The WDC and The Southern Times highlight two opposing viewpoints fueling the current conflict in the diamond world as it pertains to, um, “conflict”, and a possibly expanded KPCS.

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?

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.

From the perspective of a concerned consumer trying to do the right thing, there are plenty of legitimate gripes to be had about the diamond industry: lack of traceability and therefore the general absence of a guarantee that my diamond is doing ‘good’, weakness of the KP, under-invoicing and transfer pricing, enabling corruption, environmental damage, etc (I’ve made my gripes known here). But consumers are extremely powerful, and we are less powerful, not more, when we act on incorrect information. A speed-reader could be occupied for weeks reading one similar-sounding anti-diamond article after another, but there some are global standouts that actually deserve attention … that they should be ignored (I’m aware of the irony).

1. Priceonomics: “Diamonds Are Bullshit”

This is mostly a rehash of the old and boring “diamonds have no intrinsic value, are a bad investment and we only desire them because of De Beers” argument, as if the consumer is mindless (false), diamonds have no desirable qualities (false), and the only value to consider is what I am offered at a pawn shop or on eBay (false). This reasoning is, well, intrinsically “bullshit”, and Jewelry Atelier does a better job than me of responding to this argument and its other claims here. This argument appears to be more frequently-deployed to diamonds than other equally “valuable” goods for some reason. If the writer’s article is to be true, then it is also true for a multitude of other items people widely consider “valuable”. I won’t even bother reacting to the claim that we only demand diamonds because of “A Diamond is Forever”…

2. College Humor: “Why Engagement Rings Are A Scam”

In addition to making nearly all the same claims made by the piece above, my favorite claim made here is that “De Beers has a global monopoly on diamond mining”. Words matter, especially when you have several million views. I remain perplexed about how exactly a company could create and enforce such a monopoly, unless they had somehow confiscated all shovels, pans and sieves in the world. Nevertheless, what they had, was a near-complete monopoly on the supply of rough (very different). It’s also important to note the tense of the verb: had. What they have now is far from it, unless CollegeHumor believes that 22% of global rough production and 37% of sales constitutes a “monopoly”. Being that this piece of trash was published in 2014, it seems that they either do believe so, or started with a conclusion and then lazily hacked together evidence to fit. I lean towards the latter. De Beers also liquidated their stockpile over a decade ago.

3. Jezebel: “A Quarter of All Diamonds In Stores Are Blood Diamonds, and Nobody Can Tell Which Ones They Are”

Jason Miklian created quite a stir when he published his excellent essay, “Rough Cut” in Foreign Policy. After an in-depth investigation in to diamond manufacturing in Surat, India (where over 90% of the world’s diamonds get cut and polished), he boldly concluded that up to 25% of the world’s diamonds are blood diamonds.

Mr. Miklian’s figure has been intensely debated, and there seems to be some confusion between the terms illicit diamonds and blood diamonds. Important nuance of the difference between “up to 25%” (which is a rather large range, but strictly means 0% at the low end, to 25% on the high end)” was therefore manipulatively lost in the headline when Jezebel.com reported that a full “quarter of all diamonds in stores are blood diamonds”: when given a range, they picked the highest end and saw it fit to publish, because it was more headline-worthy. In our tl;dr world, this may be all that most people read.

Moreover, it’s further dishonest to say that a full “quarter of all diamonds in stores” being blood diamonds. By writing “in stores”, we can assume that we’re talking about gem-quality diamonds, and not diamonds in general. While artisanally-mined stones (those most likely to be called “blood diamonds”) represent roughly 15% of world rough production, their share of world gem production is about 4%. However, it would also be dishonest to claim that diamonds mined artisanally are by definition “blood diamonds”, as the tough conditions of which they are mined — and who benefits — vary greatly dependent upon the mine, and when they are extracted. AADM is also ineradicable, and the more proactive approach as advocated by the DDI is most promising. Furthermore, “of all diamonds in stores” seems to lazy assume that all retailers have the same sourcing policies and therefore the same chances of winding up with a blood diamond. This is not the case, and Mr. Miklian himself even suggested to me that I look at Tiffany and Forevermark as viable options.

One could easily call alluvial Marange diamonds “blood diamonds” (or at the very least, less “diamonds doing good”), but those diamonds are not as likely to wind up behind a jewelry counter, as their quality is generally low and they have a noticeable green tint (casting further doubt on the headline “and nobody can tell which ones they are”). For what it’s worth, Ritani, Blue Nile and Brilliant Earth all have explicit an anti-Marange sourcing policy displayed on their respective websites, and trade in green-tinted stones is banned on the polished diamond trading network RapNet. Simply put, these companies understand reputational risk, and have been proactive about publicizing their efforts.

We could easily call many diamonds from the DRC “blood diamonds” (also an excellent article by Mr. Miklian), but of course, while one of the world’s top producers by volume, the quality of stones coming out of the DRC is generally low ($25/ct according to the KP) as well.

4.Green Karat

This business has recently gone defunct, but its literature is forever in my memory, and in that of Archive.org. Consider the following sentences: “Since [man-made diamonds] are in fact real diamonds, there is little remaining reason to endure the stigma now attached to natural diamonds. We feel the time has come to start transitioning those employed in diamond mining to sustainable livelihoods in other industries, while phasing out diamond mining altogether. It simply isn’t needed any more.”

Man-made diamonds certainly sound nice on paper, but are not without their limitations: the difficulty of removing nitrogen from the synthesis process generally results in diamonds of a color in the H-K range (if you don’t believe me, go ahead and look at Pure Grown Diamonds’ inventory yourself), the stones tend to max out at just under a carat, and environmental impact depends on how those HPHT machines get their energy.

I can find every reason in the world for being insensitive about future unemployment in the fossil fuels industry should we immediately transition to renewable energy sources, but to call for replacing all of what many countries, communities and millions of people depend on (some with no other options) with rows of HPHT machines, simply because of fungible “stigma”, is a sophomoric argument at best.

5. Twitter: @WarDiamonds

Diamonds, like Middle East geopolitics, are an issue that I’ve read a lot about, and the more I read and the more complexities I realize, the less pointed I become. Every time I’ve been linked somewhere, like clockwork this toad emerges from beneath his bridge to call me a shill for the diamond industry, including, as he foolishly and tastelessly somehow saw appropriate, on my fiancé’s Facebook page. Frustratingly, I’m still trying to figure out what exactly the point of this person’s argument is. Is it that by paying taxes to the Israeli Government, all business and citizens are complicit in the occupation, and therefore all diamonds cut and polished in Israel are “war diamonds”?

Frankly, I have too many friends that both live in Israel and disagree with their governments’ policies to buy in to this argument. I’ve already spent too much time thinking about this sad person.

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.

Mid-way through my research project (about February 2014, and before this whole Ebola mess), I watched Martin Rapaport’s persuasive TEDx Speech and other words on the issue of diamonds, and then made a decision:

“I’m looking for a diamond from Sierra Leone”.

“What? So you somehow want a conflict stone now? Unsatisfied with Jezebel.com hating on you the last two three times?” asked a good friend of mine.

“As entertaining and easy as that is, allow me to clarify that…”

The truth is that although Sierra Leone has been at peace for over a decade, they are still desperately trying to shed the stigma left from both the civil war and that damn Leonardo DiCaprio film (which wasn’t even shot in the country).

Frustratingly, Mr. Rapaport’s videos omit the path through which one would go about buying a stone of Sierra Leone or West African origin. I then imagined myself as a modern-day Cecil Rhodes and remembered a story that a rough diamond buyer named Sofus Michelsen told me about his grandfather:

“My Grandfather Sofus Michelsen was a Norwegian and married my Grandmother a Scottish woman. His story was he travelled to Kimberley, South Africa in 1880 where the main supply of rough diamonds were mined, the stone he bought was a 10.30ct rough and had it cut there into a beautiful 4.00ct oval. My wife now wears it as I gave it to her for our engagement after it was passed down from my Grandmother, to my Mother, and now my wife.”

In case you’re wondering, travelling from Norway to Kimberley, South Africa in 1880 was quite a feat: “three months by schooner” he informed me. I am at this point both floored and humbled. “Brad Pitt takes a year to design Angelina’s ring, and this guy’s story involves a three months-long trip by schooner? Well, fuck everybody, then. I’m going to Sierra Leone. How cool would it be to get a picture of me, knees-deep in Tongo mud or chillaxin’ on Tokeh Beach holding the very rough that would be polished into Stephanie’s stone. I just want one “makeable I” rough and I’ll walk it to a polisher myself, Surely one of those rough buyers could spare one from a parcel” I naïvely thought.

My dream was not to be. First of all, no, rough buyers do not have a stone to spare from a parcel. There are two other options, the first of which is the legal (expensive) route, where you pay a rough diamond geologist as a consultant (you didn’t fly all this way to get screwed, did you?), plus expenses (accommodations, security, probably licensing, likely more money to “grease the gears”). One geologist even informs me: “Mr. Schulte, I could spend a half hour writing to you telling you why this is not possible. At $200/hr and a 2 hr minimum, why pay for something I’m telling you for free?” Another rough dealer says he’s working on a parcel from Salone, so maybe we could do business, but probably not because that’s not how it goes, chump. A third rough diamond buyer offers to arrange a 7-day trip, though the costs reveal that this is clearly not the most efficient way to purchase exactly one stone. The second option is the illegal, black market route like these very ballsy gentlemen at Vice did, which I will not be pursuing (particularly given the quality of the stone they ended up with).

Also, should one succeed in buying an artisanally-mined stone, it’s more likely than not that the digger’s find would be massively undervalued by the original buyer, and you exponentially increase the risk of exposure to smuggled stones and other delicacies of the illicit market. Moreover, since I’m not exactly a graduate gemologist with experience in grading rough diamonds (yet!), I could well be buying a diamond that isn’t even a diamond, isn’t cuttable or makeable, or with inclusions that significantly impact its quality as a polished stone. Can’t exactly have that, can we?

Even though the timing didn’t coincide with when I was in the market for a ring, I had tentatively planned to go with Nick Montefour, (fully licensed exporter’s agent) in January of 2015, though obviously the whole Ebola epidemic has sidetracked that sexy option, never mind that the Mrs. is not very keen to the idea, at all.

(I still planning on going once this Ebola mess calms down, and over the expected female objections)

The GIA has an excellent piece about diamond mining in Lesotho, by Gem Diamonds at the Letseng mine, source of the Lesotho Promise.

Touring the mine, located about 3,100 meters (just over 10,000 feet) high in rugged mountain country, Maharasoa notes, “This mine came from nothing in 2000. Now we have 1,500 employees (and) a mine that gives our country 70% of its corporate tax revenue and 60% of our country’s foreign exchange earnings.”
…
“Letseng has a long life ahead,” Maharasoa says. “We have established a goal that Lesotho’s diamonds, now supplying about 7.5% of our country’s GDP, can achieve 15% within a few years.”

The tiny land-locked country produces some of the world’s highest-quality diamonds, with an average value per carat of $584.88 (2013) and a long history of incredible finds.

[tribulant_slideshow gallery_id=”1″]

(via All Africa)

“At the recent international auction, we have been selling at an average of $143 per carat, but that came down to $70 per carat at our local tender last week.

“The problem is they (the buyers) knew our goods were sequestrated and that we are desperate to sell. It’s not a good environment to operate under such circumstances.”

It’s been really interesting to watch the progression of the Marange diamond tenders over the last year. Originally they were getting low prices because the stones from Marange are generally covered with an iron-lava coating and therefore command a lower price (a stone could be a ‘D’ or it could be a ‘Z’… you don’t know while examining such a parcel). Then they wizened up and started removing the iron coating before sale, resulting in higher prices. The Mugabes then cozied up to the Dubai Diamond exchange and ran a ‘test’ auction at the DDE … which took over a month to receive payment for. Recently, a parcel of Zim diamonds were held up in Antwerp under court order (which was later lifted and the diamonds released).

Basically, Zim can’t catch a break. It was therefore also interesting, after all the events leading up to this point and the diamonds potentially running out, to read this:

“[The diamond industry] is an industry that can turn around the country if we manage it properly. The direction that the Minister is taking to consolidate mining companies is very good.” — Marange Resources acting CEO Mark Mabhudhu

Got some new reading material from the GIA
Rough Diamonds. A Practical Guide

The book was originally published in 1998. Obviously the information about grading/evaluating rough is still very much relevant and excellent, but there are some very funny now-prophetic passages, for example one part where the author discusses the promise of potential Canadian diamonds, and another part where the author mentions that rough production is growing year-to-year.

Eventually, I’d really like to take the IGI’s rough diamond course and who knows what else after that… maybe not a G.G., but enough to not make a fool out of myself. But for now, this is a good start.

Namibia Diamond Trading Company (NDTC) chief executive Shihaleni Ndjamba has revealed that only 10 percent of the Namibian diamonds is sold locally while the rest is exported to De Beers Marine operation centre in Botswana. Briefing Prime Minister Hage Geingob on Tuesday, Ndjamba said although the state-owned company was still working on the current agreement of supplying 10 percent of diamonds to local sight-holders, it would welcome the government’s support in increasing the number of diamonds sold within the country.

via StarAfrica