Action in the ‘year of delivery’
Global diamond industry once again finds itself at a crucial turning point
2 024 is set to be a busy and important year for Dubai’s diamond industry - not only in terms of trade, but as a nexus point for industry leaders to engage in both dialogue and decisive action. Starting with the Kimberley Process’ intersessional meeting, which takes place at Dubai’s Uptown Tower this week, Dubai is also hosting its eponymous Diamond Week from November 11 to 15, which will further coincide with the KP Plenary Session, the JGT Dubai trade show at Dubai Expo City and DMCC’S flagship Dubai Diamond Conference.
As the world’s largest rough diamond trade hub, since 2021, Dubai’s 2023 trade figures showed a two per cent year-on-year growth in the value of its rough and polished diamonds, reaching $38.3 billion, representing a five-year compound annual growth rate of 11 per cent. As a result, the UAE’S polished market now accounts for 44 per cent of total trade value, a statistic further supported following the Gemological Institute of America opening a state-of-the-art laboratory over two floors in Uptown Tower earlier this year.
As a confluence point created by the free market, I cannot think of a more appropriate time for industry leaders to congregate and consolidate progress, while outlining and deciding a course of action for the future. As chair of the Kimberley Process for 2024, the UAE has been leading efforts to modernise, reform, and strengthen the KP under the ‘Year of Delivery’ programme, with the intersessional serving as a crucial milestone for both review and action. This year’s, however, will be different. For the first time, the KP will be adding a special plenary session at the end of the intersessional in order to expedite actionable decision making.
During this year’s intercessional will be a keynote speech by the WCO on the benefits of combating smuggling, with an emphasis on empowering African nations to retain the value of their natural resources. As the first acting KP Chair to visit both Sierra Leone and Ghana, I can attest to the exemplary processes put in place, and how both countries have leveraged the KP to curb smuggling, through robust internal controls and mechanisms that set the standard. As a country ravaged by an 11-year civil war which was, in part, fuelled by conflict diamonds, I am particularly proud of the progress of Sierra Leone, which has not only disincentivised smuggling, but is using its diamond revenues to reinvest in its national development. This progress cannot be understated and remains a strong example of the KP’S role as a catalyst for empowering African nations to harness the revenues of their raw material revenues.
As an organisation driven towards depoliticisation, the KP’S administrative decisions and technical guidelines rely on consensus. However, with the current Russia-ukraine conflict, consensus has become a difficult object to grasp. As an additional challenge, policies such as the G7’s Russian import restrictions and its proposed rerouting for all rough diamonds through Antwerp have not only negatively impacted Belgium’s diamond industry, as illustrated through the 146 Belgian companies who complained to the Antwerp World Diamond Centre (AWDC), but furthermore led to widespread criticism from the global industry.
It should also be mentioned as a background that the G7 being unwilling to trust certificates issued by sovereign governments has the potential to become a highly charged, diplomatic issue.
As an opportunity to capitalise on finding solutions, this year’s intercessional coincides with a DMCC special forum, focusing on providence, traceability and technology. Launched in partnership with Swiss-based Original Luxury, the event will feature some of the world’s leading tech providers and industry specialists, including Sarine Technologies, GIA, itraceit, Tracr (Debeers), Opsydia and Diatech amongst others. While an open event, DMCC has invited the UAE’S G7 ambassadors in order to showcase the extensive solutions available that will achieve their stated, political and economic objectives without disrupting the wider industry. Given 80 nations go to the polls in 2024, remaining apolitical will become an increasingly important stance, particularly in ensuring outcomes that are beneficial to all stakeholders and not the few.
Links with arms trafficking
As a topic I have yet to air my concerns about, I would like to raise the issue of arms trafficking and its relationship with the precious stones and rare minerals markets. While the KP has spent over two decades making significant strides into enhancing regulation, transparency and international cooperation, all under the intense scrutiny of governments, NGOS and the wider diamond industry, it appears little to nothing has been done about stemming the flow, or destroying the large caches of light weapons that find their way into the hands of militias around the world.
While not without its faults, it is fair to say that no other body is doing half the service towards a specific commodity market as the KP is for diamonds. Outside of Hollywood movies such as Lord of
War and War Dogs, little has been done to expose the disastrous impact of weapons entering mineral rich nations, and their ease of accessibility. The arms industry and its regulators have had a free pass for too long, and I believe now is the time for a similar body to be proposed and established in order to transparently address the scale of the problem, the traceability of weapons and how each country or region intends to disarm and dismantle its respective illegal arms trade once and for all.
Returning to the ‘Year of Delivery’, and while there is still much to be done, it is also important to acknowledge the successes and key milestones of the KP to date, starting with the appointment of Bojun Tang as its executive secretary. Following his election in November, Tang has already moved to the KP’S permanent secretariat in Gaborone, where he has overseen the process of relocating data from the AWDC offices and setting up a fully operational office. As an institutional move, the formal presence of a permanent secretariat cannot be underestimated. Not only will its establishment be a force for greater continuity, but ensure a steady hand remains on the helm at all times.
Review and reform programme
As a second milestone, the continued development of the KP’S review and reform programme. At this critical time, it is important to reflect on the progress made, particularly in achieving the KP’S primary mandate of reducing conflict diamonds. Additionally, it is also important to reflect on the achievements of its enhanced monitoring, increased market transparency and civil society participation, including NGOS that are geographically closer to producing nations.
Thirdly, and tangentially related to its second milestone, the KP’S commitment to overseeing its complete digitisation, starting with rough-diamond certification. In addition to digitising the KP’S administrative back-office, the successful replacement of paperbased certificates for digital ones has not only been a significant step towards trading efficiency but reducing fraud. As an outcome, the KP’S integration of blockchain technology will provide greater confidence and peace of mind to consumers, who will be able to verify the ethical sourcing of their purchase through a tamper-proof record of the diamond’s origin.
This will also play a role in streamlining the KP’S certification scheme, helping to increase speed, while reducing cost for legitimate diamond producers and traders.
As the Kimberley Process Certification Scheme turns 21, we would do well to remember it has successfully stemmed 99.8 per cent of the global production of conflict diamonds, while garnering the support of 85 countries. Through its continued efforts to digitise, collaborate and enhance traceability, it remains the world’s best opportunity for eliminating conflict diamonds and ensuring producing nations receive the full revenues of their natural resources.
As a country ravaged by an 11-year civil war which was, in part, fuelled by conflict diamonds, I am particularly proud of the progress of Sierra Leone, which has not only disincentivised smuggling, but is using its diamond revenues to reinvest in its national development.