De Beers' ASM Diamond Initiative Critical Step for IndustryApril 19, 18
By far the most important announcement this week was that of the De Beers Group that it is preparing to pilot a program called GemFair to create a secure and transparent route to market for ethically-sourced artisanal and small-scale mined (ASM) diamonds. The diamond miner said that GemFair will use dedicated technology to record ASM production at mine sites that meet demonstrable ethical standards, with the aim of purchasing of rough diamonds from approved locations while helping improve working conditions and livelihoods for those working in the sector.
GemFair will team up with the Diamond Development Initiative (DDI), an NGO that has been working for a decade to formalize the diamond ASM sector in several parts of Africa. Miners that wish to participate in the GemFair pilot must be certified by the DDI as meeting their standards, as well as additional standards specific to the GemFair business model.
Once ethically certified, De Beers will provide qualified miners with a technology solution that includes an app and dedicated tablet, supported by a diamond ‘toolkit’ that will enable the digital tracking of ASM diamonds throughout the supply chain. The pilot will run in Sierra Leone where a number of artisanal mine sites are already participating in the DDI’s Maendeleo Diamond Standards program and where significant advancements have been made by the government of Sierra Leone to formalize the ASM sector.
As Bruce Cleaver, CEO, De Beers Group, said: “The ASM sector represents a critical income source for many poverty-affected communities. However, due to parts of the sector being largely informal and unregulated, it lacks access to established international markets and the ability to derive fair value for participants. By providing a secure route to market, offering fair prices and helping to raise standards, we hope to play a role in enhancing the prospects for those working in the sector, while also potentially opening up a new source of supply for De Beers over the longer term.”
Explained Dorothée Gizenga, Executive Director, Diamond Development Initiative: “The DDI is focused on ensuring artisanal and small-scale miners have access to the opportunities, information and tools that help create self-sustaining communities and formally recognize the sector’s contribution to economic development. We believe GemFair has the potential to significantly transform the sector by providing a new and secure route to market through the world’s leading diamond company. We look forward to continuing to work with De Beers, the government of Sierra Leone and all other stakeholders as we progress.”
The pre-pilot phase of GemFair will involve setting up a local presence in Sierra Leone and working with the DDI and registered mine sites to ensure the agreed standards are being met, that participating miners are trained in how to use the technology solution, and that they have an enhanced understanding of diamond classification.
Once GemFair and DDI are confident the sites are compliant and the technology is working effectively, the pilot will commence with GemFair starting to purchase diamonds from participating miners. While offers will be made for any diamonds presented for sale, regardless of quality, miners will be under no obligation to sell to GemFair if they elect not to do so. Any approved purchases would be sold via De Beers’ auction sales channel. The pre-pilot phase will commence this month, with the aim of a first purchase occurring later in 2018. There is no set timeframe for the pilot to be completed.
Following extensive research to understand the ASM sector and its specific needs, De Beers is developing a technology solution comprising a tablet and a software application that incorporates GPS locations and QR-coded ‘bag and tag’ equipment. The software has been designed to work both online and offline, to support the ability of miners to use it in different locations. The diamond toolkit includes hardware that can work in tough rural conditions, including being powered by solar chargers. The program also involves providing participating miners with training on diamond classification to help improve their understanding of the products they sell.
If proven successful, the technology used in GemFair will be integrated with the diamond industry blockchain platform De Beers is currently developing, allowing the ASM sector to participate in the blockchain and providing an added layer of assurance for ASM production.
As much as 20% of the world’s gem-quality diamonds are produced by artisanal miners – people who dig for diamonds using rudimentary equipment. Often the whole family is involved, including children. There are 1.5 million artisanal miners in Africa and South America, working in 18 different countries, and in conditions that are hard, dirty and often dangerous. Nevertheless, artisanal mining contributes heavily to the livelihood of millions of people.
The internal trading chain in artisanally mined diamonds was, and still is, largely conducted informally, without paperwork or record keeping, thus making it largely untraceable.
De Beers is certainly to be congratulated for its latest initiative. The diamond industry must show the general public that it is committed to fair trading that increases the livelihood of artisanal and small-scale miners. Traceability is also critical in this respect. Compliance and transparency are vital at every step of the chain of custody, from production to export and all the way through manufacturing to retail.
If, at each stage of the chain of custody, the tracing mechanism is not in place, the jewelry industry and the consumer are left with a product that does not fit their requirements for guaranteed ethical, responsible sourcing. But in a blockchain environment, each buying/selling event is registered on the so-called chain that automatically becomes a ‘block’ that represents this unique information, data or characteristics about a diamond as it passes along the value chain.