De Beers steps up ‘wheat-from -chaff’ strategy against Russia
One of the world’s leading publications, The New York Times, this week ran an article on Russia’s efforts to prevent the Kimberley Process or any other organisation from labelling its diamonds as “conflict or blood”.
Part of the article reads: “Because of loopholes and technicalities, so-called ethical diamonds don’t really exist, many jewellers acknowledge.”
The statement represents the diamond industry’s oft-stated fears that failing to speak up or censure Russia for its invasion of Ukraine, would eventually tarnish the reputation of the shiny stones, a sensitive luxury commodity whose value is largely derived from the storytelling around its purity, mystique, and scarcity.
Natural diamonds compete in the luxury end of the market, jostling for consumer pockets against other forms of jewellery, holidays, various types of property and others. With fears of a global recession or strong slowdown, diamonds will be battling for survival against these other expenses as consumers jettison their luxuries.
The failure of the Kimberley Process’ June meeting held in Kasane, to even debate any action against Russia for the invasion of Ukraine and the reactions to The New York Times article, appear to be putting paid to the fears of broad reputational damage to the diamond industry.
The Kimberley Process, known informally as the KP, consists of 85 countries, diamond producers, observer groups, and civic organisations and is the diamond industry’s broadest and most authoritative grouping, enjoying the backing of the UN.
Whilst the West has sanctioned Russian diamonds since that country invaded Ukraine in February, Russia, the world’s largest rough diamond producer, still enjoys revenues from the stones as they flow uninterrupted through Russo-neutral cutting and polishing centres such as India and China, which control more than 90% of the midstream market.
Once they have left these cutting and polishing centres, the stones are no longer classified as Russian and thus mix with others and are further manufactured into jewellery and sold in the US, the world’s single largest market for diamond jewellery.
Although major retailers such as Tiffany and Signet have moved to block Russian diamonds from filtering into their jewellery lines, the stones from Moscow are generally the smaller, lower value ones in the market whose provenance is more difficult to ascertain.
Ahead of the Kasane meeting, industry analysts had warned that with Russia’s stones
A few months after launching an initiative that gives jewellery retailers a blockchain-backed assurance of the source of their rough diamonds, De Beers is stepping up its traceability efforts to consumers, where the battle between ‘good and bad’ diamonds is ultimately won and lost. Staff Writer MBONGENI MGUNI explains
continuing to trade in the global market, ethical consumers, particularly millennials who are an increasingly important part of the diamond market, could either be turned off by natural diamonds completely or turn to synthetic diamonds whose sources are easier to establish.
The New York Times article and the dismissal of ‘ethical diamonds’ are being read with concern by producers who had hoped the KP would take a stronger line against Russia.
De Beers, the second biggest producer of rough diamonds after Russia, is stepping up efforts to put more daylight between its stones and those from Moscow, moving its traceability initi
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In May, De Beers announced that its Tracr initiative which uses blockchain to provide diamond provenance to retailers was being upgraded to handle a million stones a week, giving jewellers such as Tiffany’s the assurance that the diamonds they are selling are from the De Beers’ stable.
While Tracr is ‘Business to Business’, the new programme, known as Code of Origin, is ‘Business to Consumer’.
Speaking to Mmegi recently, De Beers’ executive vice president, Diamond Trading, Paul Rowley was quick to stress that the consumer-facing initiative is “not about Russia per se”.
“This is a programme around the telling of the story of the De Beers’ journey, the countries where we operate, the people, and making sure the story goes through and answers the questions that consumers such as millennials may want to know,” he said.
“It’s not around Russia per se.
“Over the years, we have responded to various issues such as blood diamonds and we are looking to enhance and differentiate our own products. “It’s about bringing that whole ecosystem of the journey into our diamonds and telling the story about the countries where the diamonds are being produced.”
Using a customised code provided with the piece of diamond jewellery, buyers will be able to load the number onto a website and track the source of the diamond and what the community impact of those diamonds is in that particular country.