing our industry, but governments and consumers are continuously monitoring us and demanding that we do more. And one way of achieving this is by moving towards a worldwide code for valuation which will lead to skills development for artisanal miners and provide extra income for diamond producing nations. Let us hope that a way is found to achieve consensus to move this important issue forward.


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