Conflict Diamonds

As a consumer and potential buyer of diamonds you are right in being concerned about the ethics of diamond mining and trade. You may already know about the 4 Cs but there is an increasing awareness of the so called 5th C – Conflict Diamonds, especially since the release of the film “The Blood Diamond” featuring Leonardo di Caprio and Amnesty International’s campaign “Are you looking for the perfect diamond”.

Conflict diamonds, also known as "blood" diamonds, are rough diamonds used by rebel movements or their allies to finance armed conflict aimed at undermining legitimate governments. Profits from the trade in conflict diamonds, worth billions of dollars, were used to buy arms during the devastating wars in Angola, the Democratic Republic of Congo (DRC), Liberia and Sierra Leone.

While the wars in Angola, Liberia and Sierra Leone are now over and fighting in the DRC has decreased, the problem of conflict diamonds hasn’t gone away. Diamonds mined in rebel-held areas in Côte d’Ivoire, a West African country in the midst of a volatile conflict, are reaching the international diamond market. Conflict diamonds from Liberia are also being smuggled into neighbouring countries and exported as part of the legitimate diamond trade.
Congo is another troublespot. In January (2007), the World Diamond Council, the industry body, said it had received reports of conflict diamonds being smuggled from Congo via Zimbabwe to South Africa where they were certified as legitimate and exported. Zimbabwe's government denies the allegations. Although Liberia's civil war is over, its diamonds are still subject to UN sanctions.

The Kimberley Process is an international certification scheme that regulates the trade in rough diamonds. It was launched in 2000 by several southern African countries and a total of 71 countries have now signed up (as of Nov 2006). Its aim is to prevent the trade in conflict diamonds, while helping to protect the legitimate trade in rough diamonds. Governments have to keep records tracking diamonds from source to their polished form. In theory this prevents conflict diamonds from entering the supply chain. A Kimberley Process certificate, guaranteeing diamonds as conflict-free, accompanies all official shipments of rough diamonds to and from participating countries. To support this, the international diamond industry agreed to a voluntary system of warranties to ensure diamonds continued to be tracked right up to the point of sale. All invoices for the sale of rough diamonds should now include a written guarantee that states they are conflict-free.

In the late 1990s, at the height of the problems, conflict diamonds, mainly from Congo, Angola and Sierra Leone, made up between 4% and 15% of the global trade. The diamond industry says that fewer than 1% of diamonds on the market now are from war zones. Gemstone revenue has the potential to heal as well as hurt, the industry says, pointing out that Sierra Leone has now been at peace since 2002 and its diamond industry generates $140m in tax and export revenue. But critics say 1% of a $60bn global market is still too much.

Legal diamond trade ploughs money back into the country they came from. In countries such as Botswana and South Africa, diamond revenues have paid for schools, roads and clinics. Diamond revenues enable every child in Botswana to receive free education up to the age of 13 and an estimated 5 million people have access to appropriate healthcare globally thanks to revenues from diamonds.

Instead of boycotting diamonds altogether, consumers are being urged to ask retailers whether their diamonds are conflict-free.

After much controversy by the media such as the film Blood Diamond and by singer Kanye West the rapper Akon, who actually owns a diamond mine, defends diamond mining in an interview with MTV: "The argument has been blown out of proportion, I’m sure in certain mines and in certain areas there's probably some illegal activity going on, so I will not sit there a defend no mine, period. But at the same time, in any corporation there is a lot of illegal activity going on. If I had to put emphasis on anything, I would talk about the damn oil. I would call that 'blood oil'. The oil is killing more people. Diamonds is the least of our worries. All that (attention on the diamond trade) is really to (detract) you from what is really going on."

With the diamond trade having taken so much negative press (and sometimes incorrectly so) the next commodities in the firing line are gold and rubies which I will report on next...