Around USD 57 billion worth of diamond roughs are traded worldwide annually. These rough trading include diamond miners selling directly to their clients, through tenders and auctions and run-of-mine basis. Since past few years, diamond prices have become volatile with rough diamond prices increasing almost 30% in past 2 years while polished diamond prices decreasing by almost 15%. If plans of Kimberley Process Certification Scheme (KPCS) materialize, pricing of diamond roughs may however have global standards in near future.
An explosive Amnesty International report published in September 2015 had detailed how conflict diamonds are still in circulation and how mis-pricing and opaque valuation practices had enabled diamond pipeline to garner enormous profits at the expense of diamond producing nations and poor artisanal miners. Besides, the report also highlighted the role of diamond trading centers including Dubai in proliferation of such conflict diamonds and playing a complicit role in illegal money flow. Besides, The Civil Society Coalition (CSC) – a group of 9 NGOs had announced that it would boycott Kimberley Process (KP) in 2016 over undervaluation of diamonds entering UAE. Global Witness, which was the first one to bring the issue of blood diamonds to light globally, had resigned as official observer from KP in 2011 due to process loopholes and system failures.
Owing to these pressures, Ahmed Bin Sulayem – Executive Chairman of Dubai Multi-Commodities Centre (DMCC) and 2016 Chair of Kimberley Process (KP) seems to have taken up the issue. KP is in discussion with global diamond miners, World Diamond Council (WDC) and key industry players in India, Belgium, Israel, US and Dubai to set a framework, determining best practices for rough diamond valuation and formulate the first set of global standards for pricing of diamond roughs.
Around 30% of rough diamonds mined are now sold through tenders and live auctions, instead of the old traditional method of selling diamonds at fixed prices to pre-approved clientele. This is pegged to be one of the reasons for volatility in diamond pricing. Dubai was the first centre to start live tender auction in 2005 and now most of the diamond miners have adopted the tender system to sell their diamond roughs.
USD 18 billion of rough diamonds are imported by India annually for diamond processing (cutting and polishing) and global standards on pricing of rough diamonds may help diamantaires as no artificial increase in diamond prices may exist.
Though for consumers, the polished diamond prices evaluation may still remain a mystery, global standard on diamond roughs pricing may bring in some sanity.