The Dubai Multi Commodities Centre (DMCC) today has published its report on the important steps that the diamond industry as a whole can take in the fields of traceability and technology to tackle challenges its stakeholders are currently facing.
In 2024, the United Arab Emirates (UAE) assumed its chairmanship of the Kimberley Process (KP), a critical United Nations initiative to prevent conflict diamonds from entering the mainstream rough diamond market. The chairmanship was spearheaded by the ‘Year of Delivery’ initiative aimed at achieving crucial goals set by the organization.
Following DMCC’s Provenance, Traceability and Technology Forum held during the KP Intersessional meeting at Almas Tower in Dubai in May 2024, the new report focuses on a number of recommendations for the wider industry to ensure transparency, accountability, and adherence to ethical and sustainable practices.
Setting own standards
In a landscape where the diamond industry is facing significant and existential challenges, traceability can become an effective tool in protecting the value of natural diamonds against such threats as lab-grown diamonds (LGDs) and geopolitical risks. It is also essential for combatting conflict diamonds, identifying counterfeits, and upholding governmental sanctions without harming upstream supply chains, driving credibility and reputation in the process.
DMCC calls for the establishment of industry-wide minimal compliance standards - Minimum Viable Levels of Traceability and Transparency - that would be inclusive and practical across diverse operations in the value chain.
“Ideally, traceability should be comprehensive from the source, but some data is better than none. Implementing traceability further along the pipeline still adds significant value by enhancing transparency and accountability at various stages,” DMCC notes in the report.
In this regard, a step-by-step approach to gradually incorporate and improve traceability solutions would be beneficial. By starting with available data, a groundwork is laid for more robust traceability systems that can eventually encompass the entire value chain.
DMCC considers it essential that the diamond industry preserve the ability to set its own traceability standards, and proposed the creation of a taskforce composed of a diverse group of industry experts, technology providers and academic leaders to enhance those standards. Initially, the Expert Group on Traceability and Transparency would be tasked with outlining a set of recommendations on minimal compliance standards by March 2025 which are robust, comprehensive, technology-agnostic and capable of fostering trust and integrity throughout the diamond supply chain.
Technological advances in technology-agnostic environment
The diamond industry is currently operating in a difficult environment amid low prices, elevated stocks of goods and external pressure in the form of sanctions and political demands. According to DMCC, it is both urgent and important for industry to leverage available technologies to pursue traceability across the supply chain.
However, technologies like blockchain and individual diamond engraving should be adopted in a technology-agnostic environment to be used by all individual stakeholders on an equal basis, where new solutions facilitate easy adjustments to remain adaptable and relevant long-term.
Tech agnosticism is a mindset that encourages IT engineers to remain open-minded and unbiased when evaluating various technologies, platforms and languages, and focus on business requirements and customer needs to create flexible, resilient and sustainable solutions capable of adapting to evolving circumstances and delivering long-term value.
A technology-agnostic approach would ensure seamless integration of various technologies and enhancement of the overall traceability process by intuitive data visualisation and secure data transfer across the value chain. A neutral, digitally managed “trust layer” to empower a network of carefully vetted individuals can be used to authenticate entries and records at each stage of a diamond’s value chain, DMCC says.
To bring added value to the diamond industry in future, new technologies must evolve continuously and ensure that the most effective ones are identified and made available to stakeholders. Industry should establish a dedicated facility for innovators to test and pilot new digital solutions, where their robustness and viability are stress-tested before qualifying as industry standard.
“Industry must maintain a comprehensive register of available technologies, detailing their capabilities, limitations, unique features, and areas of technological and economic viability,” DMCC added.
Continuous collaboration
Ultimately, the diamond industry can only truly embrace transparency and traceability by proactive collaboration of all stakeholders.
“Continuous collaboration among all stakeholders is essential to build trust, sustainable practices, and value for all participants, ensuring the industry’s long-term prosperity. This includes mining companies, manufacturers, retailers, regulatory bodies, and technology partners,” - the authors of the report note, adding that the industry’s ability to embrace traceability solutions and innovation will be key to addressing current challenges long-term.
The collaborative effort can help the industry navigate a difficult geopolitical landscape which it exists in today. Reasons for imposing sanctions on diamond-producing nations and companies can be different, but recent events have shown that policymakers are able to work with the industry as a whole without negatively impacting its most vulnerable members. The more uniform is the voice of the diamond industry, the better it can be heard elsewhere.
“The motto “to go fast go alone, to go far go together” encapsulates the spirit needed for sustained success,” DMCC notes.
Lastly, effective traceability solutions can play an important role in strengthening the Kimberley Process, which is already widely respected by the international community. According to DMCC, KP can play its role among other industry certification processes to mitigate burdens and promote entrepreneurial innovation.
“By continuing to work together, the diamond industry can enhance its reputation, meet regulatory standards, and ensure sustainable growth, ultimately benefitting all stakeholders and consumers alike. The spirit of unity and proactive engagement will be essential as the industry navigates the complexities of modern traceability and strives for a brighter, more transparent future,” DMCC concludes.
Theodor Lisovoy, Managing Editor, Rough&Polished
