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As the Kimberley Process (KP) Intersessional meeting takes place this week in Dubai under the theme “Year of Delivery," another window of opportunity has been opened for the diamond trade watchdog to deliver an updated definition of ‘blood’ or conflict diamonds, according to the African Diamond Council (ADC) and African Diamond Producers Association (ADPA) chairperson Dr M'zée Fula Ngenge.
KP currently defines conflict diamonds as a rough diamond mined in an area controlled by insurgent forces whose sale is used to finance anti-government military action.
Concerted efforts, mainly by civic organisations, to have the new definition covering environmental issues, violence, poor labour standards and child labour, were rejected by some member nations.
China, India, and Angola were said to be the most outspoken, while South Africa, the Democratic Republic of the Congo (DRC), and Zimbabwe previously argued that the KP was all about trade, not human rights.
Dr Ngenge told Rough&Polished’s Mathew Nyaungwa that the KP has the perfect set of circumstances to restore the certification scheme's credibility by backing, ushering in and implementing an effective traceability solution for the global diamond industry as well as the entire gemstone industry.
He said the current KP chairperson is well-positioned to prevent the certification scheme’s 2024 goals from being merely diminished to a meagre theme or slogan.
Dr Ngenge also spoke about the G7 restrictions being announced on diamonds outside of the KPCS regulations, a move that he said will likely have a “cataclysmic impact” on the entire global diamond industry.
Below are excerpts from the interview.
How effective is the African Diamond Producers Association (ADPA) in advancing the interests of the continent’s diamond-producing nations?
Since initially launched and declared as an intergovernmental body two decades ago, the APDA has yet to arrive at that commanding global juncture as many of the qualifying members had anticipated. Yet, I remain optimistic and will forever be receptive to diligent efforts made to advance the African diamond industry. While the association is exclusive of inclusion and participation from the Republic of Botswana, which is Africa’s top diamond producer, ADPA has sat idle for 18 years, which resulted in and suffered from issues of deep-rooted administrative mismanagement at its inception.
However, it brings me a great deal of satisfaction knowing that solicited funds have now been secured and re-applied to ADPA’s annual operating budget to deliver a much-deserved second chance to perform. To avoid further organisational disintegration, ADPA's fiscal injections need to be regularly scrutinised. This course of action should position the association in efforts to recruit and secure laudable personnel who may be more willing to perform far beyond their potential.
What needs to change going forward for ADPA and its members?
African diamond-producing nations should now be compelled to refrain from applying for membership in ADPA solely for the sake of prestige, a false sense of belonging or to have an unavailing attachment, as opposed to fearlessly and collectively making use of the membership to work in the best interest of its potential and existing member states. The corresponding vantage point should also apply to non-diamond-producing nations seeking a free ride by claiming "observer" status within the association.
ADPA was declared in November 2006, and it is critical to keep in mind that in the ensuing two months of the following year 2007, the Republic of Angola eagerly campaigned and was accepted into the Organisation of the Petroleum Exporting Countries (OPEC), another intergovernmental organisation that ADPA was attempting to model itself after. This year, we witnessed this southwest African oil and diamond-producing nation terminating its OPEC membership, having realised that the time, energy, and effort they expended subjecting themselves to the oil cartel's quota pressurisation were not only ill-advised but were a national oversight of great consequence.
Sixteen years ago, African nations typically engaged in voluntary practices to seek global status and prominence for unfounded reasons. Even though the desire to fit in continues on a lesser scale, we can witness countries such as the Republic of Botswana fearlessly stepping forward to exhibit a much-needed level of courage and understanding that assists this top diamond-producing nation in positioning or viewing itself as an industry pacesetter, rather than as a subjugated servant of the global diamond trade.
How is the African Diamond Council (ADC) encouraging responsible mining?
The ADC encourages responsible mining practices primarily through governance, accountability, and transparency. As part of the ADC’s revenue recovery programme, the activities of the Artisanal and Small-Scale Mining (ASM) trade contribute to an estimated 15-20% of our rough diamond supplies as well as 5-10% of the price per carat value.
Other favourable overtures include assertive initiatives that aid in the management and protection of the environment as well as deliberate efforts through insistent industry health and safety standards. High on the ADC’s list of continental priorities is social and community engagement, which serve as fitting channels to demystify any industry misconceptions or misinformation, particularly as it relates to Africa.
Diamond-producing economies in Africa strongly rely on exports of rough natural diamonds, which are occasionally exposed and subject to internal structural changes, especially when the domestic economy is worlds apart from the industry’s sustained growth.
Implementation of advanced systems and technology is now one of the main focuses of the ADC, which would certainly lend a hand in Africa's efforts to educate and pilot the global diamond industry, instead of continuing to subject the African diamond industry to administrative abuse or indifference from professional industry associations or lobby groups. In contrast, African mining executives are becoming much more inquisitive, engaging, and willing in their efforts to have the quarries that they administer act as pilot programmes for recently developed advanced technology.
The ADC is working to ensure that the diamond mining industry involves and respects all stakeholders, while also making certain that national efforts succeed in educating and encouraging the public and policymakers to adopt a more progressive framework.
What is being done to ensure small-scale miners improve their operations and adopt diamond provenance?
What most may not realise is that small-scale miners are rather frugal and are very unlikely to recklessly spend money in a way that does not generate the expected amounts of recurring revenue or income. Rather than illegally transporting diamonds in volume, many informal miners are opting to sell their production domestically and participate more in internal activities that produce higher returns for them than ever before.
The ADC has placed a concentrated focus on improving the operations of small-scale miners, and our official mandate encourages a hands-on approach in undertakings to curtail poverty and reduce migration from rural to urban areas. The economic significance of small-scale mining can be considerable and has done wonders to complement large-scale mining operations that also benefit multinational mining companies.
How is the ADC fighting illegal diamond mining in Africa?
Eight years ago, the ADC launched an understated and promising revenue recovery initiative that encourages artisanal and small-scale miners to sell their production in the country versus smuggling the goods out. These efforts have recovered 28-32% of potentially misplaced revenue that would typically be forfeited resulting from illegal movement of goods out of the countries that produce them. “Garimpeiros” or informal miners have been and are still pivotal to the ADC’s long-term success, given that they are the actual mechanism that grants significant subsidies to African diamond supply chains.
Were you consulted by the Group of Seven (G7) nations before their move to make a decision that affects the ADC's member states? If not, what does this mean?
No! There was never a willing or committed intention for the G7 to voluntarily seek the advice of or have recourse to African diamond-producing nations, which impressively produce more than 67% of the world's rough diamond output. More concisely, it may indeed be worthwhile to bring to light that I was furnished with a basic and unintentional summary of facts regarding G7’s plans.
Pursuance or acceptance of an African perspective is more likely to occur when ineptitude is identified or prevails. At the same time, if an African organisation enjoys a favourable reception in a global industry body, more than likely, it occurs because the organisation possesses a deficient, palatable or ineffective mandate that fails to challenge or confront the status quo.
Now that the G7’s underhandedness and their industry supporters have consequentially become more exposed; it means that there no longer needs to be a reason for the G7 to circumvent direct engagement with the ADC. Of course, there is a common belief that productive dialogue and direct engagement are likely to transpire now much more than they did before March of this year.
Have you attempted to engage with G7 to voice your concerns over factors that will potentially affect the diamond industry in Africa?
First and foremost, I possess a professional responsibility to regularly impart the ADC's position on affairs occurring in the global diamond industry. Even so, I have channelled many of my concerns to Heads of State and Mining Ministers within Africa's diamond-producing nations, given that the G7 announcement did raise quite a few unanswered questions and concerns that subscribe to preferential market dividends, where G7 members are destined to reap most of the benefits.
With this inequitable and unjust scenario, there are no foreseeable advantages for non-EU/G7 nations together with the major diamond centres that are being urged to comply or concur with the Antwerp proposition that is designed to enhance the diamond centre’s image more than those who sustain their diamond supplies.
For example, Canada, one of the G7’s rough diamond producers would end up being exempted from any justifiable verification or financial mechanisms and African diamond producers would be affected by delays as well as excessive expenses to process accompanying documentation. Immediately after restrictions being announced on diamonds outside of the Kimberley Process Certification Scheme’s (KPCS) regulations, the decision is likely to have a cataclysmic impact on the entire global diamond industry.
While much effort is being devoted to stopping the flow of Russian diamonds to Western markets, little effort over the last two years has been devoted to putting a permanent end to the Russian/Ukraine conflict. The same holds for the armed conflict involving Israel, another major diamond centre.
African diamond-producing nations are not looking to voluntarily participate in strategies of industry gatekeepers that are actually designed to work against the African collective and the ADC certainly does not want to retrogress to the days of the international diamond cartel. In due time, we shall learn of the G7's solecism as well as the intention of those recently professing to stand in solidarity with African diamond-producing nations.
What are some of the setbacks for sending diamonds to Belgium?
Since African diamonds have been synonymous with Antwerp for centuries, many would conclude that there is nothing wrong with continuing to send a reasonable percentage of our diamonds to Antwerp or any other major diamond centre, especially those who are based in Belgium as well as those who preside over public sector administration in those countries. The initial bid to expedite restrictions by the G7 and the EU threatens to produce several negative, direct and indirect economic consequences to the global diamond industry throughout the entire supply chain (from the mine to the finger), which will certainly result in a state of perplexity for all the associated parties.
Sad to say that this professed resolution is taking place against the backdrop of a global macroeconomic downturn, which tends to exert quite a bit of unwarranted pressure on the sales of rough natural diamonds in Africa. This insistence results in excessive inventory stockpiles and price reductions, which have exceeded double-digit figures for customary sizes since last year in 2023. Owning to a failure and indifference to respectably consult diamond African-producing nations, the ADC has concluded that the G7 restrictions on diamonds are bound to continue disrupting the existing supply chains as well as the fundamental business model of the diamond sector by suggesting and introducing segregation requirements.
The G7 restrictions shall unquestionably give rise to additional and much higher expenses at each juncture, from the extraction phase to the retail stage, resulting from the establishment and introduction of lengthy, complex and unilateral procedures to process industry transactions, particularly those that can be defined as trans- or cross-border. Additional focal points and challenges to take into consideration are the foreseeable difficulties that financial institutions possess in executing payments, procuring financing, securing insurance and efficiently managing logistics. These aforementioned influences shall not only damage but intensify the turnaround time Africa typically spends on processing diamond transactions, further disrupting the industry's production cycle and profitability.
The negative impact has become so much more obvious with the proposal or recommendation to establish and utilise an exclusive medium that is certainly destined to disrupt and delay the diamond's transformational stage. The absence of a coherent understanding about how the verification process shall be conducted on the very first rough diamond poses a corresponding query concerning the polished diamond originating from the rough as well as that same diamond that will be mounted in a manufactured jewellery piece.
Most importantly, the negligence that the global diamond industry has demonstrated in implementing an incontestable public traceability platform or solution that exceeds export requirements. The same lack of care is proven to align and be compatible with existing blockchain technologies that not only further agitate the market but will position the highly-touted private blockchains to foster and buy into a forged or false sense of provenance.
African diamond-producing countries not only want effective legislation that returns their smuggled or seized diamonds to the rightful country of origin but members and mines are also demanding accompanying Certificates of Origin (CO), effective use of nanotechnology and rough stone Titles of Ownership to provide validity and legitimacy to the KPCS “Year of Delivery” theme.
A crucial midpoint in this year's Kimberly Process (KP) programme is upon us this week and for the first time in more than a decade, the KP Intersessional Meeting possesses a welcomed opportunity to furnish an authentic premise for vigorous and productive dialogue with the prospect to successfully rectify the certification scheme’s disregarded shortcomings.
Fortunately, there is another immense window of opportunity for the KP to deliver an updated definition of a "blood" or "conflict" diamond and at the same time, the KP has been blessed with the ideal set of circumstances to restore the certification scheme's credibility by backing, ushering in and implementing an effective traceability solution for the global diamond industry as well as the entire gemstone industry.
The day has finally arrived in our industry where a smartphone application can be effectively utilised to unveil the life cycle of an extracted, natural gemstone from the source to the consumer. The current KP Chair is well-positioned to prevent the certification scheme’s 2024 goals from being merely diminished to a meagre theme or slogan. A clear demonstration of foresight, insight and hindsight from the KP can certainly make the most positive impact during the diamond industry’s restructuring phase.
The last thing the African diamond industry wants to commit or buy into is the notion of suffering from or bracing for consequences caused by the implementation of precarious codes of conduct that send all rough diamonds to a single locale in the EU.
Will the G7 measures open a market for lab-grown diamonds?
It would be imprudent for the African diamond industry to disregard this likelihood, however, as long as Africa is a fertile ground for natural rough diamonds, we shall continue to view Africa’s current situation as a blessing, rather than a curse. If natural diamond prices are augmented, due to increased market prices or efforts to present an illusion of restricted supplies, it would negatively impact and remove the interest of the end consumer. It would also encourage potential diamond buyers to purchase inferior alternatives, such as fabricated, man-made, artificial, synthetic or lab-grown diamonds (LGDs).
As a result, it accelerates the decreased demand for natural diamonds, which would directly and unequivocally undermine the economies of diamond-producing countries, especially in Africa. Natural diamonds continue to maintain a robust repurchase appeal in comparison with diamonds that are deemed as "unnatural". With the existence of a shadow or unregulated private market, this advantage shall expire without any answers ever being furnished for questions of how to manage exempted goods or gauge the buying and selling of diamonds within secondary markets.
Mathew Nyaungwa, Editor in Chief of the African Bureau, Rough&Polished
