Earlier this
year, De Beers announced it had launched a pilot platform to trace stones from
mine to retail using blockchain technology. Since then, representatives of
Russia’s diamond community have unveiled their own efforts in the tracking
field.
The country’s premier polisher, Kristall Smolensk, confirmed using an IT
platform to trace diamonds. This in-house development could be further
integrated into a larger system — for instance, nationwide blockchain-type
tracing — according to the company’s press secretary, Kirill Malchikov.
“Our system tracks every rough
stone that is large enough through all steps of the cutting and polishing
workflow. Smaller gems are not traced, because it is not cost-effective,” he
explained. “The company’s view is that it would be good for all market players,
such as the De Beers Group, Alrosa, [jewelers in] India, and others to share
their experience in this area and have all these systems analyzed first in
order to work out [a] new, global one. Whether there is a will to do so is an
open question.”
‘A guarantee of
authenticity’
Alrosa, which
produces 30% of the world’s rough, is also working in this direction, Yevgenia
Kozenko, head of the company’s press service, told
Rapaport Magazine.
“The company is committed to doing everything in its power to provide a
guarantee of authenticity for each stone,” she continued. “This task requires creating a system that would digitally record every
detail about recovered rough, starting with the date each diamond was recovered
and the name of the employee who extracted it from the ore.”
The company believes this is
technically possible, but challenging. “We are now working on developing such a
tracing platform for internal use in the production process, and one that would
supply information to customers. A lot of offers coming from developers involve
blockchain-technology solutions,” Kozenko pointed out.
In fact, an experimental
tracing system for jewelry with precious stones and metals is being prepared
for a test run, which will take place between June 1 and November 1, reported
Eduard Utkin, CEO of the Russian Jewelers Guild Association.
“This is a government
initiative that will serve as a test stage for a nationwide tracing system
planned to roll out in 2019,” he explained. “The idea is to have all precious
metals and stones in the country marked with unique identifiers, making them
easily traceable from mine to finger through a single official database.”
Under the program, he said,
jewelry “will have a unique QR code on a price tag, and a shopper will be able
to obtain information about the manufacturer of the piece, the gold bar it was
made of, and characteristics and origin of the diamonds in it by scanning it
with a mobile app. The same corresponding information will be applied directly
to the ring setting and the gems in the form of readable ‘nanocodes.’”
No visible markings
The Finance
Ministry, which oversees the project, announced that these embedded nanocodes
would be assigned to polished diamonds weighing over 1 carat, and rough
diamonds over 2 carats. The Technological Institute for Superhard and Novel
Carbon Materials is currently developing a way to mark rough and polished gems
without affecting their commercial value, as a physical tag would be classified
as an inclusion.
Due to the scope of the
project, only a limited number of businesses will participate in the
experiment.
“These are just under a dozen
jewelers [and] a few polishers and gold refineries that volunteered to test the
proposed system,” Utkin said.
Kristall Smolensk said it was
considering joining the pilot, and Alrosa confirmed it had already decided to
come on board. If the test run is successful, all diamond businesses will have
to participate.
Kozenko believes the
initiative is a positive sign. “All this confirms that the market has a demand
for transparency and is looking for ways to cater to it,” she concluded.
Article from the Rapaport Magazine - May 2018. To subscribe click here.