Myth: Customers are significantly at risk of
buying a conflict diamond
Reality: Perhaps the most pervasive myth of all, the issue of
conflict diamonds — or “blood diamonds” — has a firm grip on the public
consciousness.
“Our industry has made great strides since
the widespread awareness that came to light during the brutal civil wars in
Sierra Leone and Angola in the 1990s,” says Don Palmieri, president of the Gem
Certification & Assurance Lab (GCAL). The percentage of the global diamond
trade funding or facilitating conflict at that time is up for debate, with
estimates ranging from less than 1.5% to as much as 15%. But since the
introduction of the Kimberley Process (KP) certification scheme and the World
Diamond Council (WDC) System of Warranties, more than 99.8% of the world’s
diamonds are certified conflict-free, with the support of 81 countries.
As such, the industry is extensively
self-regulated, and various countries have additional layers of government
regulation in place. The UK’s Government Diamond Office, for example, works
closely with HM Revenue & Customs, the European Commission and civil groups
to combat illicit diamonds.
Voluntary and self-regulation systems are
effective in maintaining the diamond pipeline, explains Ronnie VanderLinden,
president of the Diamond Manufacturers & Importers Association of America
(DMIA). As an example, he points to the Diamond Source Warranty Protocol
developed by leading US organizations.
“We have systems in place to ensure those
doing business have the confidence to know that their source of supply is
conflict-free. There are also those that subscribe to the Responsible Jewellery
Council, De Beers’ Best Practice Principles, and the Signet Responsible
Sourcing Protocol,” he adds.
Myth: The diamond industry is a monopoly
Reality: “The perception exists that De Beers still controls the
market and controls prices, when this hasn’t been the case for decades,” says
Adonis Pouroulis, chairman of Petra Diamonds. “In fact, Petra still gets asked
if we sell our diamonds to De Beers.”
This myth is rooted in history, harking back
to late 1980s. At that time, De Beers did indeed control over 90% of the supply
chain and was almost wholly responsible for marketing diamonds, having
developed its famous “A Diamond Is Forever” slogan in the 1940s. This also led
to the perception that De Beers “invented” the diamond engagement ring, when in
fact the first was recorded as early as 1477.
By the 1990s, the market for new mining
companies opened, breaking the hold that De Beers and Alrosa had on the
industry and ushering in a new wave of diamond discoveries in Angola and
Canada, according to Pouroulis.
David Johnson, senior manager of media and
commercial communications at De Beers, adds that his company’s share “was
around 35% of global supply by value [in 2016], while Alrosa supplied nearly
30% of the world’s value by rough diamonds. Other producers, such as Sodiam,
Dominion Diamonds, Rio Tinto and Petra Diamonds, all also had sizable shares of
supply value in 2016, so the industry clearly has a range of competing
suppliers.”
Myth: Diamond mining takes from the environment
and gives nothing back
Reality: “Diamond mining is generally less harmful to the
environment than other types of mining, because less or no chemicals are used,
which can otherwise be harmful to the staff’s health,” says Tobias Kormind,
managing director of leading European retailer 77Diamonds.com.
Pouroulis adds that “diamond mining tends to
have a much smaller footprint, as our orebodies are vertical, not horizontal
[and therefore affect less of the surrounding area]. In Petra’s case, we have
established protected habitats adjacent to our operations, totalling 10,255
hectares, to ensure preservation of fauna and flora.”
For many companies, these preserved land
areas are larger than the mining operation itself. The De Beers Group conserves
164,000 hectares of land, five times the area disturbed by its mining
activities. De Beers is “also leading a ground-breaking research project that
aims to deliver carbon-neutral mining at some of our operations in as few as
five years,” Johnson comments. “Scientists estimate that the carbon storage
potential of kimberlite tailings produced by a diamond mine every year could
offset up to 10 times the emissions of a typical mine.”
In Australia, Rio Tinto’s Argyle mine draws
more than 92% of its power needs from the hydroelectric Ord Hydro power
station, and the company has reduced its diesel consumption by 21%. Overall,
the industry has made huge strides in water recycling and waste reduction, and
has introduced comprehensive mine closure plans and tree-replanting programs.
Myth: Diamond mining communities are mistreated
and at-risk
Reality: “Unlike almost any other industry, mining builds
communities and a sense of belonging, none more so than in diamonds,” says
Kathy Chappell of Fair Trade Gems, who was recently named ethical-issues
adviser to the London Diamond Bourse (LDB). The isolated nature of diamond
mines means the workforce lives close by and develops a community spirit, which
the diamond industry supports by investing in hospitals, schools, training and
bursary programs.
Misunderstandings of the situation start at
a basic level, with many still presuming miners are extracting diamonds by
hand. “People don’t understand that diamond mining is a highly automated process, moving
millions of tons of rock per year. Miners operating large earth loaders in open
pits or underground would never even see a diamond,” says Pouroulis.
Consumers also underestimate how much the
diamond mines help strengthen the community. Petra, for instance, spent $8.5
million on training in fiscal 2017 and doubled its social spending to $3.4
million in the same period. On a national and global level, says Palmieri,
“remote mine discoveries have brought badly-needed foreign exchange to
countries and have allowed legitimate governments to educate and provide
modern-day medicines and medical facilities to their people.”
For example, 33% of Botswana’s GDP comes
from diamond mining, and an estimated five million people globally have access
to health care thanks to diamond revenues, according to
Diamondfacts.org.
Myth: The whole industry is secretive and closed
to outsiders
Reality: The high-value nature of diamonds has fostered a
presumption that the industry is riddled with inaccessible people and
organizations, more comfortable with secrecy than transparency. But in fact,
says Palmieri, “there are a lot of very hard-working people spread out across
the globe who are anywhere from struggling to well-off, to rich and wealthy,
depending upon how they have built their businesses and the effects of a
six-year decline in prices of polished diamonds.”
Public attitudes toward transparency have
also had an impact on the industry, according to Johnson.
“Society now expects to see businesses
reporting on their social activities, and regulators, financiers and other
stakeholders increasingly require transparency in corporate structures and
financial reporting so they can be confident that companies are acting
properly. As such, we have seen a major change in the diamond sector,” he says.
Contributing to the secrecy myth is the
belief that diamond companies are hoarding mountains of stones, although this,
too, is an inaccuracy, Pouroulis notes.
“Some people still think De Beers is sitting on huge
stockpiles of diamonds in vaults in London, whereas in fact there are no
significant stockpiles of diamonds nowadays,” he explains. “Yes, diamond miners
all have diamond inventory, but this is generally as per the normal course of
business as we build up inventory before making a sale.”
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