EU goes ahead with contested diamond move
Pauline Dikuelo | Monday January 15, 2024 06:00
Under the move, the G7 wants all global rough diamond production shipped Antwerp for certification that the stones are not of Russian origin, something described by Minerals and Energy minister, Lefoko Moagi, as “market swallowing”.
The G7 or Group of Seven represents most of the world’s richest economies and the major market for diamond jewellery, meaning their decisions reverberate across producer nations such as Botswana.
“G7 countries have agreed that a single import node for imports of rough diamonds to G7 market will be established in Belgium,” officials of the Delegation of the EU to Botswana told BusinessWeek in a written response this week.
Belgium was reported to have initially been hesitant to sanction Russian stones as Antwerp is a major diamond centre and Moscow’s production accounted for a quarter of imports in 2021. Independent researchers at an Antwerp based civic organisation recently said it was still difficult to estimate how many Russian diamonds were passing through Belgium indirectly through other centres such as Dubai or Mumbai. Russia is the world’s largest producer of diamonds by volume.
In December, Moagi lashed out at the EU and G7 plans, saying they undermined the established traceability and certification systems already instituted by countries such as Botswana.
“We know where our diamonds come from and we know how they have developed our countries and therefore we protect them with the integrity that they deserve,” Moagi told BusinessWeek. “We are, therefore, so opposed to this single node identification process that some countries seek to impose on us. “We believe that for over 20 years, we have managed that process well for our diamonds here, especially African producing countries and we believe that if anything, it should just be an enhancement to whatever we do in terms of the provenance journey that we want to continue using for our diamonds.
Producers say locating the single node in Antwerp will not only increase the cost and complexity of previously simple diamond transactions, but would move the centre of the industry away from fast-emerging players such as Botswana.
“As Botswana it goes against our vision about where we want to go to in terms of diamonds and value chain development,” Moagi said. “You see, what will happen when this single node commences, is that we produce rough here, then the ask is to take this rough to Antwerp and make sure it is certified. “You get a little certificate, you come back to Botswana. “You want to cut and polish it here – Antwerp to get a little certificate again. You want to make jewellery? “Who’s paying all these costs and the time constraints that you have to go through?”
De Beers and the World Diamond Council (WDC), a grouping of diamond industry players, have a counter-proposal to the G7’s plans. The plan would involve adding onto the WDC’s system of warranties – which ensure Kimberley Process compliance – a declaration that the diamonds being imported are not from Russia. The system would complement De Beers’ blockchain traceability system, Tracr, which the diamond giant made available to the broader industry earlier this year.
EU officials told BusinessWeek that a robust traceability-based verification and certification mechanism for rough diamonds would be established within the G7. They added that a G7 certificate identifying specific diamonds would be issued in the Antwerp node. The electronic certificate would “follow the diamond from mine to finger ensuring only non-Russian diamonds enter the G7 market,” the EU officials said.
“The aim is to deprive Russia of this important revenue stream to limit Russia’s ability to fund its illegal war of aggression against Ukraine,” the officials said. “The restrictions will not be applicable to African producers but rather offer an opportunity to African producers to ensure improved access to the G7 market without competition of Russia and further benefit from a more transparent market that will reinforce consumer confidence that the product is not a Russian blood diamond.”