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Tuesday, June 7, 2011

Is the Kimberley Process Dead? Does Anybody Know or Care?

A miner holds the fruit of his labor at the Marange mine.

While the international jewelry industry was meeting in Las Vegas this week, the big news was coming out of Africa as the Voice of America and other publications reported that the Kimberley Process Certification Scheme is in “turmoil” after South Africa announced that it will purchase diamonds mined at the controversial Marange diamond field in Zimbabwe.

A spokesman for South African Mineral Resources Minister Susan Shabangu, said the country’s position is the same as that of Kimberly Process Chairman Matthieu Yamba, who issued a statement in January saying Zimbabwe can freely sell its diamonds from Marange, even though there was never a consensus among Kimberley Process members.

Meanwhile, the World Federation of Diamond Bourses, which protects the interests of the world’s diamond bourses, held a dog-and-pony show at the JCK Las Vegas jewelry trade show last week. I didn’t bother to attend, opting instead to keep scheduled appointments with jewelry manufacturers and designers who were actually doing something relevant. Prior to its event, the WFDB stated that it supports the exports of diamonds from Marange.

Again a little backtracking is needed. Please forgive me if you read this before. The Kimberley Process is an international organization made up of diamond industry representatives, government officials from 75 countries and non-governmental organizations. It is charged with preventing trade in illicit diamonds—commonly called “blood” or “conflict” diamonds, depending on whether you have a vested interested in the diamond industry. Illicit diamonds under the organization’s mandate are the result of diamonds being used to fund brutal civil wars where innocent people are being killed and mutilated by those involved in these conflicts.

The Kimberley Process Certification Scheme imposes extensive requirements on its members to enable them to certify shipments of rough diamonds as “conflict-free.”

I’ve been wondering what the KP does besides hold closed-door meetings, which to me is its biggest failure. How can an organization that exists primarily to ensure consumers that its products have been mined through legal means and without human rights abuses can provide that assurance while meeting in private. In fact, the KP does such a poor job of communicating with consumers that I would doubt that one in 20 jewelry shoppers know what the hell a “Kimberley Process” is, much less what it does.

The Marange diamond field, which many say contain the largest deposit of diamonds in the world, has been the scene of murders and other human rights abuses by Robert Mugabe’s government and its military. The Zimbabwe government say those abuses have stopped but human rights advocates say they continue; that money from mines is being used to finance the ruling party’s operations, including upcoming elections; and diamond smuggling is rampant. However, the country is not involved in a civil war, therefore under the KP’s mandate, Zimbabwe’s government and its allies believe they can sell its diamonds. Expanding that mandate to include human rights abuses not funded by civil war is one of the sticking points.

The human rights abuses eventually led the Kimberley Process to suspend buying diamonds from Marange. The KP voted to reinstate Zimbabwe in July, 2010, allowing two supervised exports of rough diamond from the Marange production in August and September. The date of the second sale was changed and the sale was held without public knowledge.

The issue of reinstating Zimbabwe into the KP Certification Process was the main item on the agenda when the organization met in November, 2010 in Jerusalem. After four days of closed door meetings (of course), participants failed to reach a conclusion. The issue is still unresolved with communications being issued only among KP participants and no information being presented to the public, unless it is leaked.

For its part, Zimbabwe government officials insist that it received approval to sell diamonds from Marange through the KP certification scheme. In addition, it has made statements that if the organization refuses to allow it to sell its diamonds it will do so anyway, possibly flooding the market with diamonds and reducing their value.

Meanwhile, a variety of organizations have already either banned its members from dealing in diamonds from Marange or have encouraged their members not to do so, including the Responsible Jewellery Council, RapNet, and MasterCut and the Company of Masters Jewellers in the U.K.

Now that South Africa will reportedly buy diamonds from Marange, there is no doubt in my mind and others that India and China will follow. So the market will either be flooded with diamonds that are not KP certified, or the KP will cave to the pressure and certify the diamonds. The first scenario should create a quick end to the KP while the second scenario will probably lead to a much slower demise.

In the end I wonder if it matters, since the general public has no idea that this organization ever existed in the first place.

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