The recent re-launch of the CanadaMark hallmark by Dominion Diamond Corporation is designed to enhance the company’s status as Canada’s primary diamond mining company. While CanadaMark is essentially a business-to-business (B2B) program that complements the brands of manufacturers and retailers, Dominion is hoping it will create a premium for its exclusively Canadian rough diamond production.
“The CanadaMark program represents the company’s commitment to category marketing of Canadian diamonds,” Robert Gannicott, Dominion’s chief executive officer, said in a May 2014 press release prior to the mark’s unveiling at the JCK Las Vegas show in June. Dominion acquired the CanadaMark as part of its 2013 acquisition of the Ekati mine from BHP Billiton, which initially developed the hallmark. “Through this program, [Dominion] aims to highlight the long-term environmental stewardship and social responsibility of the Canadian diamond mining industry, which ultimately will help achieve the highest prices for the company’s diamond production,” Gannicott added.
As such, the company’s direct revenue stream from the program is fairly modest. Currently, only 13 companies are approved CanadaMark manufacturers, while Dominion expects to double that amount by the end of the year. The company estimates that close to 200,000 diamonds have been certified with the CanadaMark hallmark – including those issued by BHP Billiton when it ran the program in the past decade.
James Pounds, Dominion’s president, explained to Rapaport News that approved manufacturers pay a nominal annual fee to be a license holder. He added that the company will soon review its decision to waive a fee that was previously charged to issue each certificate.
Still, the program is not about creating additional revenue for Dominion. Rather, the company believes that there are strong marketing opportunities for brands using CanadaMark diamonds that will in turn boost the value of its own rough production.
The company is therefore careful to define the program as a hallmark – a certificate of origin, and not as a brand of its own.
Whereas brands such as the De Beers Forevermark program, for example, claim to guarantee the quality and authenticity of the associated diamond, CanadaMark simply verifies that the stone was mined in Canada. Dominion believes that, in itself, is enough to augment the branding of its manufacturing clients and associated wholesale and retail partners.
Pounds explains how it works: Manufacturers wishing to join the program undergo an initial verification procedure. Their operations are audited by an independent third party to make sure the applicable factory is equipped with individual tracking systems that ensure the CanadaMark-assigned diamonds are not mixed with other production. The factory also needs to have the equipment in place to inscribe the CanadaMark logo and unique serial number onto the girdle of the stones.
Therefore, Dominion is not involved with any grading or quality control of the CanadaMark diamond, but enables the systems to track the origin of the diamond throughout the pipeline – from the mine to the store.
The manufacturer buys its rough from Dominion and receives an individual invoice number that verifies the mine from which the supply was recovered. The manufacturer then assigns a tracking number to the individual stones as they are separated from other rough supply while undergoing the cutting and polishing process. Once polished, the manufacturer enters the invoice and tracking numbers into Dominion’s system, along with the details and characteristics of the stone, after which a unique serial code is issued by the mining company. The manufacturer laser inscribes the code onto the girdle of the diamond and Dominion then issues the certificate.
Pounds notes that polished diamonds above 0.30 carats are commercially best suited for the CanadaMark, while quality standards are set to include I2 and better clarities and M and better colors. He added that Dominion accepts grading from all of the major laboratories.
Therefore, Dominion relies on the quality control of its clients and the positive reputation that Canada’s diamond industry enjoys.
Pounds explains that the company’s focus in the past few months since launching has been to educate its clients about what the CanadaMark stands for, and how it can help their businesses. An online B2B trading platform exclusively for CanadaMark diamonds is also being developed.
The second phase of its roll-out plan, Pounds says, will focus on educating consumers primarily in the U.S. and Canada about the hallmark. He added that efforts to bring more manufacturers and retailers on board would be helped by increasing end-consumer demand and interest in the program.
Much of that messaging will stress that Canadian diamonds are ethically sourced and produced according to socially responsible practices and in an environmentally friendly manner. Undoubtedly, more consumers are seeking such assurances.
In that context, the hallmark has resurfaced at a time when the trade is considering broader guidelines for source verification and weighing the appropriate model for chain of custody. Part of the discussion centers on whether factories should be subject to random post-production audits of their operations, or whether production can indeed be separated and monitored to verify its source of origin from start to finish.
Many argue that it is more practical to periodically audit factories and companies to ensure that they adhere to certain standards, in which case the traceability of the diamond begins at the factory rather than the mine. Skeptics, among them this column, claim that loopholes exist in such a system through which companies can easily adjust paperwork that leave the industry vulnerable to green washing – presenting a product or company as compliant to certain environmental or ethical standards when they are not.
Rather, in order to give complete 100 percent assurance to consumers, a system is required that enables full traceability from mine to retail. This can only be achieved by separating diamonds through the production process. Doing so is not only necessary for reliable source verification, but it also makes commercial sense given the premium that ethically sourced diamonds can, and should, garner.
The CanadaMark suggests the same.
“We see a good opportunity to build greater differentiation, which justifies a premium for CanadaMark polished over time,” Pounds stressed. “The hallmark resonates especially well with the millennial consumer who is looking for story, authenticity and ethical business practices.”
Of course, Canada is not the only country that can offer such positive messaging. This column maintains that there is untapped diamond branding opportunity in Botswana. Perhaps the state-owned Okavango Diamond Company will consider developing a similar hallmark to enhance the value of its Botswana-produced diamonds. Namibia might be thinking along the same lines as it negotiates a new supply and marketing contract with De Beers.
Therefore, Dominion’s revitalization of the CanadaMark may well be a test case for the industry as it’s the only initiative currently using a certificate of mining origin to enhance the value of the product. Dominion believes its clients can gain a premium for their polished by latching onto the Canada story, and it can, in turn, gain higher prices for its rough. Mining company diamond brands embrace a similar goal. As such, the industry will be monitoring how effective such category marketing can be, and Dominion’s ability to leverage the potential for diamonds that were made in Canada through its rejuvenated hallmark.
