The BJA’s Simon Rainer on why it’s time to replace words with deeds.
By Simon Rainer
One of the huge benefits in my role as CEO of the British Jewellers’ Association (BJA) is to be part of the many UK and International debates regarding matters relevant to our industry.
And so it is with some regret at this normally happy time of the year to outline some of the key issues regarding the diamond supply chain.
While the BJA is proud and I hope renowned for taking the lead on many key industry issues and initiatives, I am afraid that the situation regarding diamonds cannot be resolved in isolation.
Fundamentally, the UK jewellery industry has to sit up and take notice of the approaching storm clouds heading its way. We can no longer afford to accommodate conservative thinking and the protection of individual interests.
The diamond supply chain is under intense and increasing scrutiny and we must all play our part in creating reform.
So let me outline a few of the current issues.
The Kimberley Process
At present, the Kimberley Process provides a certification system verifying that the proceeds from the sale of diamonds are not used by insurgents against democratically elected governments. This has worked well for many years until the Zimbabwean Marange fields were opened. Financed in part by ZanuPF and the Chinese Government, the international community soon realised that diamond sales were funding the government to act against its indigenous population – on one hand (and extremely perversely) complying with the KP but on the other hand ignoring fundamental human rights.
EU sanctions against the Zimbabwean Diamond Mining Corporation were recently lifted and now huge amounts of rough are making their way into Surat to enter the international supply chain. All of this has led to calls for the KP to accommodate human rights issues, but until agreement can be reached these diamonds are being freely traded and more than likely are present in jewellery flowing in from China and the Far East.
I will concede that there will be many of you reading this who think "so what". The diamonds I sell or use are KP compliant and I am therefore operating within the law.
However, this raises the largest issue of all. Wouldn’t you like to know the source of your diamonds so you have a choice of what to use or buy?
And here we face the objections of the vociferous and conservative minority who believe that we do not need diamond source information. Those ahead of the game such as suppliers of diamonds from Canada or Botswana are already realising the importance of verifiable sourcing
Just consider the mess we are going to be in as more and more consumers ask where their jewellery and components come from.
If this has started to ring a few alarm bells, note the new EU consumer goods regulations and RoHS2, where country of origin has to be declared at the point of sale. And let us not forget our soon-to-be new friend, the EU Minerals from Conflict Areas proposed directive – currently just involved with tin, tantalum tungsten and gold, but something that could get extended to diamonds.
As industry leaders and politicians struggle to get their heads around the diamond sourcing issue, I offer one piece of useful advice: make sure that every diamond you buy is accompanied by a written statement from your supplier that state the goods have not been sourced from an area of conflict, do comply with the requirements of the Kimberly Process and (most importantly) comply with the 2004 UN Global Compact.
And so to an equally pressing issue in our industry regarding the disclosures required regarding the correct identification of natural diamonds, treated diamonds and synthetic diamonds.
All too often I am receiving evidence of irregularities in the honest trading of diamonds. Wherever there is money to be made and advantage can be taken of people’s ignorance, this practice will continue to flourish and presents the biggest threat to our industry.
Not only do you need to take the necessary precautions to ensure that the natural diamond you think you are buying is from a credible source you now need to check that it is actually the genuine article.
The technology for producing synthetic diamonds is now so advanced that they cannot be detected by the human eye and the use of specialist equipment such as that used by the Birmingham Assay office is required to tell the genuine from the synthetic and the genuine from the treated. Never has the phrase Caveat Emptor been so applicable.
The rise in popularity in synthetics is in the main not a bad thing, and in fact De Beers has recently opened up its Element 6 production facility in Oxfordshire (though these stone are for technology purposes). All we ask for is that like the source of a natural diamond, full and complete disclosure is made.
And talking of disclosure let me finish on the issue of diamond certification. I am sure that you all realise that the diamond certificate that accompanies your (natural and correctly sourced) diamond is based on an assessment and cannot be read as a guarantee of the 4Cs from the issuer of the certificate.
There are five major diamond grading laboratories, each of which uses different standards when grading a diamond. Such a situation leaves our industry vulnerable from a consumer confidence consumer standpoint.
A recent Rapaport survey that sent 10 different diamonds to grading labs found that opinions varied by as much as three colour grades.
Let me put this into context:
Round Brilliant, 1 carat, VS1 I colour £5,600
Round Brilliant, 1 carat VS1 F colour £8,400
Which equates to a difference of £2,800 or 51%.
Traders are obviously using the vagaries of the diamond grading system to their advantage and I ask quite simply why we can’t have one standard for all, or in the worst case scenario a far greater consistency in diamond grading assessments. Perhaps we can even get to the stage where a consumer knows exactly what they are buying.
In reality, most labs use machines to grade diamonds. Is it asking too much for a consistent and independently audited calibration system to be put in place? The same process exists for evaluating metal content in the hallmarking process with XRF technology, where there is an unequivocal results outcome. Why not the same testing concept for diamonds?
We are now entering a dark and mysterious world that has even seen one major lab change its assessment protocol, so those holding master stones are no longer sure what is the correct grading procedure. This in itself is absolutely remarkable. Diamonds have been the same for millions of years, so why should a grading system have to change and for whose benefit?
The repercussions of such anomalies are huge and invariably it is a trade association that receives consumer complaints regarding diamond grading and ultimately valuations. A consumer who buys the F colour stone as above and then later gets it independently assessed as an I colour is not normally a happy punter. In such a position, I defy anyone to give a logical answer as to why a valuation will be so wildly out and why as an industry we can’t come to some common agreement on the way forward.
On a positive final note, I am pleased that the British government, through the auspices of the Foreign and Commonwealth Office, are actively involved in progressing discussions regarding the KP and new EU regulation. Their help together with that of CIBJO is creating a communication path that did not exist before. It does appear that politicians both here and in Europe are taking note.
I am slightly heartened that our opinions are being heard (particularly with regards to the diamond supply chain) but as always the debate will be whether government has to legislate or whether the industry will work to new voluntary codes.
With regards to the "peripheral” issues of diamond grading, naturals versus synthetics and valuations, I am afraid that is for us as an industry to sort out. We have to be open and honest on what we can achieve, but the time for narrow thinking really has to come to an end and our words have to be replaced by sustainable deeds.
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