It’s been difficult finding any positive news coming out of diamonds lately.
CAR, KP, and the Nice Narrative
A report from Amnesty International on the Central African Republic and a Time Magazine article on conflict diamonds and the KP offer a sobering reminder that, no matter, what positive narratives can come out of Botswana, Canada, Russia, South Africa or Namibia, no matter what the KP reports for how many carats come out of this and that country as a share of global supply, the temptation to focus on the sore points of the supply chain will always be too easy to pass up, and for good reason. Artisanal diamonds may take up only 15% of carats and 5% of gem production, but the press and public attention will always come back to the artisanal diamonds.
Foxes in Charge of the Chicken Coop
The KP released its figures for 2014, showing that, once again, a certain volume of rough diamonds enter the UAE, about the same volume of rough diamonds leave, yet somehow they magically increase in price by about 40%. I know “conflict diamonds” is a worthy news story and getting photography of such misery is easy, but how is the wholesale looting of national resources not worthy of significant press attention? Fittingly, the UAE has become vice-chair of the KP, and will become the chair in 2016.
New chapter in a very old story: Global Witness exposes the ties between the Burmese ruby trade and the members of the military junta. How is it that peoples’ negative “ethical” impressions of gemstones mostly extend to the colorless ones with a hardness of 10.0?
Rough Diamond Gemologist resurfaces to remind us that rough buyers are most assuredly the most tough-as-nails street-smart people on the planet.
“When a man with experience meets a man with money, the man with the money gets the experience, and the man with the experience gets the money.”
Long break, but yes, I’m still interested in diamonds.
The KP Plenary is being held this week in Luanda, Angola. I’m excited to see what the figures will show for production for 2014. Some things in particular that I’ll be zeroing-in on:
Sierra Leone, Liberia, Guinea
Ian Smillie of the DDI had once directed me to look at the figures of both Sierra Leone and Liberia. Sierra Leone historically has very high-quality (and high price per carat) diamonds, while Liberia generally does not. Evidence that diamonds are being smuggled from Salone into Liberia could therefore be found in a high price per carat, matching or nearly-matching that of neighboring Salone.
This region also has been significantly impacted by Ebola during 2014, and this certainly impacted diamond production, as documented by Estelle Levin Ltd
A certain volume of rough diamonds enters Dubai, and about that same volume leaves Dubai as well. Why then is it, that in between their entrance and exit from Dubai, the diamonds increase in price by ~50 %? This is most likely evidence of under-invoicing and transfer pricing, where the value of a parcel of diamonds is under-stated as it leaves its country of origin as a “tax optimization (wink wink)” strategy. The diamonds are then sold in Dubai at a fair market rate, and the tax savings are sometimes split with a kickback to a corrupt local official. Some might call this “tax optimization”. Others could call it by its more accurate description: “theft”.
Following the dropping of the ban on export by the UN and the KP, in 2014, Côte d’Ivoire re-enetered the diamond market. I’m extremely curious to see what the average price per carat will be, though I’ve been told it’s in line with other Western African countries.
Zimbabwe’s production should be shown to be down sharply as a result of the alluvial diamonds in Marange running out. Almost no good news has ever come from this country’s diamond production, even lately as the 7 companies currently mining in Marange are reluctantly nationalized and merged.
Let’s assume I want to convince consumers that there are good things to be had from diamonds, and that diamonds are, and can be, a part of a ‘green’, ‘ethical’ world (which do I intend to do). To make this point, I would direct those people to certain executives and watchdogs that represent the best of the industry. I’d direct them to Martin Rapport, who has long been an advocate for fair-trade diamonds, and famously had to wear a bullet-proof vest for two years and received bomb threats at his office after publishing his price list for diamonds, then resigned from the World Diamond Council in 2010 following inaction on Marange while human rights abuses were ongoing. I’d direct them to Edward Asscher, president of the World Diamond Council, who has been vocal in advocating for changing the definition of “conflict diamonds” “to include all rough diamonds directly associated with acts of organized and institutionalized violence”. I’d direct them to Ian Smillie, executive director of the Diamond Development Initiative, and witness #1 at Charles Taylor’s war crimes trial (if a notorious warlord has your name on his shortlist, you know you’ve done something good in the world).
On the other end of the spectrum, who makes it difficult for me to do this job and tell this good story to whoever will listen, at significant risk to myself?
Peter Meeus is the chairman of the Dubai Diamond Exchange (DDE), and someone I’d like to one day meet, but also, to learn a bit more about. I want to understand his point of view better, so that I don’t fall victim to surface pronouncements, because what I read on the surface does make my mission much more difficult.
I want to know why he happily shakes the hand of and poses for photos with of one of the world’s most brutal “elected” officials who famously recently paid North Korea $5MM for two bronze statues of himself (being the least of Mugabe’s crimes). How does this look from the outside?
I’d like to know why he had appointed to the board of the DDE, Robert Mugabe’s former personal helicopter pilot (Robert Mhlanga), who now chairs Mbada Diamonds, one of the leading companies mining in scandal-plagued Marange. Does this fit in to a “positive” view of the diamond industry, while some of the industry’s largest and most influential retailers (Tiffany, Ritani, Blue Nile) and trading networks (RapNet) have specific anti-Marange sourcing policies?
I’d like him to explain what changes have taken place at the DDE since the former CEO, Noora Jamsheer, resigned her position “rather than ignore suspicious diamond shipments”, and why Dubai seems to be the destination of choice for conflict stones from the Central African Republic. I’d also like him to explain why UN investigators saw it important to mention a “lack of vigilance” in Dubai in their report on Côte d’Ivoire.
I’d like to know whether he agrees with Chindori Chidinga, the late Zanu PF MP, when he asks “What is the value of the KP certificate if it comes from places that are also tax havens?”
I’d like to know why he walked out of the Precious Stones Multi-Stakeholder Working Group in Paris when confronted with allegations of under-invoicing and transfer-pricing (An issue which he already acknowledges exists).
I’d like to know where this tirade and this tirade come from, why he seems convinced that there is “a broader and hidden agenda”, and why the US, Israel and Botswana (amongst others) view a KP chaired by Dubai to be a threat enough to coax Australia in to running for vice-chair?
Finally, I’d like to know if he thinks the KP is really even necessary any more. After all, there is no civil war in either Angola or Sierra Leone, and since Guinea, Côte d’Ivoire and CAR represent less than 0.2% of global production, why the expense and effort?