Certified diamond: definitely conflict-free thanks to the Kimberley Process

Are you as big a fan of the American actor Leonardo DiCaprio as we are? Rightly so too! We love watching him give his very best performances on the big screen time and again. With or without – well ... – his South African accent, like in the Blood Diamond film.

Obviously incredibly exciting, but apart from that, we couldn’t be further removed from all of this at BAUNAT DIAMONDS. After all, if you purchase a certified diamond as an investment via us, you will be investing in 100% guaranteed conflict-free gemstones. In fact, you would have a hard job finding a diamond in the sector which would be purer.

Nowadays the vast majority of the rough diamonds are produced by companies which strictly adhere to the Kimberley Process Certification Scheme. You will undoubtedly have heard this name before. Or you’re aware of the fact the system has been named after the South African mine town of Kimberley at the Big Hole, the famous mine we have mentioned before. But what exactly does the Kimberley Process entail?

Big Hole

  • The Kimberley Process is an international collaboration between many countries, NGO’s and the diamond industry. The aim: to eliminate trading in conflict diamonds right across the world.
  • Conflict diamonds are traded to finance movements which a UN recognised government wants to overturn.
  • Rigorous self-control: the diamond sector doesn’t tolerate any purchases or sales which violate the Kimberley process rules.
  • Even more transparency by continuous audits of customers and blockchain technology.
  • Conflict diamonds have now virtually been eradicated: 82 countries are participating with the Kimberley Process, good for 99.8% of all globally produced rough diamonds.
  • If you decide to opt for a certified diamond as an investment, you will be opting for an honest product which doesn’t pay for wars. Start your journey with BAUNAT DIAMONDS.

 

How did the Kimberley Process first come about?

Twenty years ago, in 1998, the British NGO Global Witness uncovered the fact that the former Angolese rebel army UNITA, now one of the country’s largest parties, was financing itself by selling illegally mined diamonds.

The UN imposed sanctions, but they didn’t help at first: the movement simply continued with its sales. In fact, it soon became apparent military groups from Sierra Leone and the Democratic Republic of Congo were also buying weapons with conflict diamonds. The UN, NGO’s and the diamond sector knew this filthy trade simply had to stop.

As the world organisation itself couldn’t impose a great deal, the UN General Assembly adopted a resolution in 2000 which supported the creation of an international certification system for rough diamonds. Many countries, NGO’s and companies worked on this together. The result took effect from 2003: the Kimberley Process.

Ruwe diamant

Only trade in certified diamonds

The Kimberley Process is an international collaboration agreement between many nations, a number of non-governmental organisations and the diamond industry. The aim: to exclude each rough conflict diamond from the world trade which is being traded to finance a movement which wants to overturn a government recognised by the UN.

Each country is free to decide whether or not it wants to become a member of the Kimberley Process. But if it does decide to join, it will need to include the minimum requirements of the certification system in its national legislation. This naturally means: not trading a single conflict diamond. At the same time, the participating country may only do business with other countries minimally abiding by the Kimberley requirements.

Each cargo of rough diamonds must be shipped in sealed, secured containers, with a valid and government-validated Kimberley certificate. This shows the gemstones are conflict-free. The participating countries will need to thoroughly inspect the export, import and internal trading in order to be sure of that fact. They also need to keep transparency high on the list of priorities and therefore share and exchange all relevant data about production, imports and exports.

So what if a conflict still breaks out?

In practice no diamond bourse in the Kimberley Process countries would trade gemstones without the necessary guarantees that the certification system’s requirements were being observed. If a conflict does arise in a participating country, the certificate will immediately be withdrawn.

It goes without saying that a suspension of the certificate won’t be good news for the mining companies active in that country. But they will still close the mines time and again if this proves necessary. Out of principle and because most of the major players, like De Beers, are mining for diamonds on a global scale. They will simply focus on another area.

You’d have to be seriously mad to consider smuggling

In theory the mining companies could participate in smuggling too. But there isn’t a single legitimate diamond company which would consider that. First and foremost because this is totally unethical. The mere idea opposes everything the Kimberley Process and its participants represent.

And secondly, financially it isn’t worth the effort to offer diamonds on the black market. Buyers will never pay the full price there, considering the gemstones would be difficult to sell on.

And at the same time the mining costs will remain the same: the digging machine won’t suddenly work cheaper. To the contrary in fact, the expenses will actually rise. Oil is more expensive in conflict areas, many accessories are difficult to obtain, additional security measures are required ...

Kimberley certificaat

Rigorous self-control

So colouring outside of the lines of the law would really only result in self-destruction. The diamond industry, on the other hand, operates very rigorously to ensure no purchase or sale violates the rules of the Kimberley Process. Exactly as those requirements also prescribe themselves.

All the major mining companies, including De Beers, even go one step beyond this. They surround themselves by independent audit agencies like SGS, which continuously check on how the miners’ customers work, how they are financially structured, where they cut the diamonds and how they treat their staff.

The large mining companies have seen it as very important ‘to know your customer’ for many years. ‘After all, we trade incredibly valuable products throughout the entire sector, which we don’t just want to sell to anyone’, according to Steven Boelens, Executive Director and Co-Founder of BAUNAT DIAMONDS.

Very closely involved with pioneering activities

Steven Boelens actually worked for the oldest and most renowned broker Bonas during the early years of the Kimberly Process. ‘I used to go looking for the right, reliable customers, right across the world, for the mining companies and diamond bourses. This helped to organise the continuous audits.’

‘It was an incredibly fascinating, innovative period. Completely new mechanisms were being rolled out, which are considered normal today. Like the fact that companies wanted to know what their customers were going to do with their purchased goods. Fifteen years ago the diamond sector was one of the first to take this responsibility, together with the financial world at the time.’

Aiming for even more transparency

The Kimberley Process makes trading in diamonds a great deal clearer. But the sale of diamonds must be and stay as pure as the stones themselves. The producers use blockchain technology for this purpose. They want to make the certified diamond fully traceable with this technology, from the miner right through to the retailer.

De Beers, the largest diamond producer in terms of value, has taken the lead here. In May 2018, the company reported it could track one hundred high value diamonds from the source to the buyer, via blockchain, the first successful attempt of its kind. As soon as the gemstones left the De Beers mine to the cutter and jeweller, they would leave an immutable, secure digital trail. The Tracr blockchain platform developed for this purpose will be launched at the end of 2018 and will be available to the entire industry.

Conflict diamonds are now virtually eradicated

The Kimberley Process can certainly look back on an excellent track record twenty years on. Currently an impressive 82 countries are participating, whereby the entire European Union counts as one member. These nations, together with the industry and NGO’s, have managed to virtually completely eradicate conflict diamonds from the sector. Meanwhile, 99.8% of all rough diamonds from across the entire world are being produced by companies which strictly adhere to the Kimberley Process Certification Scheme.

This has turned the diamonds into one of the most controlled raw materials in the world. What a difference when compared to oil or cobalt, a chemical element currently being pursued on a worldwide scale. The element is used to make very stable batteries with a long lifespan, for example for electric cars and smartphones. But cobalt is often mined for in unknown, degrading conditions. Our sector certainly experienced different times too, but is now demonstrating how things can be done differently, very differently.

A certified diamond as an investment which is ethically correct too

When you opt for a diamond as an investment, it’s crucial to know you are investing in an honestly acquired product. A beautiful, valuable item which no one has needed to suffer for. Which wasn’t used to finance disruptive wars and violence.

Believe in us, that’s equally important to us. That’s why you will only be investing in 100% conflict-free certified diamonds with BAUNAT DIAMONDS. We exclusively work with renowned diamond companies, which see it as an honour to comply with the Kimberley requirements.

Make your choice today via our four investment options or our online collections. For a certified diamond as an investment, in all purity.

Author: Tom Dejonghe
Source: BAUNAT

With this article, BAUNAT strives to inform you thoroughly about investing in diamonds. No investment can be guaranteed to be without risk or fully according to your expectations. That is why we recommend to research the risks and aspects of investing in diamond properly to ensure that you make the right choice for your portfolio.

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