SPECIAL SUPPLEMENT
ANCIENT BEAUTY,
BOLD FUTURE
Stories
Science
Sustainability
The fascinating tale of diamonds, since the beginning of time
More than aws: Exploring inclusions, the signature of natural stones
How the industry supports communities worldwide
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EL AINE & TRAVIS HAVE BEEN TOGETHER FOR FIVE YEARS. HER DIAMOND HAS SPENT TWO BILLION YEARS BENEATH THE EARTH’S SURFACE AND SIX MONTHS ON HER FINGER.
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CONTENTS
6 What is a diamond?
Diamonds have been a subject of fascination since long before they caught on in the West.
10 Naturally beautiful
Alethea Inns from the American Gem Society (AGS), explains the science of inclusions.
14 Myths & realities
Myths about the industry, especially among consumers, are some of the hardest to debunk. Leading experts correct some common misconceptions.
20 Supporting communities From funding hospitals to keeping conflict stones out of the pipeline, the industry is investing in the future of its mining communities.
26 Retailer insights B:10.25 in
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Tracing diamonds from mine to market gives consumers confidence in the product they’re buying, say store owners.
30 The final cut
‘Real is Rare’ is an industry rallying cry, says DPA’s Chief Executive Officer Jean-Marc Lieberherr. On the cover The iconic Diavik Foxfire, discovered at Rio Tinto’s Diavik mine in the Northwest Territories of Canada in 2015, is the largest gem quality rough diamond in Canadian history. It is now owned by Amadena Investments LLC/ Excellent Facets Inc. Picture: Courtesy of Rio Tinto Diamonds.
EDITOR IN CHIEF: PUBLISHER: COPY EDITOR: DESIGNER: CONTRIBUTORS:
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SALES DIRECTOR:
Sonia Esther Soltani John Costello Rachel Beitsch-Feldman David Polak Rachelle Bergstein, Anthony De Marco, Joshua Freedman, Sarah Jordan, Joyce Kauf, Avi Krawitz, Koobonye Ramokopelwa Karen Knox. For advertising information: advertising@diamonds.net
COPYRIGHT ©2017 Rapaport USA, Inc. All rights reserved.
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WELCOME
IMAGE: Ben Kelmer
Stoking the diamond fire
“Love and engagement rings are the foundation of diamond demand. In my view, the whole point of the engagement ring is that the man is giving the woman — or partner to partner — something of great value that will retain value... Snapchat millennials or not, getting engaged to be married is not about creating a snap-relationship with a snapsynthetic diamond that does not retain value.” That’s what Martin Rapaport wrote in April 2016. Rapaport is not one to mince words, and he has always been very clear about his position on labgrown diamonds. Although he has never advocated for removing them from the market, he has — as with every other aspect of the industry — demanded transparency. This is why a collaboration 4
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between Rapaport Magazine and the Diamond Producers Association (DPA) is a natural one. Our publisher, John Costello, has been vocal about the magazine not accepting advertisement from synthetics manufacturers, and our core mission is to analyze, support and celebrate the natural-diamond industry. The special supplement you’re holding now is the result of the DPA’s insights into the market and passion for diamonds, combined with our contributors’ in-depth research into key issues: the scientific, ethical, marketable, historical, commercial and overall emotional aspects attached to a diamond. As with our previous supplements, we expect it to be a tool with longevity — a reference for jewelers, empowering them to share the fascinating story of diamonds with their customers. Diamonds are “the only stones that sparkle, even in the rough. They are indestructible and can be passed through families, generation to generation,” according to Susan Farmer, consultant to De Beers. This is the level of enthusiasm we want everyone who comes in contact with diamonds to feel, especially if it’s backed by knowledge and understanding of this compelling industry. Good storytelling is fueled by colorful facts, lively anecdotes, and an unambiguous message. We hope this supplement feeds the fire and serves to enlighten those who read it. ▪ Sonia Esther Soltani Editor in Chief sonia.soltani@diamonds.net
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EL AINE & TRAVIS HAVE BEEN TOGETHER FOR FIVE YEARS. HER DIAMONDS HAVE SPENT TWO BILLION YEARS BENEATH THE EARTH’S SURFACE.
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WHAT IS A DIAMOND?
The stuff of legend Diamonds have been a subject of fascination since long before they caught on in the West. By Rachelle Bergstein
There’s a legend that shows up in a few different places, about a renowned explorer — the real Alexander the Great in some books, the fictional Sinbad the Sailor in others — who is faced with the challenge of collecting diamonds. The stones sit at the bottom of a shadowy and forbidding valley, guarded by serpents that, in one colorful version of the story, have the magical ability to look men in the eye and turn them to stone. The hero has a plan to lower a mirror into the pit, and sure enough, when the snakes glance into it, their charm backfires: They petrify themselves. Still, even with the enemy vanquished, the men are hesitant to 6
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climb into the valley. Their leader, whom they’ve followed deep into the Hindu Kush, has another thought — he’ll consult the wise men of the region about how best to claim the treasure. The elders offer strange advice. The hero returns and instructs the group to throw raw meat into the valley and wait at the top of the mountain. They do it, and sure enough, the odor attracts a pack of vultures that swoop down and pick up the meat. As the birds make their ascent, the hero tells his troops to follow them. The vultures fly overhead and escape, but as they rise further and further into the air, small pebbles rain down from the sky. The men scramble
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The 45.52-carat Hope Diamond is as famous for its beauty as it is for the untimely deaths of most of its owners.
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to pick them up. To their delight, it’s the diamonds; they stuck to the raw flesh just long enough to be lifted out of the darkness.
IMAGES: Alamy Stock Photo
A centuries-old appeal This account appears everywhere, from the writings of 13th-century Persian scientist and storyteller Zakariya alQazwini, to the dispatches of Marco Polo, to the classic One Thousand and One Nights. But in the end, it doesn’t really matter whom it’s about or where it came from, because it’s an entertaining adventure that also reminds us just how long diamonds have been prized. The message is clear: It’s worth making a stop at a harrowing snake pit just to gather the crystalline gems. Diamonds have meant money, prestige and power since at least the 1200s, when Marco Polo traveled to India and then published books in Europe about what he saw. They’ve meant plenty of other things, too. Today, as the story of diamond marketing in the 20th century becomes increasingly well known, it’s worth looking back at how the stones were perceived before they were being advertised in the pages of Town & Country, The New Yorker and Vogue. Long before anyone understood the science behind diamonds or even where to find them, they were a subject of fascination. Cross-cultural power From India to Syria to Rome to Greece, ancient cultures have ascribed miraculous, otherworldly powers to diamonds, using them in religious artifacts and, of course, jewelry. Indian maharajahs wore rough diamonds — the bigger the better — because
they thought the stones gave them strength. In the Middle Ages in Europe, diamonds were thought to have active medical properties, able to do all sorts of wonderful things: cure diseases, promote fertility and even end arguments between couples (well, maybe that last one is true). Even though we know better now, the heart of the deep, crosscultural diamond tradition remains as clear — and as relevant — as ever. A real diamond will always be a little bit mysterious, a little bit unknowable. Even with all of the resources we have at our fingertips, we’ll never fully understand the diamond’s astonishing journey. With many now debating the question of its value, this is a good time to recall the mystique and inherent beauty that have drawn people to this stone throughout history. a
King George V and Queen Mary of Great Britain in their robes of state wearing the Crown Jewels that feature the Cullinan diamond, the largest gem-quality rough diamond ever found.
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WHAT IS A DIAMOND?
A BRIEF HISTORY OF DIAMONDS 800 to 400 BCE Diamonds are first discovered on the banks of rivers in India, where they are called vajra, the word for “thunderbolt”: a reference to their strength. The stones are used for both currency and ornament, and are often placed in the foreheads of religious idols (the legend of the notorious ocean-blue Hope Diamond holds that it was stolen from one such statue — hence the curse). 77 CE In Ancient Greece and Rome, diamonds are called adamas, which means “invincible.” Roman scholar Pliny the Elder writes, “The most valuable thing on earth is the diamond, known only to kings, and to them imperfectly.” Pliny explains the stone is so impossible to destroy that first, it must be weakened by soaking it in goat’s blood. 1200 The long historical connection between Jews and diamonds begins in the Middle Ages, when people believe that diamond dust is deadly. Barred from working in other, more desirable trades due to religious persecution, Jewish men begin learning how to cut the stones.
1910 The story of the Hope Diamond curse catches on in the American press, after Washington socialite Evalyn WalshMcLean (pictured) buys the blue stone from renowned French jeweler Cartier. The way the legend tantalizes modern readers shows how mysterious diamonds remain to people, and how easy it is to believe that a jewel can have special powers.
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IMAGES: Alamy Stock Photo; De Beers
1429 The art of diamond cutting is now an art form, and one man, Jacques Coeur, sees an opportunity in Agnes Sorel (pictured), the young and fashionable mistress of King Charles VII of France. Coeur, the king’s financial adviser and a successful merchant, meets Louis de Berquem in his travels, a Belgian who has been experimenting with the cut that will become the brilliant. Coeur thinks de Berquem’s stones are so stunning that women, not just men, will want to wear them. He convinces Sorel to try it, and she starts a trend.
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The Koh-i-noor
The Orloff
The Eureka
Scintillating conversation Susan Farmer, luxury consultant to De Beers, talks about the power and symbolism of diamonds through the ages. By Joshua Freedman What does a diamond mean to you? The ultimate symbol of romance and a piece of eternity.
IMAGES: Alamy Stock Photo; De Beers
Do diamonds only have value because of clever marketing? Diamonds have been valued for their spiritual powers for millennia, and people have gone to extraordinary lengths to acquire them. Napoleon went into battle with the Regent diamond in the hilt of his sword because he thought its indestructibility would transfer to him... There are ancient illustrations of diamonds in the breastplates of Hebrew priests. And [there’s] a painting of Alexander the Great throwing pieces of meat into the Golconda gorges so the vultures would pick up the diamonds adhering to the fat and bring the stones up to him.
diamonds for many centuries. The first commoner to wear them was Agnes Sorel, mistress of Charles VII of France. Romance [as well] — the first betrothal ring recorded was given by Maximilian of Austria to Mary of Burgundy in 1477. In the 21st century, women are happy to buy themselves diamonds as a symbol of their success and independence. What are the most iconic diamonds? Personally, I love the romance and histories of various old stones such as: c The Koh-i-noor that Shah Jehan gave to Queen Mumtaz, for whom he built the ultimate tomb, the Taj Mahal. c The Orloff, a Golconda diamond set into the scepter of Catherine the Great. c The Eureka, the first diamond found in the Orange River, putting South Africa on the map. It is a beautiful soft orange-pink color.
Why do we love diamonds? The prospect of owning something older than the dinosaurs with beauty and mystical qualities. Man has always been attracted to the rare and beautiful, and a fine quality or intensely colored diamond is extremely rare.
What is the most intriguing fact you ever came across about diamonds? I still think the basics are intriguing — the hardest substance known to man, forged miles within the earth over billions of years, and shot to the earth’s surface by volcanic activity.
What have diamonds represented in culture over different generations? Power: Only royalty was allowed to wear
How would you define the beauty of diamonds in one sentence? Intense fire and light. c diamonds.net
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NATURALLY BEAUTIFUL
Marks of distinction Inclusions are a natural diamond’s signature. Alethea Inns, director of gemology and education at the American Gem Society (AGS), explains the fascinating facts of this phenomenon. By Joyce Kauf Inclusions can consist of other mineral crystals that look like what they are called — for example, a break in the crystal lattice is called a feather because it can resemble the texture of a feather. A pinpoint inclusion is just that — it looks like a pinpoint — while thin, elongated inclusions are called needles. How do a diamond’s imperfections enhance it as something unique and authentic? Inclusions are often used to determine the relative value of a diamond, based on their size, nature, number, position in the diamond, and relief — or visibility — but they are also so much more. Inclusions tell us the story of the diamond —
IMAGES: American Gem Society (AGS)
What are inclusions? In the world of gemology, inclusions are defined as internal visible features in either a rough crystal or faceted gemstone. Inclusions are important in gemology because they can tell trained gemologists whether the gemstone is natural, synthetic, or treated, or even where it came from. Inclusions are often referred to as “flaws,” or “imperfections,” but in reality, they are part of the natural geological process and an essential and fascinating part of gemology. Inclusions make each diamond unique, as no two diamonds are identical, and are even used by gemological laboratories to verify a diamond’s identity. A diamond with natural inclusions is like a snowflake.
Top right: Alethea Inns. Bottom: Examples of inclusions (from left): An orange heart-shaped crystal on a diamond’s table; a feather on a pavilion; and a purple-pink crystal, seen through the pavilion’s facets.
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IMAGES: American Gem Society (AGS)
how it formed, what it went through in the earth, and how it got to the surface of the earth. In fact, for geologists and researchers, the most prized diamonds are those specimens with large, visible inclusions. Some geologists spend their entire careers studying one type of diamond inclusion and its implications. This is because diamonds act as vessels that can capture minerals from the mantle of the earth and can give us information about the growth environment, and even the age of our planet. The oldest diamonds have been dated at up to 3.5 billion years old — which is not something you can say about a laboratory-grown diamond. How are they formed? What conditions in the earth need to be present? Conditions have to be just right not only to form diamonds, but to form the inclusions that occur within them.
Diamonds are generally theorized to have formed at depths greater than 150 kilometers, at pressures of around 5 GPa (gigapascals) and at 1,000 degrees Celsius, and need a specific chemistry in order to grow. This is why they are geologically rare. Diamonds are carried to the earth’s surface by magma — molten and semi-molten rock found beneath the earth’s surface — younger than the host rocks in which they were formed. These two rock types in which diamonds grow in the mantle are eclogite and peridotite, and occur at different depths in the earth. Diamonds are carried to the earth’s surface in one of only three rare types of magma. The most important type of magma is known as kimberlite, such as the Diavik mine in Canada. ▶
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NATURALLY BEAUTIFUL
on the amount of nitrogen that aggregates in the crystal lattice. Some diamond types can be categorized by inclusion types, such as Ib diamonds with clusters of dark “Ib needles.” Large cape diamonds with N2 and N3 aggregates often have high-relief transparent garnet “Inclusions tell us the crystals and fine, How do inclusions story of the diamond transparent linear growth, known manifest themselves – how it formed, what as “transparent in diamonds? Most diamond it went through in the graining.” While there inclusions are earth, and how it got are still many classified as unanswered syngenetic, which to the surface” questions about means the inclusion how exactly diamonds form, their forms at the same time as its host. inclusions are a window into the Pyrope garnet is an example of a history of the earth, and their syngenetic inclusion you may find journey to the surface. They are an in a diamond, and is usually a darkopportunity to carry a piece of that reddish included crystal. history with you, so you can admire Furthermore, diamonds are diamonds from the inside out. c classified into different types based 12
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The Argyle mine in Australia, famous for its pink diamonds, is derived from a rarer type of magma, called lamproite, with an entirely different geochemistry. Pink diamonds from Argyle often have coesite inclusions, which are high-relief transparent crystals.
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ALL PART OF THE STORY
IMAGES: De Beers; Erik Runyam Jewelers
“Inclusions are just one part of the much bigger story of selling a diamond,” says Erik Runyan, owner of Erik Runyan Jewelers in Vancouver, Washington. “My experience shows that people aren’t afraid of inclusions, but rather, their concern is how they affect the beauty of the diamond. As jewelers, we have to convey that inclusions are natural phenomena occurring in the creation of these unique and rare stones.” Runyan notes that the diamondpurchasing public is becoming more knowledgeable. “In the past, customers had some idea of the 4Cs, but now they are familiar with the entire GIA grading scale. It is amazing that customers will ask for SI1 — except they don’t know what that means in real life. And that is why it is critical that the selling conversation transitions from looking at diamonds on paper to seeing and holding them in person,” he advises. He prefers to sit down with the customer and let her select the diamond that she finds the most beautiful — without considering specific criteria such as clarity or color. “After the emotional connection is made is when I start talking about the quality characteristics that drew her to that diamond,” he says.
Runyan also talks about the origins of the diamond, emphasizing the “incredible journey” each of these rare stones has made over billions of years. Only a handful of his customers have specifically requested synthetic diamonds, produced either through High Pressure-High Temperature (HPHT) or chemical vapor deposition (CVD) methods. And even in those cases, he says, “my impression is that these customers are not looking for a stone without any imperfections. They are interested in synthetic diamonds because of their low-carbon-footprint and/or no-conflict associations.” While synthetic diamonds exhibit the same chemical, physical and optical properties as natural diamonds, there is an important element that cannot be replicated in a laboratory. “There are two reasons people buy a diamond,” he says. “The first is that diamonds are simply beautiful. And secondly, they are rare. It is unusual for someone to own something so unique that comes from the earth. A diamond is given as a symbol of love. But a labgrown diamond does not evoke any romance at all.” c
Erik Runyan (top right) and a selection of diamond jewelry from Erik Runyan Jewelers.
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MYTHS & REALITIES
The truth about diamonds Myths about the industry, especially among consumers, are some of the hardest to debunk. Here, leading experts correct some common misconceptions. By Sarah Jordan
Myth: Customers are significantly at risk of buying a conflict diamond Reality: Perhaps the most pervasive myth of all, the issue of conflict diamonds — or “blood diamonds” — has a firm grip on the public consciousness. “Our industry has made great strides since the widespread awareness that came to light during the brutal civil wars in Sierra Leone and Angola in the 1990s,” says Don Palmieri, president of the Gem Certification & Assurance Lab (GCAL). The percentage of the global diamond trade funding or facilitating conflict at that time is up for debate, with estimates ranging from less than 1.5% to as much as 15%. But since the introduction of the Kimberley 14
Process (KP) certification scheme and the World Diamond Council (WDC) System of Warranties, more than 99.8% of the world’s diamonds are certified conflict-free, with the support of 81 countries. As such, the industry is extensively self-regulated, and various countries have additional layers of government regulation in place. The UK’s Government Diamond Office, for example, works closely with HM Revenue & Customs, the European Commission and civil groups to combat illicit diamonds. Voluntary and self-regulation systems are effective in maintaining the diamond pipeline, explains Ronnie VanderLinden, president of the Diamond Manufacturers &
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Mining diamonds offshore in Namibia.
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Importers Association of America (DMIA). As an example, he points to the Diamond Source Warranty Protocol developed by leading US organizations. “We have systems in place to ensure those doing business have the confidence to know that their source of supply is conflict-free. There are also those that subscribe to the Responsible Jewellery Council, De Beers’ Best Practice Principles, and the Signet Responsible Sourcing Protocol,” he adds.
Myth: The diamond industry is a monopoly Reality: “The perception exists that De Beers still controls the market and controls prices, when this hasn’t been the case for decades,” says Adonis Pouroulis, chairman of Petra Diamonds. “In fact, Petra still gets asked if we sell our diamonds to De Beers.” This myth is rooted in history,
harking back to late 1980s. At that time, De Beers did indeed control over 90% of the supply chain and was almost wholly responsible for marketing diamonds, having developed its famous “A Diamond Is Forever” slogan in the 1940s. This also led to the perception that De Beers “invented” the diamond engagement ring, when in fact the first was recorded as early as 1477. By the 1990s, the market for new mining companies opened, breaking the hold that De Beers and Alrosa had on the industry and ushering in a new wave of diamond discoveries in Angola and Canada, according to Pouroulis. David Johnson, senior manager of media and commercial communications at De Beers, adds that his company’s share “was around 35% of global supply by value [in 2016], while Alrosa supplied nearly 30% of the world’s value by rough diamonds. Other producers, such as ▶
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Gahcho Kué mine in Canada.
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Sodiam, Dominion Diamonds, Rio Tinto and Petra Diamonds, all also had sizable shares of supply value in 2016, so the industry clearly has a range of competing suppliers.”
Myth: Diamond mining takes from the environment and gives nothing back Reality: “Diamond mining is generally less harmful to the environment than other types of mining, because less or no chemicals are used, which can otherwise be harmful to the staff ’s health,” says Tobias Kormind, managing director of leading European retailer 77Diamonds.com. Pouroulis adds that “diamond mining tends to have a much smaller footprint, as our orebodies are vertical, not horizontal [and therefore affect less of the surrounding area]. In Petra’s case, we have established protected
habitats adjacent to our operations, totalling 10,255 hectares, to ensure preservation of fauna and flora.” For many companies, these preserved land areas are larger than the mining operation itself. The De Beers Group conserves 164,000 hectares of land, five times the area disturbed by its mining activities. De Beers is “also leading a groundbreaking research project that aims to deliver carbon-neutral mining at some of our operations in as few as five years,” Johnson comments. “Scientists estimate that the carbon storage potential of kimberlite tailings produced by a diamond mine every year could offset up to 10 times the emissions of a typical mine.” In Australia, Rio Tinto’s Argyle mine draws more than 92% of its power needs from the hydroelectric Ord Hydro power station, and the company has reduced its diesel consumption by 21%. Overall, the
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MYTHS & REALITIES
Jwaneng mine in Botswana.
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IMAGES: De Beers; iStock
Diamond cutting factory in India.
industry has made huge strides in water recycling and waste reduction, and has introduced comprehensive mine closure plans and treereplanting programs.
Myth: Diamond mining communities are mistreated and at-risk Reality: “Unlike almost any other industry, mining builds communities and a sense of belonging, none more so than in diamonds,” says Kathy Chappell of Fair Trade Gems, who was recently named ethical-issues adviser to the London Diamond Bourse (LDB). The isolated nature of diamond mines means the workforce lives close by and develops a community spirit, which the diamond industry supports by investing in hospitals, schools, training and bursary programs. Misunderstandings of the situation start at a basic level, with many still presuming miners are extracting diamonds by hand. “People don’t ▶
41% Myth: Millennials are rejecting diamonds Reality: Millennials make up 27% of the population, and yet their share of diamond sales volume is 41%.
Myth: Millennials think diamonds are not rare Reality: Nearly two-thirds of all millennials believe diamonds are rare. And the term is often intertwined with the emotional symbolism of diamonds, such as the ideas of love and commitment. diamonds.net
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MYTHS & REALITIES
understand that diamond mining is a highly automated process, moving millions of tons of rock per year. Miners operating large earth loaders in open pits or underground would never even see a diamond,” says Pouroulis. Consumers also underestimate how much the diamond mines help strengthen the community. Petra, for instance, spent $8.5 million on training in fiscal 2017 and doubled its social spending to $3.4 million in the same period. On a national and global level, says Palmieri, “remote mine discoveries have brought badly-needed foreign exchange to countries and have allowed legitimate governments to educate and provide modern-day medicines and medical facilities to their people.” For example, 33% of Botswana’s GDP comes from diamond mining, and an estimated five million people globally have access to health care thanks to diamond revenues, according to diamondfacts.org.
Myth: The whole industry is secretive and closed to outsiders Reality: The high-value nature of diamonds has fostered a presumption that the industry is riddled with inaccessible people and organizations, more comfortable with secrecy than transparency. But in fact, says 18
Palmieri, “there are a lot of very hardworking people spread out across the globe who are anywhere from struggling to well-off, to rich and wealthy, depending upon how they have built their businesses and the effects of a six-year decline in prices of polished diamonds.” Public attitudes toward transparency have also had an impact on the industry, according to Johnson. “Society now expects to see businesses reporting on their social activities, and regulators, financiers and other stakeholders increasingly require transparency in corporate structures and financial reporting so they can be confident that companies are acting properly. As such, we have seen a major change in the diamond sector,” he says. Contributing to the secrecy myth is the belief that diamond companies are hoarding mountains of stones, although this, too, is an inaccuracy, Pouroulis notes. “Some people still think De Beers is sitting on huge stockpiles of diamonds in vaults in London, whereas in fact there are no significant stockpiles of diamonds nowadays,” he explains. “Yes, diamond miners all have diamond inventory, but this is generally as per the normal course of business as we build up inventory before making a sale.” c
IMAGES: De Beers; Alrosa
Gahcho Kué mine.
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HIGHLIGHTS OF RESPONSIBLE SOURCING A look at the trade’s efforts since the turn of the century to combat conflict diamonds and maintain an ethical pipeline
2000 – The global diamond industry announces its zero-tolerance policy toward conflict diamonds, establishing the basis of the Kimberley Process (KP) certification scheme. 2002 – The System of Warranties is created by the World Federation of Diamond Bourses (WFDB) and the International Diamond Manufacturers Association, under the auspices of the World Diamond Council (WDC), to comply with, support and strengthen the KP.
2007 – Governments, leading NGOs and the WDC meet in Brussels, Belgium, where they introduce new measures to strengthen the KP. The certification scheme welcomes Liberia, Turkey and the Republic of Congo as participants. 2015 – De Beers marks the 10-year anniversary of its Best Practice Principles (BPPs) assurance program. In the whole of 2015, BPPs provided independent assurance on the working conditions and business practices of nearly 320,000 people in 3,000 entities throughout the pipeline. c
IMAGES: De Beers; Alrosa
2003 – The KP goes into effect to prevent conflict diamonds from entering the mainstream roughdiamond market, with the support
of the United Nations General Assembly and others.
A selection of rough from Alrosa.
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SUPPORTING COMMUNITIES
Sharing the wealth From funding hospitals to keeping conflict stones out of the pipeline, the industry is investing in the future of its mining communities. By Avi Krawitz million it took to build and set up the facility. “This really is a testament to the heart of the Surat diamond community,” says one foreign executive considering a donation. “I don’t think the diamond industry markets its good deeds enough.” Push the positive That mandate — to highlight the positive impact the diamond industry has on its communities — is one that former South African president Nelson Mandela urged Russell Simmons to adopt just over a decade ago. Simmons, a celebrated music producer who at the time was mulling a jewelry line of his own, had embarked on a fact-finding mission to understand how diamonds could benefit the people of southern Africa. The industry was still defending itself from negative perceptions about
IMAGE: Kiran Hospital; De Beers
Standing in the entrance to Kiran Hospital in Surat, India, Govindbhai Dholokia beams with pride as he gestures toward the list of donors that made the facility possible. “Everyone here works with their hearts,” says Dholokia, chairman of diamond manufacturer SRK Exports and cofounder of the hospital. “This project represents the heart of the diamond industry.” Until the hospital’s opening in April 2017, Surat offered limited options for patients in need of specialized care, explains Dr. S.P. Shrivastav, head of the hospital’s oncology unit. Today, this facility is making treatments available to tens of thousands of people who previously didn’t have access, he says. And it was Surat’s diamond manufacturing sector — which accounts for an estimated 80% to 90% of global polished production — that funded it, contributing most of the $75
The Multi Super Specialty Hospital and Research Center in Surat.
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IMAGE: Kiran Hospital; De Beers
Mechanic at Venetia mine workshop in South Africa.
conflict diamonds, following the release of Blood Diamond — the 2006 film that highlighted the industry’s role in Sierra Leone’s civil war. But having visited mining and manufacturing operations in South Africa and Botswana, and having seen the schools, hospitals and infrastructure supporting those communities, Simmons recognized the opportunity that lay ahead. He answered Mandela’s call by setting up the Diamond Empowerment Fund (DEF), with the goal of giving back to youth in the communities where the diamond “I don’t industry operates.
and Veerayatan, a nonprofit providing educational, social and medical services in India. In the past, it also supported the Diamond Development Initiative (DDI) in setting up mobile schools for artisanal mining communities in the Democratic Republic of the Congo (DRC). While DEF relies on donations from companies throughout the diamond pipeline, Orem-Lyman stresses that the organization is not only about financial support. “We want to change the narrative surrounding the diamond industry,” she says. “People need to know about the think the good that diamonds do, and that miners, diamond industry Changing the manufacturers markets its good and jewelers are narrative Now in its 10th year, contributing to uplift deeds enough” DEF has given out those less fortunate.” millions of dollars in student grants That extends to the work jewelers and to organizations that facilitate are doing in their own communities. access to better education, skillDEF launched a “Diamonds Do Good” building and vocational training, the website, providing a platform where fund reports. The idea is that students companies can tell their stories should come back and contribute to about the positive impact diamonds the economic development of their are having on their immediate home countries, explains DEF executive surroundings. director Nancy Orem-Lyman. The organization’s current It makes business sense beneficiaries include the Johannesburg- For many, these projects aren’t just based African Leadership Academy, about doing the right thing; they’re the Botswana Top Achievers program, good for business as well, since their ▶ diamonds.net
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customers are demanding it. the Kimberley Process Certification “Consumers are looking for products Scheme (KP), which verifies that a that are made responsibly and which country’s rough-diamond production provide a fair livelihood for the people is conflict-free. However, he went who are mining and producing these on, many outsiders are still skeptical items,” Ernie Blom, president of the about the industry’s efforts to increase World Federation of Diamond Bourses transparency and meet the ethical (WFDB), said at the Dubai Diamond standards consumers are seeking. Conference in October. “We must continue to show that these are our System of warranties aims as well.” Fischler, whose organization represents In fact, representatives from miner the diamond industry at the KP, De Beers and retailer acknowledges the “Consumers are Signet Jewelers need to update the pointed to consumer certification scheme looking for products interest as one of — which is why the that are made the reasons for KP is currently doing their corporate a review to assess responsibly and social responsibility whether it is fulfilling which provide a fair programs. its core mission. Such programs Part of that livelihood” can include both discussion is community support and efforts about broadening the scheme’s to maintain the integrity of the scope beyond its narrow definition company’s products, according to of conflict diamonds, particularly to panelists at the conference. include violence related to diamond Stéphane Fischler, acting president miners and their communities, Fischler of the World Diamond Council (WDC), explains in an interview with Rapaport said the industry had come a long Magazine. The DDI, for instance — way since the 2003 establishment of which was established 10 years ago
IMAGE: Diamond Development Initiative (DDI)
SUPPORTING COMMUNITIES
DDI trains miners on Maendeleo Diamond Standards.
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IMAGE: Diamond Development Initiative (DDI)
under the auspices of the KP — has programs in place to encourage responsible and violence-free mining in the artisanal sector (see sidebar). At the conference, Fischler called the KP “the best story we have today” to validate the industry’s commitment to integrity, adding that a unified effort was necessary to ensure the continued implementation of the scheme. Among other things, that means complying with the WDC’s system of warranties and self-regulation standards, which require diamond suppliers and jewelry manufacturers to pass on a warranty statement each time diamonds change hands, assuring the next buyer that the goods have gone through the KP system. The WDC is also reviewing the system of warranties to explore ways to broaden awareness and introduce a stronger element of due diligence. Global sustainability goals Another organization working to bolster the integrity of the trade is the Responsible Jewellery Council (RJC), which boasts more than 1,000 member companies that have committed to its code of practices for diamonds, gold and platinum-group metals. The code addresses human rights, labor rights, environmental impact, mining practices, and product disclosure, among other issues. Beyond the RJC, there has been an industry-wide push for companies to align with the 17 UN Sustainable Development Goals (SDGs). Special sessions at the Dubai Diamond Conference, and at the Diamond Conference that De Beers hosted in Gaborone during October, encouraged enterprises to use the SDGs as a guide for their social responsibility agendas. The diamond industry has the ▶
UNITED NATIONS’ 17 SUSTAINABLE DEVELOPMENT GOALS
NO POVERTY
ZERO HUNGER
GOOD HEALTH & WELL-BEING
QUALITY EDUCATION
GENDER EQUALITY
CLEAN WATER & SANITATION
AFFORDABLE & CLEAN ENERGY
DECENT WORK & INDUSTRY, INOVATION ECONOMIC GROWTH & INFRASTRUCTURE
REDUCED INEQUALITIES
SUSTAINABLE CITIES & COMMUNITIES
RESPONSIBLE CONSUMPTION & PRODUCTION
CLIMATE ACTION
LIFE BELOW WATER
LIFE ON LAND
PEACE, JUSTICE & STRONG INSTITUTIONS
PARTNERSHIPS FOR THE GOALS
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SUPPORTING COMMUNITIES
‘Part of the industry’s DNA’ Central to De Beers’ own program are its best practice principles (BPP), which help the company determine whether its operations — and those of its clients — comply with the best ethical business standards. But it has other projects as well. For example, a strong focus in 2017 has been gender equality, reports Katie Ferguson, the company’s head of social impact. To that end, the company has partnered with UN Women and worked to provide opportunities for women in both its own organization and the communities where it operates. Environmental issues are also high on the agenda, with De Beers aiming to achieve carbon-free mining within five to 10 years. The WFDB’s Blom laments that these efforts tend to go unnoticed. Part of the problem, he suggests, is that these stories are not known to the wider public. “We just need to find a way to get this information out to consumers,” he says. DEF’s Orem-Lyman agrees, adding that the large enterprises aren’t the only ones engaged in such programs. “The industry is predominantly made up of family-run businesses, and these are families that give back,” she says. “People don’t know about it, but doing good is part of the industry’s DNA.” ▪ 24
DEVELOPMENT DIAMONDS In the mid-2000s, the diamond industry faced a dilemma. While efforts by the Kimberley Process to monitor rough-diamond production were largely successful, there remained the challenge of recruiting the artisanal mining sector, which accounts for an estimated 15% to 20% of global production volume. With the establishment of the Diamond Development Initiative (DDI) in 2008, the industry sought to address that challenge by formalizing the sector, explains Hany Besada, program director at DDI. It’s a daunting task, considering there are approximately 1.5 million diamond diggers with an estimated 10 million dependents — predominantly in West Africa — who remain the most vulnerable population in the diamond supply chain. But organizing the artisanal sector to work within industry structures benefits both the diggers and the government, Besada maintains. The government gains from greater tax revenue and employment opportunities, while diggers gain a legalized framework for their work, a new set of skills, and access to diamond buyers and fair pricing. To that end, the DDI has focused on establishing a record of active miners and registering them in its framework. Its flagship Maendeleo Diamond Standards (MDS) program certifies that their diamonds have been ethically produced through violencefree operations and environmentally friendly mining practices. The next step will be to arrange the sale of MDSapproved diamonds to international buyers. “We understand there is growing demand for ethical jewelry,” Besada says.
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IMAGES: De Beers
potential to influence and affect all the SDGs (see graphic), given its global scale and diverse operations, De Beers explained in a report earlier this year. “The ongoing success of diamond companies will depend on accountability across the diamond value chain regarding contributions to sustainable development.”
Orapa mine in Botswana.
Bedrock of Botswana Diamonds have kept this country’s fires burning for the past 50 years, and they’ll continue to affect its future. By Koobonye Ramokopelwa
IMAGES: De Beers
The discovery of diamonds in the late 1960s was without a doubt Botswana’s most significant development. Through diamonds, the country has managed to move from a GDP per-capita of $70 to an impressive $17,918 in the 51 years since it gained independence. The economy has expanded by an average of 5% per year in that time — a trend that has been attributed to prudent financial management and forward-looking leaders. Leading the way “Botswana was fortunate to have had great leaders since diamonds were discovered,” says Charles Siwawa, CEO of the Botswana Chamber of Mines organization. Those leaders have been able to invest the country’s diamond revenues in growing the economy, lifting other sectors in the process. Debswana, the mining company the government owns jointly with De Beers, has sent hundreds of citizens abroad for engineering and technical courses. “Remember, when diamonds were discovered, we did not have engineers and technicians to run the mines. This initiative has helped a lot,” says Siwawa, whose group is a voice for mining companies in Botswana. Debswana owns four diamond mines and employs over 11,000 people, making it the country’s largest private-sector
employer, according to its corporate affairs manager, Matshidiso Kamona. Building up the community The company has also played a meaningful role in Botswana’s social landscape. It owns two hospitals and, along with De Beers, has established the Diamond Trust, which funds eco-tourism projects. Additionally, more than 10 years ago, the government set up the Diamond Hub, which coordinates economic activity in the sector. The cutting and polishing industry has created thousands of jobs as well, with 17 companies actively manufacturing diamonds in the country. “These companies also source diamonds from other producers to come and manufacture them here,” says Susan Matlolela, the Diamond Hub’s deputy coordinator. In 2013, De Beers transferred its Londonbased rough-diamond sales activity to Botswana, creating new jobs and boosting sectors such as trade, hotels, security and property. The estimated value of the diamonds sorted, sold and marketed in Botswana is approximately $7.56 billion (BWP 80 billion) annually. Still, the industry is facing fresh challenges that will likely impact state revenue. The way Botswana can continue to benefit from diamonds, says Kamona, is through diversification of the economy and within the sector itself. c diamonds.net
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RETAILER INSIGHTS
Right to the source Tracing diamonds from mine to market gives consumers confidence in the product they’re buying, retailers say. By Anthony DeMarco Forevermark Tribute collection ring stack.
When it comes to responsible sourcing, says Monica Stephenson, “diamonds are a tricky subject.” Stephenson is the founder of Anza Gems, which purchases colored gems directly from East African artisanal miners and gives a portion of its sales back to the mining communities. Of course, there are plenty of ways to ensure responsible sourcing of natural diamonds. Aside from the Kimberley Process — which has been criticized in the past, but does provide assurance that diamonds have non-conflict origins — organizations like the Diamond Development Initiative are bringing diamonds directly from artisanal and small-scale miners to consumers in a way that benefits the mining communities. De Beers, through its sightholder system and its Forevermark brand, offers additional safeguards. Each Forevermark diamond has a numerical inscription attesting of the responsible sourcing of the gem. 26
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Meanwhile Rio Tinto runs mine of origin programs at both Diavik and Argyle where the polished is directly trace to the mine and country. Argyle issues an Argyle Pink Diamonds Gem Identification & Authenticity document for every diamond over 15 points. As for Canadian diamonds they come with Maple Leaf and Canada Mark engravings. However, diamonds do come from many sources, and it requires a lot of work to determine whether those sources are ethical ones. “You really want to look for a vendor with a documented chain of custody from the mine, through the cutting process, to the retailer’s hands,” says Stephenson. “There are companies out there providing this, but they are often not your typical diamond dealers. Ask for documentation.” In lieu of these options, she recommends that retailers ask designers and manufacturers where their materials are sourced. “Look for designers working
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with responsible materials so you can represent that jewelry to your customers with confidence,” she says. “At some point, it comes down to trust between you and your vendor, and between you and your customers [that you will] deliver what you are promising.”
Falling Leaves ring from Seasons Collection by Shelly Purdy.
Canadian authenticity Toronto-based jewelry designer Shelly Purdy has used Canadian diamonds exclusively since 2000. “I was excited, their shop so when the pickiest person because being a Canadian designer, comes for something where the metal or I wanted Canadian content in my diamond is traceable, you can really tell a work,” she says. “I focus on diamond story about it. If they know you’re making engagement rings, and using Canadian an effort, it makes a big difference.” diamonds was important to me.” In doing so, she continues, she has “an Skeptical on synthetics authentic Canadian story to go along On the subject of lab-grown stones, some, with my work. I think it’s important to such as Stephenson, have been skeptical look at the provenance of a stone. For the about their marketing pitch. “Synthetic diamond industry to become stronger, diamond companies have done this the consumer needs to marketing job, saying trust us, and we need to “As someone who they are the ultimate make the information to sustainable has been in mining answer available.” engagement rings, but communities, I’ve we have to be careful Lester Oehler, CEO of wholesale manufacturer to eliminate an seen the benefits of not and designer Toby entire continent as mining firsthand” a diamond source Pomeroy, agrees that Canadian diamonds are [by replacing African the best option today, but says there are mining with synthetics],” she says. limitations to the supply. The company’s “As someone who has been in mining founder, Toby Pomeroy, is a pioneer in communities, I’ve seen the benefits of responsibly sourced gold and platinum. mining firsthand. We should work on However, determining the provenance improving artisanal mining conditions, of diamonds outside of Canada has been but mining is not inherently bad, and a greater challenge, Oehler says. “We wish synthetics are not necessarily the only we had nice, easy, clean criteria to draw alternative.” from, but we don’t have that much. We She also expresses doubt about the don’t do enough volume for it to be a carbon footprint of lab-grown diamonds. huge issue. We just try to find the most Although the companies claim to be traceable we can.” “carbon neutral,” that just means they are It’s important that retailers at least funding low-emissions projects to offset make a sincere effort to show they care their own emissions, she argues. “And how their products are sourced, he what is the environmental impact of that stresses. “They should have something in versus a mined diamond?” a diamonds.net
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RETAILER INSIGHTS
IN THEIR OWN WORDS HARVEY ROVINSKY, OWNER BERNIE ROBBINS JEWELERS NEW JERSEY & PENNSYLVANIA
GRACIE HAYS, CO-OWNER THE GEM GARDEN SAN MARCOS, CALIFORNIA
“We use natural, responsibly sourced diamonds because we believe there is one world we live in, and we’d better take care of it. It’s everybody’s responsibility, and we work very hard to ensure that the things we do and the vendors that supply us have the same philosophy. Most of our vendors are members of the Responsible Jewellery Council [RJC], and we deal with sightholders when it comes to diamonds, almost exclusively. We’ve been a Forevermark jeweler for over four years. Forevermark and De Beers are passionate about conservation and repatriating on the grounds where they mine. For every acre De Beers mines, they repatriate five acres. We respect that a lot, and that’s why we continue to work with them. “Mining has gotten a bad rap, which historically may have been true, but it’s just not true anymore. That message has to get out to the consumer. Young people today are rightly very conscientious about keeping the world environmentally safe. We want to let them know that we believe in that and are part of it. “I also want them to know that lab-grown diamonds are sending out a message that’s not accurate: ‘Labgrown is green, and mining is not.’ It’s absolutely wrong. It takes an awful lot of energy to grow lab-grown diamonds. There are a lot of things being done now to keep mining as clean as possible and to clean up after the process is done. Millions of people have jobs they wouldn’t have if it weren’t for mining, so there’s a great story to be told, and honestly, I don’t think the industry is doing a good enough job of telling it.”
“Much of our business comes from millennials, particularly young couples choosing an engagement ring. They come in the store together and want to be engaged in the entire process of sourcing and designing their rings. They really like to learn. “What we provide has become what I call a gemological service. We try to fully educate our customers. The GIA is 10 minutes away, and we encourage them to go. They ask a lot of questions and are concerned about the source of their diamonds. “A normal question is, ‘How can we be sure we don’t have a blood diamond?’ Those are the words they choose, unfortunately. We tell them we would never sell them anything we wouldn’t be comfortable wearing ourselves. We provide information on the different jewelry associations we deal with and the companies we do business with. We tell them the companies we work with have made ethical pledges to be a part of those organizations. We share as much information as we can from the trade. We are up-front; if you want 100% certainty of your source, you should buy a Canadian diamond. We provide the GIA report, which adds a level of comfort. If they still have concerns, sometimes we suggest using a recycled diamond from a family member. Other times, we’ll talk about colored stones from Australia. “We work hard for our customers. It is no longer a sales flip. It adds about 30 to 45 minutes to a sale. It’s a lot of time, but we enjoy it...They become forever customers, and all of our customers have referred someone to us.”
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TIFFANY STEVENS PRESIDENT AND CEO JEWELERS VIGILANCE COMMITTEE (JVC) “Responsible sourcing is a vital topic in the trade today and amongst consumers. At its root it means knowing what your goods are and where they come from and ultimately passing along that confidence and peace of mind to your customer. Responsible sourcing encompasses compliance with the Kimberley Process, Dodd Frank Conflict Minerals provision, Anti Money Laundering laws, Made in the USA claims, testing for lab- grown stones, social impact assessments, meeting the FTC ‘green guides’ for environmental claims, as well as newer, broader sourcing standards set by leading companies like Signet which require quality control throughout the supply chain. Focusing on the lab-grown topic, the FTC advises that a seller cannot use the word “diamond” to describe a lab-grown product unless the word is immediately proceeded by the word “laboratorygrown,” “laboratory-created,” “synthetic,” or “(manufacturer name)-created.” Describing laboratory-grown diamonds as “real” is considered unfair or deceptive, per the FTC Guides. This is because “real,” denotes a natural, mined diamond and laboratory-created diamonds are manmade. Describing a synthetic diamond as a “cultured diamond,” without the specific qualifying language specified by The Guides to make clear that the gemstone is man-made is considered unfair or deceptive. In the Green Guides, the FTC has set clear rules against making broad, unsubstantiated “green” or “eco-friendly” claims. To date, we are unaware of any substantiation of the eco-friendly claims being made by laboratory-created diamond producers.” jvclegal.org
RETAILER INSIGHTS INTO SYNTHETICS To ensure that communication with retailers is targeted and effective, the Diamond Producers Association (DPA) commissioned a retailer survey earlier this year of 250 US chains and independents, online and offline. Here’s what it found with regards to synthetic diamonds: 1. The retailers had a fairly high awareness of synthetics — under either of the most common names for them (synthetic diamonds, laboratory-grown diamonds) — but still weren’t entirely clear as to what they were and how they were made. In particular, there was almost unanimous surprise that it takes no more than a few weeks to manufacture them. 2. Most of the retailers do not sell synthetics, and a large majority said they would “not likely sell” or “absolutely wouldn’t sell” them in the next 12 months. For those, the main reasons were lack of consumer interest (38%), and reputational concerns (45%) — i.e., that carrying them would harm the store’s image. 3. A large majority agreed strongly/ somewhat with the following statements: “Synthetics will have a worse retail value than natural diamonds, or no resale value”; “it would be good to have a natural mark on natural diamonds to clearly identify them”; and “I worry that I might inadvertently buy undisclosed synthetic diamonds.” 4. Those who do sell synthetics vary in how they display and disclose them in-store. Most have a marked, separate section, though a worrying number put them in the same space as real diamond jewelry, while some only offer them on demand and do not display them. ▪ diamonds.net
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THE FINAL CUT
‘Real is Rare, Real is a Diamond’ is an industry rallying cry
The Diamond Producers Association (DPA) was recently established by seven of the world’s leading diamond miners — representing about 75% of global production — to sustain consumer confidence in and demand for diamonds. Through the DPA, Alrosa, De Beers, Dominion, Lucara, Petra, Rio Tinto and Gem Diamonds make a significant commitment to the long-term success of the sector. In 2017, we received $57 million in contributions from our members to intensify our “Real is Rare, Real is a Diamond” consumer marketing campaign in the US and launch our first Indian campaign in November. In 2018, we will add China to our program and resume diamond category marketing there after a 10year absence. It is exciting — and even intriguing — to see how much “Real is Rare, Real is a Diamond” resonates with consumers in every market, regardless of culture, gender or age. The growing need for genuine meaning and truthfulness in our lives, in our 30
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relationships, in what we do and buy, is a universal phenomenon and a long-term trend. Diamonds have a uniquely genuine story to tell that goes back billions of years, involving incredible forces of nature and millions of women and men whose lives are supported and enhanced by diamonds. This story is very relevant today and will become increasingly so. It is our collective responsibility to make sure that consumers, especially younger generations of consumers, hear it. “Real is Rare, Real is a Diamond” is not a marketing line or a slogan. It is a big idea that we are only starting to explore and develop. It is a promise of authenticity and sincerity which only a precious, billion-year-old diamond can carry, and which can shape consumer perceptions for years to come. The wish is for “Real is Rare” to become an integral part of how we conduct our business, how we shape the modern diamond message for consumers, and a rallying cry for the industry. We look forward to working hand in hand with all who share our passion for diamonds, as well as the greater industry community, to deliver an informed and inspiring buying experience for consumers. For now, we invite you to diamondproducers.com to register on our Trade Portal, where you will have access to information about our key initiatives, research and insights, and campaign assets. ▪ Jean-Marc Lieberherr CEO, Diamond Producers Association
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T:6 in S:5.75 in
ANKE & GUANCHEN HAVE BEEN TOGETHER FOR ONE YEAR. HER DIAMONDS HAVE SPENT TWO
BILLION YEARS BENEATH
THE EARTH’S SURFACE AND A FEW MONTHS ON HER FINGER.
S:9.75 in
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T:6 in S:5.75 in
ANKE & GUANCHEN HAVE BEEN TOGETHER FOR ONE YEAR. HER DIAMONDS HAVE SPENT TWO
BILLION YEARS BENEATH
THE EARTH’S SURFACE AND A FEW MONTHS ON HER FINGER.
S:9.75 in
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