Scoop

When strikes hit the South African mining sector, it was not only jobs and production that were lost – lives were too. AngloGold Ashanti, the world’s third-largest gold producer, cut its dividend and warned of restructuring at its South African operations and mining giant Anglo American was also reviewing the viability of shafts operated by its platinum operation in South Africa, Anglo American Platinum (Amplats), the world’s largest producer of the precious metal. Diamond mines were also affected, with Petra Diamonds being hit by a rash of (resolved) strikes at its South African mines, with workers downing tools at its Kimberley Underground, Koffiefontein and Finsch mines over pay and working conditions.

There were also countrywide strikes in India against the government’s proposed imposition of a 1 percent excise duty on unbranded jewelry, the doubling of the import duty on gold from 2- to 4 percent, and the government ordering the collection of 1 percent income tax from retailers, on the sale of jewelry worth more than $3,917 (Rs.200,000). The strike hit the Opera House diamond district of Mumbai in March when some 80 percent of the diamond offices in the area – mainly small and medium operators – heeded the strike call by the Bombay Diamond Merchants Association (BDMA) and joined the protests.

It was meant to be a move that bought the industry together, but the proposed Diamond Source Warranty Protocol, a chain of custody initiative announced by a group of American organizations, fell flat when it was introduced at the 35th World Diamond Congress. The initiative was announced by the Jewelers of America (JA), the Jewelers Vigilance Committee (JVC) and the Diamond Manufacturers and Importers Association (DMIA). Part of the issue is the "competing" World Diamond Mark initiative, which was rolled out at the conference and which is aimed at consumer assurance through an approval mark that guarantees best practices. Hopefully the issue will be resolved before too long.

Another issue that came up during the year was the subject of the generic promotion of diamonds. During the World Diamond Congress, a call was made for a levy on all rough diamond sales by miners to fund global generic diamond promotions. The idea was put forward by Sanjay Kothari, former chairman of the Gem & Jewellery Export Promotion Council (GJEPC), who said the key to such a campaign is ensuring a big enough financial war chest to carry out any promotion plans. The GJEPC has imposed a levy on all polished diamond exports from India to fund its domestic promotional campaign.

Recognizing that it needs to evolve to stay effective, the Kimberley Process (KP) is considering new definitions of just what “conflict” means.  According to a KP statement, "An updated definition could apply to diamond-related conflicts that meet generally agreed-upon standards of armed conflicts, such as a resort to armed force between States or protracted armed violence between governmental authorities and organized armed groups or between such groups within a State." Contrary to some earlier fears, the new definition would not apply to violence that is unrelated to diamonds. The clarification was made in response to concerns by countries worried that internal issues could be used as an excuse to exclude them from KP on political grounds, including Russia, China, Israel and a number of African countries. The KP is also expected to change the way it is headed, with the formation of a permanent administrative body, which would make the annual transition between chairs much smoother.

 

This seemed to be the year that the idea of diamonds for investment really got off the ground – with companies such as Singapore Diamond Exchange (SDX), which offered diamond portfolios starting at $250,000, going up to over $1 million. But one company, PureFunds took the concept even further with the proposal of an Exchange Traded Fund (ETF), Diamond/Gemstone ETF (NYSE ARCA Ticker Symbol: GEMS) that tracks an index of 26 publically traded diamond miners and retailers. The ETF will hold shares of the indexed companies, but not actual diamonds.

 

One unwelcome word that kept coming up during the year was synthetic. There was a spate of synthetic diamonds being passed off as natural. Fortunately, the industry’s gem labs have the skills to sort out the synthetic from the natural, but the knowledge that people were trying to commit fraud of this sort had everyone on the lookout. Among the biggest incidents was the parcel of hundreds of CVD synthetics submitted to IGI in Antwerp, while another, albeit much smaller, group of CVD synthetics surfaced at the Gemological Institute of America’s Hong Kong lab in June. There were also warnings about other gemstones undergoing undisclosed treatments, including irradiated emeralds from Colombia.