Kimberley Process (KP) Chairman Ahmed Bin Sulayem, in response to the GEMKonnect interview with World Diamond Council (WDC) President Andrey Polyakov, has articulated his perspective on the issue of a global rough diamond valuation protocol.
Bin Sulayem’s statement follows:
With great interest I have read the interview with WDC President Andrey Polyakov.
Unfortunately current rough diamond valuation practices have a detrimental effect on the development and potential of producing nations.
As KP Chair I have organised three 'Special Forums' on rough diamond valuation, where experts on diamond valuation as well as representatives from across the Industry, Civil Society and Government, were invited to participate.
It was our hope to have a consensus at Plenary to agree on a standardised methodology for the valuation of rough diamonds, based on the input from the Special Forums.
After long and thoughtful consideration and study we came to the conclusion that a system — based on reverse engineering that derives rough diamond prices from the price of the polished output they are expected to yield- would be the most efficient tool to reach that goal.
Essential to that is the use of recent polished diamond transactions as well as the need to factor in short-term fluctuations in the rough diamond market. Further, the use of pre-formatted rough diamond sorting protocols to be used locally and the ability to apply such a methodology universally is of paramount importance.
Last but not least there is a need for prices to be independent and objective; and, implementation of the methodology must rest on robust governance processes.
In order to deliver these principles it would be needed to set up a Central Intelligence Valuation Agency (CIVA) which could coordinate the implementation of this standard for rough diamond valuation across valuation offices worldwide.
The CIVA would ensure an effective implementation of this standard, including: training local valuation offices (LIVA) implementing the pre-formatted sorting protocols; supplying up-to-date rough diamond prices through reverse engineering; providing technical assistance to local valuation offices; and, performing key functions at a central level which should be automated, transparent, traceable and cost-effective.
We do not deny the fact that the development of such a system could be a challenge both from a feasibility point of view as with regards to the implementation cost and that it might also lead to taxation issues.
At this moment in time however, and to our regret, we can only acknowledge that the diamond trade is not ready to take such a bold step forward, which would certainly increase global transparency and lead to best practice principles to be applied across the globe and of which ultimately the diamond producing countries and more importantly the diamond diggers — whom I have met on all these African trips- would benefit.
But it is only a question of time. The time will come that such a system will be available.