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13 november 2023

m_zee_fula_ngenge_xx.pngDr M'zée Fula Ngenge, Chairman of the African Diamond Council (ADC), is a Mining Engineer and highly respected Senior Strategy Advisor who celebrated 40 years in the global diamond industry this year. He acts as a professional liaison within the international diamond trade and is well-positioned to influence, both the public and private sectors.

In 1986, Dr M‘zee was instrumental in introducing the Ideal & Super-Ideal Cut diamonds to the global diamond supply chain. These highly sought-after Hearts & Arrow diamonds have rapidly increased in popularity since the 1990s. He also served as Chief Administrative Developer in 2000 and became Project Launch Team Coordinator in 2001 for Kimberley Process (KP), a diamond certification scheme to eradicate blood/conflict diamonds.

In 2001, Dr M'zée was a principal trustee and decisive proponent to establish Dubai as a major diamond and jewellery manufacturing centre, laying the foundation for the successful launch of Dubai Multi Commodities Centre (DMCC) in 2002.

In early 2017, M'zée drafted a bold and assertive revenue recovery proposal that urged the Republic of Angola to implement "Operation Transparency"; and in late 2018 an internationally lauded campaign that was effective in combating illegal immigration, unlawful exploration of diamonds as well as environmental crimes related to the plundering of natural resources, such as diamond smuggling.

At the beginning of 2019, Dr M'zée was assigned as Chairman and Managing Director of the African International Diamond Exchange (AIDEX), Africa's most transparent rough diamond supplier for four diamond exchanges in Antwerp, the Diamond Exchange District in Ramat Gan, the world's largest diamond bourse in Mumbai as well as the largest Free Zone in the United Arab Emirates. At the end of 2019, he was entrusted as Chairman of the Board of Trustees for the African Diamond Trust Fund (ADTF), a fully integrated, autonomous financial depository and vault operator for ethically mined rough diamonds originating in Africa.

Here, in an exclusive interview with Rough&Polished, Dr M'zée Fula Ngenge expresses his views on the recently concluded Kimberley Process Plenary, and other grave issues being faced by the global diamond industry currently.

Some excerpts:

 

Facing poor demand, trade organisations in India have suspended diamond imports with loss to manufacturers, jobs to artisans etc. Do you see this situation improving in the near future with help from Africa...maybe?

First of all, it is important to understand that this prorogation of diamond imports in India is due to economic slowdowns within top diamond consuming nations, such as the United States of America and the People's Republic of China. This provisional two-month cessation from October 15th to December 15th of this last quarter in 2023 was intended to have an uninhibited footprint on significant diamond suppliers such as ALROSA, De Beers, Rio Tinto and Dominion, given that these are the most dominant diamond miners in the world, and since global diamond prices were descending as a result of excessive polished diamond inventories.

We cannot dismiss the subversive reality that our African natural diamond production is highly at risk of being integrated with synthetic or lab-grown diamonds that are mostly manufactured in China as well as with sanctioned diamond production from the Russian Federation that the Kimberley Process (KP) Certification Scheme (KPCS) continues to suffer defeat in hindering movement of these particular goods.

The African Diamond Council (ADC) and African Diamond Producers Association (ADPA) play an integral part in protecting the global diamond assets, and the ADC governing body certainly does not want to play any role in Indian cutting and polishing factories closing due to a lack of ethical and natural diamond production. At the same time, the ADC and its ADPA inter-governmental arm does not want India's current state of despair to make provisions for an unwelcome upsurge in sanctioned or synthetic diamond imports.

The ADC was perfectly aligned with India's Gems and Jewellery Export Promotion Council (GJEPC) for voluntary suspension on rough diamond imports into India and we are extremely supportive of the decision that the Bharat Diamond Bourse (BDB), Mumbai Diamond Merchants’ Association (MDMA), Surat Diamond Association (SDA) and Surat Diamond Bourse (SDB) collectively exhibited in reaching a consensus on the matter.

What India can count on from the ADC and its African International Diamond Exchange (AIDEX) are unforeseen supplies of rough diamonds that will inevitably secure a sense of confidence and stability for the Indian diamond sector.

While the Israel-Palestine war has affected the Indian diamond trade to a certain extent till now, how do you think the scenario will play out in the coming months if the war continues? Your predictions please…

I am a firm believer that the most prudent way to predict the future is to actually create it. Since the African Diamond Council (ADC) is well aware that Israel’s diamond industry being directly affected by the unexpected affray, we are also aware that Israel’s diamond community has never been hit this hard with so much uncertainty. We can see that some air travel has been suspended, several offices have closed, payments are being postponed and some career Diamantaires are now settling for odd jobs to supplement their household income.

While I am sure that there are and will continue to be grave concerns with reference to the industry sustainability and survival of Israel's diamond trading hub, there is more distress and concern regarding the survival of the Jewish state.

When we look at the total number or percentages of rough diamond imports and exports between Israel and India, we can see that there is not much trade taking place. When it comes to polished diamonds, Belgium is presently serving as a more favorable option for global diamond traders.

Nonetheless, if Dubai's financial institutions can overcome their nescience and inability to keep up with the accelerated pace that the African diamond industry is now operating at, then the United Arab Emirates will transcend beyond the assenting status that Belgium is now taking full advantage of.

The African Diamond Council (ADC) will forever seek overlooked opportunities to create ideal conditions necessary for success in the entire global diamond industry as long as it does not become prone to or contaminated by indifference for Africa’s diamond industry.

There will be serious and irreversible consequences for industry bodies that do have our best interest at heart or those who are guilty of efforts to deliberately disregard, misinform or control Africa’s invested interest into ethically vindicating the global diamond industry. As long as there are no internal distractions or chaos within African diamond producing nations, the ADC and its supporting ADPA derivative shall remain optimistic with regard to Africa's divine decree and fortuity, if there is such a thing.

Diamond trade analysts claim that sanctions and restrictive measures on diamond mining giant ALROSA have led to market distortion globally. Now that the EU may join G7 countries to ban Russian diamonds, what are your views?

Several diamond trade analysts and professionals have become too engrossed in making industry claims that they may not actually be experiencing or have been made fully aware of.

It is ironic that the Russian Federation is and has been established as the world's largest exporter of rough diamonds by volume for quite some time, while the United States of America accounts for a little over half of the global demand for polished diamonds worldwide.

The Group of Seven (G7) is an informal, homogenous and intimate grouping of Member States consisting of the United States, which happens to be their best economic performer. In addition to that, the U.S. has the largest gross domestic product (GDP) of each of the G7 member states. Other Northern hemisphere members represented by the G7 are the United Kingdom, Canada, France, Germany, Italy and Japan, who are typically stalwart backers of U.S. aspirations to spearhead global jurisprudence that they could substantially benefit from.

In 1997, Russia came on as a member of the Group of Eight (G8), however, their membership was suspended … or should I make it clear by disclosing that the other seven countries decided to meet in 2014 with a concentrated aim to exclude Russian Federation from the G8 … due to their annexation of Crimea.

Of the collective and remaining G7 nations, Canada is the sole diamond producing nation. There is a recurring inquest with regard to why the People's Republic of China is not a member of this forum and why Russia was excluded, especially if the G7’s mission is to assemble the world's largest industrialized economies that possess the capacity to protect and strengthen the international financial architecture. Rather than exert a great deal of energy to structure a rules-based world order that is obsessed with isolating China and Russia, it would be worthwhile to convey the message that I would like to remind each government when I arrive there…

There is no appealing harmony when everybody is singing the same note and it is only when the notes are contrasting that put us in position to truly harmonize. When we magnify who is claiming the number two spot for global diamond consumption (behind the USA), China is in clear view. China will never be viewed as a left-wing democracy in the eyes of the G7 member states, even if the case is made that this Asian nation can be established as the largest of the world’s developing countries.

It is not a surprise or unnatural occurrence that China is the largest trading partner to Japan, while other G7 must also depend on this unitary one-party socialist republic for an assortment of manufactured goods that are in high demand. All of the G7 members have exhibited reluctance to embrace a political system that appears to be inconsistent with theirs, and some would even argue that China’s exclusion is caused by ideological reasons as well as its low nominal GDP and non-liberal democracy.

Historically, Antwerp has been the most prosperous nucleus for Russian diamonds and at the present moment, we must all keep that thought in mind, particularly since Belgium is a European country that has previously been unwilling to block the European Union’s (EU) interest in imposing a ban on Russian diamonds.

While the G7 and EU have already informally consented to imposing sanctions on ALROSA and the Russian Federation, we must be cognizant of the fact that the EU’s initial reluctance to act together with the G7 was out of fear and embarrassment that their endorsement will give rise to additional humiliation, directly resulting from KP’s global ineffectiveness.

In fact, it has become more obvious for consumers to understand why Belgium was initially not on board with the impulsive decisions made by the G7 to sanction Russian diamonds, particularly those in the United States, the United Kingdom and Canada. Belgium would love to take advantage of a real opportunity to position themselves as the sole entry point for natural diamonds destined for the European Union. India would also love to remain uncontested in their efforts to uphold an elevated level of relevance as the most important center for global diamond resale.

Every diamond “loss” that can be observed in Antwerp’s Diamantkwartier or within the Israel Diamond Exchange (IDE) in Ramat Gan at this particular epoch is viewed as a temporary “victory” for the Dubai Multi Commodities Centre (DMCC), particularly since this existing trend is now delivering revenue and relevance to the world’s youngest diamond center.

Returning to the topic of Russia, whenever the topic of ALROSA is on the table for discussion, it is important to remember that the Russian government is not only engaged in an armed conflict, but also holds a 33% stake in the Russian diamond company and is responsible for 90% of Russian Federation’s diamond mining capacity.

But, the diamond business goes on in Russia, and nothing stops ALROSA from holding its first auction of colored and white diamonds in Moscow. The auction will take place on November 14 -16, 2023. Your comments?

Many international diamond traders are learning incredibly consequential lessons from Indian diamond firms that they are likely to be heavily penalized within their own countries for any trade links with ALROSA as well as for any suspicious payments destined for related or unrelated Russian bank accounts.

The Russian Finance Minister’s existing position to conduct business as usual outside of the G7 nations or European Union is based on the Federation's long-standing position as the world’s top diamond producer. The Russian Federation has become accustomed to leading the global diamond parade to such a great extent that ALROSA has become determined and obsessed with continuing their efforts to look for ways that prevent them from becoming an industry casualty.

It’s a survival instinct that African countries like Angola, Sierra Leone, Democratic Republic of Congo and Central African Republic had to overcome, so there is an unmistakable display of industry self-preservation in Africa that can be used as an example. The time has also come when the world will get a chance to see how the Israeli diamond sector takes the exact same approach with respect to their industry’s survival.

ALROSA' s planned auction of the 40+ rare colored and colorless diamonds that will be on offer is a clear indication of their concerted deportment. It will be unfathomable for serious international diamond buyers and collectors to resist the temptation of wanting to obtain these stones, and fortunately for ALROSA , the level of interest can be accepted as luxury that comes with being at the top of the diamond food chain. With or without G7 sanctions, ALROSA shall continue to enjoy random success in exploiting uncomplicated channels to sell diamond production that will surely end up on shelves in the United States.

In addition to that, ALROSA shall achieve their fiscal objectives owing to the fragility and ineffectiveness of the Kimberley Process (KP).

Over the years, KP Plenary has reviewed the progress and challenges of the KP to ensure transparency and accountability of the global diamond trade, but in vain. No decisions have been concluded till today, frustrating industry members. Please shed some light on this please.

For more than a decade, genuine interest as well as customary devout attendance at the KP Plenary Meetings has been rather uneventful and many attendees who previously supported the Certification Scheme would conclude that any chance of a virtuous blessing has been on the wane for quite some time.

It has been rather dissatisfying to watch founding members of the Kimberley Process (KP), namely Global Witness (GW) and Partnership Africa Canada (PAC) make conscious decisions to walk away from a Certification Scheme that has become the top priority of the World Diamond Council (WDC).

It was even more devastating to accept the fact that the KP no longer represents how the entire world responds to bona fide intricacies within the confines of the global diamond supply chain. Whenever profound suggestions by the Kimberley Process Civil Society Coalition (KP CSC) are publicly uttered, it tends to fall upon the deaf ears of the KP members who pretend as if they are completely unaware of the fact that they are deceptively being led and undermined by a deceptive industry lobby group that is not (and was never) in accord with them.

The recurring indifference exhibited by every WDC President and from the Chair of the KP’s Working Group of Diamond Experts (WGDE) has a great deal to do with why there are so many KP setbacks. When that same WGDE Chair also sits as a Member on the Working Group on Monitoring (WGM), the Committee on Rules and Procedures (CRP), the Working Group on Statistics (WGS), the Committee on Participation and Chairmanship (CPC) as well as occupies space as an Observer to the Working Group on Artisanal and Alluvial Production (WGAAP), then African diamond producing nations can now comprehend why De Beers finally had to expose themselves by expressing their backing of the World Diamond Council (WDC) in efforts to progress the ‘G7 Diamond Protocol’ proposal.

The G7 Certificate Scheme is being aggressively hyped to serve as the preface for De Beers to demand that Tracr becomes the industry-wide technology to deliver transparency. For diamond industry insiders, the recently announced collaboration between De Beers’ Tracr and Sarine Technologies is being viewed as a despondent and overstated attempt to persuade the industry that Tracr is the only option when it comes to solving the ongoing traceability issues. If the G7 falls for this futile industry maneuver, Tracr will continue to be aggressively promoted and earmarked by both De Beers and the WDC as the only acceptable solution for the entire global diamond industry.

The industry can see that Tracr is heading in the direction to be hyped in the same forceful manner that the WDC’s System of Warranties (SoW) was eagerly pushed on to the industry’s most credulous disciples. The African Diamond Council (ADC) believes that it is better for the KP to legitimately evolve, than to see it completely collapse.

To substantiate my statement, this is why the ADC has meticulously been testing a technically progressive transparency platform that has proven to detect, pinpoint and track the origin of rough diamonds as well as other gemstones. This transparency system has already established a great deal of accuracy and the ADC has evidence that it is fully capable of delivering the level of credibility and integrity the Kimberley Process (KP) needs to persevere, establishing a level of irrefutable integrity, while making a strong case to have industry offenders made consequentially liable.

While Sarine Technology's “AutoScan Plus" system and De Beers’ Tracr digital platform are still relatively far from attaining a viable and suitable solution for diamond traceability, particularly in Africa, the African diamond industry applauds their efforts.

The ADC continues to analyze opportunities as well as press forward by providing support for more farsighted and disruptive traceability developers. KP participants inside African countries are now more informed and equipped to grasp why the Kimberley Process Civil Society Coalition (KP CSC) may have been moved to boycott the Kimberley Process Certification Scheme in 2016.

What is more magnified is why KP fails to unite administrations, civil societies and key industry players. The word is out now that it was never their intent. The little credibility that KP once had was constructed on the shoulders of African diamond producing countries when civil wars in diamond producing countries were taking place.

Now, non-diamond producing nations are being depended upon to establish a consensus for the diamond-industry organizations that depend on the WDC to be their voice. We take our hats off to all the enlisted members who are considering revoking their support or membership KP and WDC.

The African public sector is wisely waking up with a much desired understanding of why the African Diamond Council (ADC) felt obligated to give a wide berth to the KP Plenary this year. KP members have also expressed a more elevated discernment on the ADC’s decision to stand behind the Rapaport Group on their unshaken stance in defiance of an approval on the proposed WDC G7 protocol on Russian diamonds.

The Small and Medium-sized diamond companies or enterprises that are not equipped with adequate human resources or endowed with the desired levels of financial capital to meet the exhaustive compliance requirements that the WDC is hoping to impose on them will definitely not survive.

When Rapaport's assessments were labeled by WDC as “inaccurate assertions”, the African Diamond Producers Association (ADPA) felt it was time to express the well-established displeasure to the KP Chair for not being included in the G7 discussions.

With these latest developments, the WDC is now on the defensive and quite uneasy at the thought of members relinquishing their support for the lobby group that has failed to establish an impressive track record of success, especially with relationship maintenance and regarding diversity and inclusion, particularly from the African continent, which now makes up more than 69% of diamonds worldwide and where more than US$ 9 billion of revenue is being generated.

During the recent Kimberley Process Plenary in Zimbabwe, were any constructive decision/s finalised for the global diamond industry? What was the final outcome of the Plenary? Your opinion?

In recent years, constructive decisions are typically passed up on at KP Plenary Meetings, however, the Republic of Zimbabwe did take a commendable opportunity to highlight their internal progress and success that has been achieved as KP Chair which cannot be attached or associated with giving undeserving praise or credence to those in charge of the Certification Scheme.

Over the last year, the Zimbabwean government had an opportunity to demonstrate that significant progress was attained in exhibiting unexpected levels of transparency and no one should be surprised with the level of effort and progress Zimbabwe made to reinvent their industry.

As far as a final outcome, Zimbabwe’s laudable efforts to make sustainable mining a key priority was also evident during the Meetings in Victoria Falls and each unexpected development they could bring to the forefront was warmly applauded by all.

It is important to bring to light that whenever I take interest to listen carefully to prepared testimonies by Heads of diamond industry lobby groups, particularly when calculated claims are being made on African soil in connection with protecting the integrity and credibility of the diamond industry, these carefully constructed utterances come with a great deal of skepticism and defeatism.

In closing, the G7/EU sanctions will not only unmask additional disorganization in the Kimberley Process (KP) to a greater extent, it will also discredit and undermine its initial and intended purpose, which is disturbing to Africa's diamond industry, given that it will once again lead to social unrest and insurgency in diamond producing countries.

Africa does not want to become the victim of a “Hot War” inside anyone’s “Cold War”. While African diamonds and natural resources have historically been the external motivation for internal unrest, this is a set of circumstances that Africa will no longer tolerate or be subjected to.

Lastly, the G7 is currently considering four traceability proposal options that African diamond producing nations will not move to embark on or implement. What Africa chooses to have recourse to will not only exceed the exceptions of the existing blockchain proposals currently being considered for the G7, but will exceed our own expectations to present a pioneering system that will be viewed and accepted as nothing other than necessary, effective and all-inclusive.

Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough & Polished