ALTHOUGH FALSE KP CERTIFICATES ARE RARE,
INDUSTRY CAUTION IS STILL RECOMMENDED
Mark Van Bockstael
By Mark Van Bockstael
Chair, KP Working Group of Diamond Experts
Chairman, WDC Technical Committee
Several times a year, with uncanny regularity, the international diamond trade receives alerts from the Kimberley Process (KP) about yet another false certificate that has been encountered, and for which it is asked to practice enhanced vigilance. Together with the mostly negative media coverage such news generates, many diamantaires wonder whether the Kimberley Process Certification Scheme (KPCS) is still functional, remaining capable of delivering on the mandate that KP received from the United Nations in 2000, of breaking the link between armed conflict and the diamond trade.
How gloomy this all may seem. But the truth is that the KPCS is still very much alive and effective. The occasional alert that is issued is real, but is not really indicative of the overwhelming majority of legitimate KP certificates.
A few figures will clarify this statement:
- The official KP website shows that seven alerts about false KP certificates were broadcast in 2015, out of a total of 53,738 KP certificates issued worldwide. This represents a rate of just 0.013 percent.
- The same KP website shows 16 alerts each for false KP certificates in 2016, 2017 and 2018 on total issued of 61,793, 70,278 and 64,097 respectively. These compute into rates of 0.026 percent; 0.023 percent and 0.025 percent respectively.
- For the most recent year on record, 2019, the KP website shows that there were seven alerts out of a total of 52,443 KP certificates issued, corresponding to a rate of 0.013 percent.
Clearly, these are very good results. But are they reflective of reality? Some may argue that the low numbers could be the result of very lax oversight, and what we are seeing is akin to the tip of the iceberg. But this is unlikely. The chances are that what the KP reports is pretty close to the truth.
How is it that we are are so confident? What is the mechanism that makes it possible to find the proverbial needle in the haystack – identifying the few false certificates from the giant stack of bonafide ones?
The trick that the KP has up its sleeve is Import Confirmation. It makes all the difference. Every KP certificate accompanying an imported rough diamond shipment from any KP Participant-country must be reported back to the KP authority that issued it at the point of export. Import confirmation is a KP minimum requirement that must be performed at all times.
For this particular purpose, most KP Participant-countries include an especially designed import confirmation section on their outgoing KP certificates. All the importing KP authority then needs to do is check that the contents of the shipment and the KP certificate match, detach the Import Confirmation section from the KP certificate, stamp and countersign it, and then send it back to the issuer.
This way, a closed loop is created between […]
MARKING THE 20TH ANNIVERSARY OF A YEAR
THAT CHANGED THE COURSE OF THE DIAMOND INDUSTRY
ABOVE: Kimberley (left), the northwestern South African city closely associated with the diamond mining industry, which was the location of the founding of the Kimberley Process in May 2000, and Antwerp (right), the venue of the World Diamond Congress in July 2000, at which was established the World Diamond Council.
The year 2020 marks the 20th anniversary of two seminal events in the history of the diamond industry, both of them associated to the campaign to eliminate the trade in conflict diamonds. The first was the founding of the Kimberley Process (KP), the coalition of governments, industry and civil society that gave birth to Kimberley Process Certification Scheme (KPSC) and since then has overseen its operation. The second was the establishment of the World Diamond Council, which became the industry representative in the KP, taking upon itself the task of securing the trade in conflict-free diamonds in the rough diamond, polished diamond and diamond jewelry sectors.
In May 2000, at the height of the conflict diamond crisis, members of the industry joined representatives of various governments and civil society in Kimberley, South Africa. There, for the first time, a proposal was discussed to establish an international certification system for rough diamonds, as a means of ensuring the conflict-free status of the goods in the distribution chain.
The two-day meeting is today recognized as birth of the KP. The city in which it took place, which some 130 years earlier had been site of the largest diamond rush in history, provided the name of the permanent forum that was created, with governments becoming full voting Participants, and industry and civil society joining as Observers.
Two months later, in July 2000 at the World Diamond Congress in Antwerp, Belgium, the World Federation of Diamond Bourses (WFDB) and the International Diamond Manufacturers Association (IDMA), passed a joint resolution to create an association that would represent the industry in the campaign to eliminate the trade in conflict diamonds. They were joined soon after by CIBJO, the World Jewelry Confederation. This was the birth of the WDC.
At an inter-governmental conference in London in October 2000, the nascent KP forum was presented with a paper entitled the “WDC System for International Rough Diamond Export & Import Controls.” A decision was made to forward it for discussion at the United Nations General Assembly. On December 1, the international body passed a resolution that became the framework for a global certification system.
The KPCS was launched on January 1, 2003, after all member governments around the world had passed the legislation or regulations necessary to implement and enforce the system in their own territories. But already before then, in 2002, the WDC had introduced the System of Warranties, designed to extend the effectiveness of the KPCS beyond the rough diamond trade, through the polished diamond and diamond jewelry sectors. […]
2020, THE YEAR IN WHICH EVERYTHING CHANGED
Dear members and friends,
It’s that time of the year again. The WDC Annual General Meeting is just around the corner, on Monday, October 19, 2020, and so much has changed since last year, both personally and collectively.
If I quickly look back to October 2019, I was still working at the offices of my former employer, Rubel & Ménasché, in the heart of Paris’ exclusive jewelry district. At the time I represented them in the WDC, and also in the Young Diamantaires’ group, which I will shortly mention.
Fast forward 12 months, which seem like several years already, and like so many others I am working from home. But now I represent WDC, and in my new capacity I will be delighted to be a host of the first-ever virtual WDC AGM.
By nature, I tend to see the best in every situation, but I admit I will miss meeting our members in person. At the same time, I realize that this new format will allow us to welcome more guests, and for that I am grateful.
As always, the AGM provides an opportunity for us to report on our activities to the WDC membership. The event this year also will feature a discussion, with guests David Prager, Vice President, Corporate Affair of the De Beers Group, and the renowned industry analyst Edahn Golan. The subject on the card is “meeting the expectations of a changing consumer.”
This latest edition of the WDC News Update tackles a variety of subjects, one of which is a milestone, for 2020 represents the 20th anniversary of the founding of both the Kimberley Process and the World Diamond Council. We pay tribute to those events, both of which were referred to by the WDC President Edward Asscher, when he addressed the 2020 World Diamond Congress, on September 14. That occasion itself was significant, for it was at the 2000 World Diamond Congress in Antwerp that the decision was made to establish the WDC.
This edition also examines a subject of particular importance to the Kimberley Process, and that is fraudulent certificates. We do so with the expert help of Mark Van Bockstael, who almost certainly is the world’s leading authority on the Kimberley Process Certification Scheme. Once again serving as Chair of the KP’s Working Group of Diamond Experts, as well as being Chair of the WDC Technical Committee, Mark has been associated with the KP since it was founded, and indeed before then, being among the forum’s original and most influential architects.
The newsletter introduces us to Polina Proksheva, a junior geologist at ALROSA, who shares her experiences and her life as a young woman working in the diamond mining industry in Yakutia, about 4,400 kilometers east of Moscow. I can relate to the passion that Polina brings to her work and mission, and to the feeling of community she has with her colleagues. Every woman we bring to you is from a very […]
With the worldwide spread of the COVID-19 coronavirus and the imposition of lockdowns in most countries, the WDC called on its members to contribute blogs describing that they were experiencing in their own organizations and households, and how they viewed the impact of the global pandemic.
Our huge trading hall, which is usually teeming with activity, is now fairly empty because of restrictions that allow only 100 people access at a time. Who would have imagined a diamond exchange with no handshakes to seal transactions?Almost four months ago, when the coronavirus broke out, I found myself having to manage the worst crisis the Israel Diamond Exchange has ever known. The challenge was massive and I approached it with great apprehension – to safeguard the health of the community, which includes more than 3,200 members and some 8,000 small and medium-sized business owners, and the health of the industry that is so dear to us all.
The economic crisis that struck in the wake of the COVID-19 pandemic impacted in unprecedented ways on China’s jewelry retail markets and their supply chains. This was self-evident from the data collected at the Shanghai Diamond Exchange (SDE), where we saw polished imports through SDE into China decline by 70 percent during the first four months of 2020. But, with much of the lockdown now lifted, we are seeing businesses springing back. Many have returned to full operation and Chinese consumers are coming back to the shopping malls. We expect to see trade and the market gradually ramp up in the coming months.
More than four months and counting. My last trip abroad was in January. It was to the United States, where I visited New York City and Miami. I remember watching the TV news and hearing about an unusual flu-like virus that had been detected in Wuhan, and later talking about it with my staff in the Far East. At the time, I recall thinking: “Another SARS, far away in China. Just ignore it, stick to your agenda and it will go away soon.”
We are almost halfway through what has been an unexpected and turbulent start to the year. While tens of millions remain in lockdown, others are slowly easing their way back into a “normal” rhythm, albeit at a slow and careful pace. I am proud to say that here in the United Arab Emirates (UAE), we are among the latter category.
JEWELRY COMPANY’S CENTENNIAL COMMITMENT
LOOKS TO ADDRESS MEGA-CHALLENGES OF RESOURCE SCARCITY,
AND CLIMATE, DEMOGRAPHIC AND SOCIAL CHANGE
Following the outbreak of COVID-19, Chow Tai Fook donated three ambulances to hospitals and clinics in Wuhan, the initial epicenter of the pandemic, which is a city where the company operates extensive manufacturing and logistics facilities.
A long-time member of the World Diamond Council, the Chow Tai Fook Jewellery Group is one of the world’s largest jewelry companies, with a workforce of about 30,000. It operates more than 3,800 stores in about 500 cities, in greater China, Japan, Korea, other Southeast Asian countries and the United States. It also has a fast-growing e-commerce business. The firm was founded in Guangzhou in 1929 by Chow Chi-Yuen.
Not only a pioneer in the growth of the fine jewelry markets in Asia, and mainland China in particular, the Chow Tai Fook Jewellery Group has also been committed to the development, implementation and promotion of responsible business practices.
As the company approaches the 100th year since its founding, it has announced what it refers to as its Centennial Commitment. The company’s Chairman, Dr. Henry Cheng Kar-Sun explained the approach in a detailed Sustainability Report, which was released in June 2020. “The new initiatives in our four priority areas – responsible sourcing; craftsmanship, innovation and technology; resource efficiency and carbon reduction; and people focused – enable us to face the megatrends of resource scarcity, technological breakthroughs, climate change, and demographic and social change, all of which, in their various ways, will have a disruptive effect on our industry,” he wrote.
The wastewater treatment system at Chow Tai Fook’s production hub in Shunde which is able to process up to 300 tons of wastewater per day. The company makes an effort to use the treated water in its manufacturing processes.
Environmental sustainability is a is a key element of the program, with Chow Tai Fook pledging to reduce its ecological footprint by at least 15 percent by 2029. This includes substantially cutting back on greenhouse gas emissions, water consumption and waste generation, as well as obtaining ISO 14001 Environmental Management Certification for the environmental management systems in all its mainland China production hubs – in Shenzhen, Shunde and Wuhan.
There have been few disruptive events that match the outbreak of the COVID-19 coronavirus. Soon after its scale became apparent, the company set up an in-house facemask production line, using the high-standard dust-free cleanroom technology at its production hub in Shunde to produce some 100,000 facemasks per day. These were distributed both to employees and to other communities in need.
The company also initiated a charity sale campaign in mainland China to support medical professionals, and donated three ambulances to hospitals and clinics in Wuhan, where the pandemic first struck and where Chow Tai Fook operates a large production and logistics facility.
In 2012 the Chow […]
“Women of the Diamond Industry” focuses on the issue of gender equality along the entire diamond and jewelry supply chain. The series provides a platform for women in the industry to tell their own story and describe the particular challenges they have faced in their careers.
The second article in the series is authored by Esther Finda Kandeh, National Coordinator of Women in Mining & Extractive Sierra Leone.
Esther Finda Kandeh, National Coordinator of Women in Mining & Extractive Sierra Leone
LOOKING OUT FOR THE INVISIBLE MINERS OF SIERRA LEONE,
CHANGE IS POSSIBLE IF WE ACT NOW
I was born in the Tankoro Chiefdom in the Kono District of Sierra Leone, one of the poorest diamond-mining communities in the country. In 2013, concerned by the plight of women in the mining areas, I established Women in Mining & Extractive Sierra Leone (WoME-SL), to address the realities that we experience on a daily basis. My goal was to create an advocacy platform and community-level pressure group that would promote the empowerment of women and the wellbeing of young people within the mining communities in Sierra Leone.
WoME-SL was later transformed into a national organization, comprised of and led by women from different mining districts in the country. We work together to address the increasing challenges that we face at the local level within our communities. Our organization has been an enthusiastic participant in the regional approach endorsed by the Mano River Union (MRU), which is promoting a program originating from the Kimberley Process in West Africa that will build capacity in artisanal diamond-mining areas, including the ability to effectively comply with the Kimberley Process Certification Scheme’s minimum requirements and training on the OECD’s conflict minerals guidance. It is within this framework that we have been happy to cooperate and collaborate with the World Diamond Council.
Sierra Leone is located at the center of the West Africa’s Rice Coast, which is a region spanning a string of countries, stretching from Senegal in the east to Benin in the west. It’s a nation blessed with natural resources, with the minerals among them being rutile, bauxite, gold, iron, limonite and, of course, diamonds.
The mining sector plays an integral role in both Sierra Leone’s economic and social structure. Some 30,000 individuals are either directly or indirectly employed by large-scale mines, with an estimated 300,000 people, including their dependents and extended families, reliant upon the revenues they generate. Furthermore, artisanal mining and related activities provide livelihood support to at least another 300,000 Sierra Leoneans according to World Bank data, and upwards of 10 percent of the population relies to some degree on artisanal diamond mining.
The mining sector accounted for an average of 5 percent of Sierra Leone’s GDP between 2016 and 2019, and prior to the COVID-19 crisis has been expected to grow by 7.4 percent, although that forecast has been […]
AS THE COVID-19 CRISIS SPREADS THROUGH ASM AREAS,
INDUSTRY STEPPING UP TO HELP THE MOST VULNERABLE
A member of GemFair staff preparing food and aid packages for artisanal miners and their families at a mining site in Sierra Leone’s Kono region, as part of the organization’s COVID-19 response.
By Konstantin Born
Business Development Manager, GemFair
When I left Freetown, Sierra Leone, to fly home to my family in London on March 11, I expected to be back in West Africa within weeks. How could I have known that fewer than 10 days later the Government of Sierra Leone would announce the closure of all border crossings and international arrivals via air, and that I would be sitting in my living room in London while writing this piece. Even though it looks as if the first airlines will begin to resume flights to Freetown in the coming weeks, the country I have lived and worked in for many years will have changed markedly by the next time I return.
I am the Business Development Manager of GemFair, which was launched in 2018 by De Beers Group in Sierra Leone to advance the artisanal and small-scale diamond mining (ASM) sector. GemFair’s goal is to support the formalization of the ASM sector – by raising standards, delivering fair value and digitally tracing the diamonds that artisanal miners recover from the mine onward.
At the beginning of July, we announced together with the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and the Mano River Union (MRU) that GemFair will be collaborating in the development and delivery of an ASM capacity-building program that promotes safe and responsible operating standards in the MRU member countries of Sierra Leone, Liberia, Guinea and Ivory Coast. It is part of a regional approach promoted by the Kimberley Process, of which the World Diamond Council is a supporter and stakeholder.
Before the COVID-19 crisis, the author, Konstantin Born (right), with Raymond Alpha, GemFair’s Location Manager in Kono, during a field trip in Sierra Leone.
Since GemFair’s inception, our teams in London and Sierra Leone have worked tirelessly to make a change for the most vulnerable and often forgotten members of our industry – the artisanal and small-scale diamond miners. Many people forget that the ASM sector is a significant employer in the global diamond sector, with millions more depending directly or indirectly on ASM for their livelihoods.
Having worked with artisanal miners both in a capacity as a policy advisor to Sierra Leone’s mining regulatory authority and during my time at GemFair, I will never stop to be impressed by how hard they work and how resourceful they are in order to generate an income for themselves, providing for the needs of their families and communities. And we have been making progress. Through the commitments and actions of the Kimberley Process Certification Scheme (KPCS) and more recently through initiatives like GemFair, we are starting to see the gradual […]
WDC BOARD CONFIRMS LEADERSHIP FOR NEXT TWO YEARS,
EDWARD ASSCHER, PRESIDENT,
AND FERIEL ZEROUKI, VICE PRESIDENT
ABOVE: WDC’s top leadership through 2022, Edward Asscher (right), President; and Feriel Zerouki, Vice President.
Meeting in a virtual session on June 5, 2020, the Board of Directors of the World Diamond Council has confirmed the organization’s leadership team for the next two years, with Edward Asscher serving as the new President of the international organization charged with leading the diamond and jewelry industry’s effort to prevent conflict diamonds from entering the jewelry supply chain and with representing it in the tripartite Kimberley Process coalition. Feriel Zerouki becomes the first woman to serve as WDC Vice President.
Having served for the past two years as the WDC Vice President, according to the WDC bylaws Mr. Asscher automatically assumed the President’s role from Stephane Fischler, who had served first as WDC’s Acting President, starting in 2017, and then for two years as President, beginning in 2018.
A member of one of the diamond industry and Amsterdam’s most well-known families, Mr. Asscher is serving a second term as WDC President, having held the role from 2014 to 2016.
He is also currently Vice President of the European Council of Diamond Manufacturers, and is a past President of both the International Diamond Manufacturers Association (IDMA) and the International Diamond Council (IDC), which is a diamond standards-setting organization affiliated to IDMA and the World Federation of Diamond Bourses (WFDB).
Long involved in public life, Mr. Asscher has also served in functions outside of the diamond industry. He is past President of the Liberal Party in Amsterdam, and was elected as a Senator for the party in the Dutch parliament, serving in the upper house from 2007 to 2011.
Feriel Zerouki, who was elected to the post of WDC Vice President, is the Senior Vice President of International Relations & Ethical Initiatives at the De Beers Group.
Joining De Beers in 2005 as a supply-chain analyst at the Diamond Trading Company, in 2009, she was appointed Best Practice Principles Manager for De Beers, with responsibility for building and maintaining a streamlined social compliance program for the company. She was then appointed to Head of Government and Industry Relations in 2015 with the overarching objective of protecting the integrity of diamonds, the diamond supply chain and maintaining the integrity of De Beers and its commercial interests. She additionally serves as General Manager of De Beers’ GemFair initiative, which works to provide capacity-building opportunities to artisanal and small-scale miners, providing them a secure route to market for ethically-sourced diamonds, and she serves as Honorary Treasurer of the Responsible Jewellery Council.
Ms. Zerouki will become WDC President at the end of Mr. Asscher’s two-year term in 2022.
The WDC Board of Directors also confirmed the reelection of Ronnie Vanderlinden, President of the International Diamond Manufacturers Association (IDMA), as WDC Treasurer, and the appointment of Udi Sheintal as WDC Secretary.
IT IS SURVIVAL TIME
Dear colleagues and friends,
I retired from my business on March 2 this year, just a few days before the COVID-19 pandemic started dominating news headlines all over the world. It was bad timing for my children, Lita and Mike, who now run the family company.
In the 50 years I have been involved in the industry, I have never experienced so rapid a fall in global retail sales. And we all know about the diamond multiplier effect – if retailers’ sales shrink by 10 percent, then the wholesalers’ business will contract by at least 20 percent, as the latter group reduces the inventory it’s holding. This means that manufacturing companies are experiencing a much larger fall in sales.
So now the whole industry has reduced inventory, with the exception being the rough diamond producers. But with their sales very limited, they are cutting production.
Four months into the crisis, and we do see that certain retailers are managing to do rather satisfactory business. Pent up demand is one factor for this phenomenon. People realize that in these difficult times, the fundamental values of life are so important – health, family and love. Fortunately, diamond jewelry is a symbol for all of those, and we know from experience that the expression and realization of these values is bringing customers to the stores.
Even I, after 50 years of marriage, recently gave my wife a diamond eternity ring.
We need to ask ourselves what all this means for our industry – from the miners in the producing countries, to the polishers, the wholesalers, the jewelry manufacturers and the retailers?
We know how important rough diamond production is to the producing countries. Millions of their citizens depend on the health of our industry and the diamond supply chain. It’s easier to track what’s happening in the industrialized mining sector, with some mines being furloughed and others on minimal production. But the devastation in the informal mining sector is often hidden. We need to ask ourselves what this means for the alluvial diamond miners and what we can do about their wellbeing?
I am confident about the very large companies, but I worry about the state of artisanal and small-scale miners and diamond polishers. This is a group made of the individuals who together with their families depend almost entirely on the revenues generated by the small number of diamonds that each is able to process.
We are all overwhelmed by the tremendous pressure of a market that changed so drastically in such a short time. In this turmoil, do we still care about working conditions, the environment and social rights?
Wherever we operate, we need to think about cash flow, for this will dictate whether we, as companies, can survive. We also need to look in the eyes of the thousands of members of staff we have had to furlough. It’s a tough and imperfect world in which we live, and we are often being called to […]