Breaking Down KP’s Suggested Diamond Valuation System

(edahngolan.com) - One of the key issues brought up for consideration of the Kimberley Process (KP) this year, was the suggestion to put in place a rough diamond valuation system. At its core, the idea is to find a way to determine if the values stated on rough parcels shipped internationally are reasonable. The suggested methodology proposes that rough diamonds be valuated based on converting known polished diamond prices into rough prices, taking into account manufacturers’ costs and margins. Much can be said about the pros and cons of having such a system in place. I feel that an important component of this discussion is the “how,” not only because it is an unknown to most, but it can also stimulate a wider discussion on valuation.