KP Chair, AWDC Diamond Valuation Forum stress need for methodology for rough diamond valuation

While opening the second of the three-series Rough Diamond Valuation workshop-style forums, KP Chair Ahmed Bin Sulayem, called for a consensual approach to determine the criteria in creating universal methodology for the valuation of rough diamonds.

“Adopting the right methodology for a standardised approach to creating a process, which will serve all areas of the rough diamond industry, from large corporations to artisanal miners, is complex. What we’ve achieved so far, however, indicates a willingness on the part of all diamond industry professionals to embrace the concept of set of rough diamond valuation protocols”, said Ahmed Bin Sulayem.

The forum was attended by industry experts who addressed issues that would impact how a set of tools might be created for a valuation mechanism that could be used by all KP participants. Among the many topics were - a statement on Anti-trust legislation, using ‘Chatham House’ protocols. The forum looked at the challenges of creating rough diamond valuation structures from a producer’s perspective and government diamond valuators as well as diamond tenders and auction experts, shared inputs about the rigours of the human element of valuing rough diamonds.

Existing methods vary in different countries, with some using price books and lists based on valuators individual categorisation of rough diamonds using references to colour, clarity, carat and cut (4 C’s).

The Diamond Development Initiative (DDI) representative highlighted the difference in value perspective, between large corporations and smaller artisanal miners, when outlining fundamental needs of the smaller producers, whose requirement for immediate income overshadowed their negotiation skills for fair market value.

Stephane Fischler, President of the Antwerp World Diamond Centre welcomed the opportunity to focus on a critical aspect supporting the mission of the KP and bringing this series of seminars to Antwerp.“The discussions have produced interesting avenues, all converging towards the need of building expertise and capacity whilst ensuring solid governance processes”, said Mr. Fischler.

The workshop identified a range of methods that could be adopted focusing in detail on reverse engineering based on the retail price of polished diamonds. Reverse engineering is a method where the valuator will base his decision on the forecast of polished output of the stone applying a certain percentage of fixed costs, generally 15 percent including polishing and certain margins.

Tenders and auction experts opined about price fluctuations and market forces and sighted seasonal influences, all impacting final valuations.

Mr. Bin Sulayem summarised: “There was consensus that individual governments should take a greater role by establishing regional offices - and creating training programmes to enhance the skills of valuation experts. Also to come out of the meeting was the agreement to look into a standardised method of identifying a valuation starting point”.

Delegates agreed unanimously that it was important for the future of diamond producing countries to better manage their resources, and improve living conditions of industry workers, especially those in the diamond producing nations of African.

Peter Meeus, Workshop Coordinator, said, “By Plenary we hope to identify a methodology that can be used in diamond offices around the world based on pre-formatted rough sorting protocols linked up with a reverse engineering platform based on real-time transactional prices. If we can still do that within this year we will have done what no one has done before”.