Trade Resources Industry Trends Diamonds Development in Global Market

Diamonds Development in Global Market

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The diamond industry needs to support programs to uplift its vast artisanal mining sector. The more than 1.5 million diamond diggers – predominantly in West Africa – and their estimated 10 million dependents, remain the most vulnerable population in the diamond supply chain. The industry's apparent lack of awareness of this sector exposes its own vulnerabilities.

The Diamond Development Initiative (DDI) is an organization dedicated to addressing the challenges facing the informal artisanal diamond mining sector. The recent appeal to the industry for financial support by Rory More O'Ferrall, honorary vice chairman of DDI, made at the World Diamond Congress (WDC) in Antwerp should not go unnoticed.

This column endorses both his appeal for financial support and DDI's campaign to promote consumer demand for development diamonds mined by diggers participating in its program.

More O'Ferrall best described DDI's function in an interview with Rapaport News on the sidelines of the WDC meetings: DDI exists to confront the political, social and economic challenges facing informal diamond diggers, bringing government, industry and civil society together to create a sustainable environment for the diggers and their communities. DDI promotes better government mining regulation, efficient organization of production, legitimate and transparent distribution channels, and free and open markets, he explained.

The goal of DDI's work centers around bringing the diggers into an infrastructure that enables them to sell their diamonds through legitimate means. The idea is that by formalizing the sector, diggers should gain a fair price for their diamond recoveries and be better equipped to make a sustainable livelihood.

The alternative, which is still a reality for the majority, is that the diggers typically work for less than $2 a day – often for a middleman – and their diamonds are inevitably smuggled across the border where they're eventually mixed with other goods, provided a Kimberley Process (KP) certificate, and sold in the global market. Generally, the diggers don't have the capacity or know-how to sell the diamonds in the most effective or legitimate way.

Today, the informal artisanal mining sector is responsible for an estimated 15 percent of global production. While there is no official data about the sector, it's a fair assumption that a significant portion of these goods has been mined in appalling conditions, and with serious ethical and human rights question marks. They are subsequently traded in Antwerp, India, Israel, New York, Hong Kong and the like and then sold in consumer markets without thought to the diggers or the issues at the start of the supply chain.

Therefore, efforts to formalize the sector benefit both the diggers and the industry as the challenges facing these miners will inevitably reach the consumer conscience.

To date, DDI has registered around 100,000 diggers who are now a step closer to avoiding such vulnerabilities. Ngomesia Mayer-Kechom, DDI's manager for international programs, explained that the registration process sets the basis for formalizing the sector by creating a database of individuals working in the sector. "You can't formalize the sector if you don't know who's working in it," he noted. The process can also involve providing assistance to create organizational structures and offering education regarding pricing and selling options, among other things.

DDI is currently focused on the Democratic Republic of the Congo (DRC), where more than 800,000 individuals are digging for diamonds, and Sierra Leone, which has approximately 120,000 diggers. Other countries with alluvial mining include Angola, the Central African Republic (CAR), Burundi, Liberia, Ghana, Tanzania, Zimbabwe, Guinea, Brazil, Guyana and Venezuela, to name a few.

There is a great deal of work to be done, which requires government backing to facilitate DDI's operations and commendable goals. The governments of the DRC and Sierra Leone have recognized that doing so helps uplift their citizens and also provides them with a revenue stream they would otherwise miss out on. Angola also recently gave a grant to DDI to support the organization's work.

Still, DDI has to convince the diggers to join the program. They face expected resistance from those who might be exploiting the diggers and More O'Ferrall also noted that the diggers themselves are naturally suspicious of being told what to do. Therefore, with its small staff of workers on the ground – 2 permanent and one part-time employee in Sierra Leone and 2 permanent staff members in the DRC – DDI aims to engage in a dialog with the communities in order to understand what the diggers' primary concerns are. Almost inevitably, those revolve around a lack of income and the conditions in which their families are living, More O'Ferrall explained.

Therein lays DDI's greatest challenge. While it proposes to diggers to register as part of its database, the organization endeavors to create a market for their goods. That requires differentiating these so-called 'development diamonds' from other diamonds and ensuring some kind of premium for them at the retail end of the market – where they would be shown to be ethically sourced by informal artisanal miners.

While there are currently several ethical sourcing initiatives in the diamond and jewelry industry, DDI argues that potential benefits from those programs generally exclude artisanal miners, and tend not to address social and environmental issues in artisanal mining countries. Addressing artisanal miners may be a tougher task in the already contentious ethical sourcing debate.

Therefore, the organization has prepared its own development diamond standards for artisanal miners to apply measurable social and environmental practices to their operations. By accounting for the sector's unique political and social circumstances, DDI hopes to create an independently verifiable, ethical and traceable product that consumers will be able to purchase at a premium.

More O'Ferrall admitted that the delivery of development diamonds to the market is in its infancy and is taking a long time to implement. However, he reiterated his encouragement at the progress that has been made and assured that there is a definite need for it.

Consumers increasingly want to contribute to the betterment of society through their purchases, and development diamonds certainly would meet that appeal. But they also require the trade's involvement to make such a campaign truly effective.

More O'Ferrall argued that the trade has little choice due to the serious reputational threat it faces if it does not address the plight of the artisanal mining sector. He cautions that the industry risks being the target of public international criticism, and a possible boycott, if it doesn't take action on behalf of the diggers. "The workers in the informal sector are unregistered, unregulated and unprotected, at the mercy of unscrupulous traders, corrupt government officials and rogue militaries," he told attendees at the WDC. "These workers and their dependents are part of our diamond family. We must take action to preserve our reputation and to protect our bottom line."

Strong words indeed, with purposeful references to the industry's vulnerability when the conflict diamond issue first arose. This time it's an easier crisis to avoid given that the DDI already has a structure in place.

Until now, DDI has survived on a fairly modest budget. In 2013, its revenue from donations fell to just $541,700 from $682,728 the previous year. The bulk of those donations is earmarked for specific projects while the organization largely relies on the trade to cover its operational costs. Mayer-Kechom explained that DDI spent much of 2013 developing programs that are being implemented this year, and that the organization therefore requires broader fundraising in 2014.

That's a challenge that individuals and companies in the industry are surely up to, and that the industry is arguably socially obliged to meet. Not doing so would undoubtedly leave the rest of the diamond industry exposed and the artisanal mining community in an ever vulnerable position. 

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