Rapaport has a piece about the relaunch of CanadaMark diamonds.

Whereas brands such as the De Beers Forevermark program, for example, claim to guarantee the quality and authenticity of the associated diamond, CanadaMark simply verifies that the stone was mined in Canada. Dominion believes that, in itself, is enough to augment the branding of its manufacturing clients and associated wholesale and retail partners…

The second phase of its roll-out plan, Pounds says, will focus on educating consumers primarily in the U.S. and Canada about the hallmark. He added that efforts to bring more manufacturers and retailers on board would be helped by increasing end-consumer demand and interest in the program.

Much of that messaging will stress that Canadian diamonds are ethically sourced and produced according to socially responsible practices and in an environmentally friendly manner. Undoubtedly, more consumers are seeking such assurances.

I like to consider myself well-travelled and better-versed in geography — and African geography — than the average fella, and have even been to the continent twice before (with plans to return soon). However, when presented with the two options of a Canadian diamond that had been traced to the source versus the “general / African / mystery” pile of diamonds, who could blame a consumer for being convinced that the latter was the more “ethical” choice? I even had a persistent, obnoxious (and persistently obnoxious) co-worker imply to me, on three separate occasions, that since I was serious about getting a responsibly-sourced stone: “so, you’re getting a Canadian diamond, right?”.

Thankfully I did quite a bit of reading after that, and then changed tack:

“I’m looking for a diamond from Sierra Lone. Or Botswana, South Africa or Namibia. Or Lesotho. Or Tanzania. Oh, and radiant cut, SI1, F-I, l:w 1.2-1.3. ~1.75ct.”

Figuring it was worth a try and in my naiveté, I actually said this to a few rough diamond geologists (imagine their laughter!) and to my diamond dealer. But try saying this to an acquaintance with average geographic knowledge (which is also more likely minimal-to-no African geographical knowledge) and guess the reaction you’ll get. I’m guessing it’s probably along the lines of: “Well I’ve seen Blood Diamond, and …”. Even amongst my closest friends, some rather well-travelled, the reaction was pure confusion: “so, after all this research, now you want a conflict diamond?”

Obviously “Africa” is not just a monolithic mass and mess to avoid: judging just by the headlines, production in Botswana (most transparent country in Africa and among the most transparent in the world) has almost nothing in common with the production out of Zimbabwe or Angola (both among least transparent in the world). Is CanadaMark, by relying solely on its origin and allowing consumers to make all good assumptions from there, exploiting geographical ignorance? If full traceability from mine to retail were possible, what would a consumer think if his GIA cert included “Origin: Namibia” or “Origin: Botswana” on it? Obviously there are a lot of good things that should come to mind.

The status quo leaves more to be desired. CanadaMark exists, and consumers may find it enticing. Forevermark is a great step in the right direction, but there should be an option beyond just De Beers. How can I get a Lesotho diamond? A Tanzanian diamond? A Côte d’Ivoire stone (of which I’ve heard nothing but positive developments lately)? Is there not a good, marketable story to be told, and as well, a fungible perception that can be changed?

Rapaport’s article concludes with, what I perceive, the correct conclusion:

This column maintains that there is untapped diamond branding opportunity in Botswana. Perhaps the state-owned Okavango Diamond Company will consider developing a similar hallmark to enhance the value of its Botswana-produced diamonds. Namibia might be thinking along the same lines as it negotiates a new supply and marketing contract with De Beers.

With diamonds, much like the other subjects (religion, politics, foreign policy, etc), the more I read about the subject and the more complexities I realize, the less-pointed and more confused I get. There’s few greater joys to me than stumbling upon a fact or quote that turns my entire world upside-down. Here are (some) of those which launched me down longer roads of reading, research and rethinking:

1. De Beers is now 15% owned by the Government of the Republic of Botswana (GRB).

In 2004, the GRB acquired 15% of De Beers. For what it’s worth, this was also complete news to a Forevermark retailer I recently spoke with (given that being accepted into the Forevermark program was described to me as being the toughest application process with the most invasive background check this person had ever consented to, how do they not know this?). The remaining 85% is owned by Anglo-American, who increased their share from 45% when the Oppenheimer family sold its remaining 40% to … the company founded by Ernest Oppenheimer (Anglo), naturally.

In 2006, renowned industry analyst Chaim Even-Zohar bet that the GRB would sell their stake.:

“Anyone closely following the governmental strategies towards diamond mining and diversification will come to the inevitable conclusion that Botswana will sell – and probably sooner rather than later. Selling its stake in De Beers is, for many reasons, in the best interest of Botswana.” — Chaim Evan Zohar

Making bets on the future with certainty is generally a risky thing to do. Safe to say that this has not happened, and the GRB disagrees with that assessment. In 2013, De Beers moved their rough sorting and selling operation, DTC from London to Gaborone. This does appear to be, “for many reasons, in the best interest of Botswana”.

2. Most of the world’s diamonds (by weight) get polished in India

… but some mining companies like De Beers deliberately limit the size of the rough available to Indian sightholders, in order to protect the master cutting/polishing centers in Antwerp, New York and Tel Aviv. Moreover, a barrier to greater beneficiation (cutting and polishing in their country of origin) of diamonds in African countries, is that India maintains a massive cost of labor advantage over their African counterparts.
Not long ago, De Beers used to argue that:

“for a major diamond producer like Botswana, it would be national folly to prescribe that any percentage of their diamonds needed to be beneficiated locally.”— Former Managing Director, Gary Ralfe (2001)

Curiously enough, this position was reversed six short years (and a 15% acquisition by the Government of Botswana) later, under a new Managing Director:

“For the African diamond producing countries, beneficiation is not optional, not a passing whim motivated by political correctness, but an imperative, an absolutely essential and critical part of their macroeconomic policy designed to uplift their economies to provide education and jobs and healthcare for their people and to make poverty history…. We [De Beers] don’t embrace this out of misguided enthusiasm or altruism. No, we embrace it because it makes good business sense and because it is the right thing to do.” — Mr. Gareth Penny, Managing Director, De Beers

“Diversification and Beneficiation” is now proudly touted on De Beers’ website.

3. “Blood Diamond” wasn’t filmed in Sierra Leone.

A simple query of IMDB confirms this simple fact, but Ian Smillie, Executive Chairman of the Diamond Development Initiative, told me: “Small piece of info: the beach scenes in the movie were shot in Mozambique, but there are no mountains in the background in Mozambique, as in Freetown. But if you look at the movie, there actually are mountains – they used CG graphics to do it. Hollywood: dedicated to getting it right.” The country is still desperate to shake the stigma left from that movie, and of course now with the Ebola crisis, the urgency and difficulty of that job has increased dramatically.

EDIT: Rob Bates of JCK tells me: “You are correct about BD, but there were some stray shots filmed in Sierra Leone. (Zwick calls out one in DVD commentary)”

4. Cecil Rhodes’ first monopoly: water pumps

Years before purchasing all the mining concessions in Kimberley and founding De Beers with Rothschild money, Cecil Rhodes established his first monopoly by “[arranging] for the largest capacity water pump in southern Africa to be hauled to Kimberly where it was used in keeping diamond workings open during the seasonal rains. In the dry season this pump was able to be used in the production of a scarce and desireable commodity – Ice Cream.”

5. The Mysterious Car Crash: A Zanu PF Favorite

Edward Chindori-Chininga was a Zimbabwean Zanu PF MP, and Minister of Mines and Mining Development from 2000-2004. On the 1st of June, 2013, He had offered some incredibly nice things to say about the Kimberley Process and “its role and contribution to a conflict free diamond industry in Africa”, in addition to some very well-documented shortcomings and frustrations faced by African countries, and Zimbabwe in particular. Weeks later, he published a report critical of diamond mining operations in Marange, revealing extreme corruption, a lack of transparency (shocker in the diamond world, I know), smuggling, leakages of diamonds, etc. He also revealed to a researcher at PAC that he considered himself “a marked man”, and then days later was found dead of a “mysterious” car crash.

A co-worker of mine is originally from Mutare. When asked about this, he offered a little chuckle and noted with a sort of “yeah I’ve heard this one before” tone, that this is business as usual for ejected Zanu PF politicians whose perceived usefulness has run its course. Turns out, this is indeed business as usual for Zanu PF, and NewsDay catalogs a handful of such “mysterious” car crashes here.

6. Following UN embargo on Liberian diamonds, the Taylor regime relied on timber for funding.

Global Witness details:

To compensate for the loss of diamond revenue caused by international sanctions, Taylor sold Liberia’s forests to logging companies – shifting his sources of financing from blood diamonds to conflict timber. Among those who received logging concessions during this period was international arms dealer Leonid Minin who, at the time of his arrest in 2001, was planning a large arms deal for Liberia.[xiii] Also holding major concessions was Dutch national Gus Kouwenhoven, who ran the notorious Oriental Timber Corporation, which was involved in importing arms into Liberia and developed infrastructure that was used to transport weapons to Sierra Leone.

CNBC Africa has a puff piece about resources in Botswana, particularly mentioning diamonds:

Mostly boilerplate stuff of a story told many times before, but a good primer, none the less. Briefly discusses the effort for beneficiation of resources in-country.

The Botswana-De Beers deal appears to be win/win. Botswana retains direct access to the world market for its diamonds while De Beers has long-term and uninterrupted access to one of the largest diamond supplies in the world. Over the long term, the De Beers move sets the stage for Botswana to emerge as a major participant in all aspects of the diamond industry, not just diamond mining. That’s good for the continued development of the country, already one of Africa’s success stories.

This article references how in 2013, De Beers moved their rough sorting and selling operation, Diamond Trading Company, from London to Gaborone.

Typically, rough diamonds have been hauled out of African countries and shipped to India, where they create an extraordinary amount of jobs in the cutting and polishing sector. Obviously if you’re an African country with ample diamonds but high unemployment, this might be the sort of thing that would anger you.

That sort of practice is, however, looking to change, by what is called beneficiation, which is where a country seeks to participate in the diamond pipeline beyond simply mining, but into diamond and jewelry manufacturing. This is one of the many good things going on in diamonds, but not without its challenges.

Personally, I see greater value in knowing that my fiancé’s center stone was cut and polished in either New York, Botswana, Namibia or South Africa. Why brand-name diamond manufacturers compete to consumers on minuscule differences in “the perfect cut” while glossing over more real differentiating features like this, I will never understand.

via Council on Foreign Relations