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Diamond Chain of Custody and Conflict Diamonds - Conflicting views
While the world diamond industry is busy mooting a new definition of conflict diamond, many related aspects that may get affected by the change are also getting their share of attention. One of the most talked about thing is diamond chain of custody (CoC) that is directly related to the cornerstone of the diamond industry, that is, trust.
By: Diamond World News Service
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Jan 1 2013 3:08PM
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Reference: 7514  

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Shah also states that the new definition of conflict diamond will hardly have any effect on COC, which is a prerogative of RJC. “Conflict diamond definition and COC, though remotely connected, are looked after by two separate organisations. They are two separate issues with separate objectives,” clarified Shah.

Talking about the stringent standards of COC by RJC, Shah said that as RJC is not a member of KP, there is no requirement of any change either in COC, or in discussion of new definition. Though Shah kept it clear and objective enough, he however did not mince words in expressing his opinion on the COC designed by RJC. “The CoC, as proposed by Responsible Jewellery Council, in our opinion, is devoid of practicality and is not in sync with the way the business of diamond is being done in the world today. It has serious repercussions in terms of transaction cost on the entire diamond industry of the world and has a potential of wiping out the small and medium traders and brokers in the diamond sector, who are the integral part of the system. We are not against regulating the diamond sector and in fact we are the founding members of KP and are part of all constructive discussion happening in the sector. However, already this sector is over regulated and we do not feel any more regulation will do any good for this sector,” he expressed.

Seconding Shah’s opinion was Earnest Blom, newly-elected President of World Federation of Diamond Bourses. “At the outset the issue of Conflict Diamonds and Chain of Custody (C.O.C.) are not linked but do have a relationship, the K.P. is a United Nations initiative that encompasses seventy four governments and deals solely with rough diamonds whilst the Chain of Custody is a voluntary system that is exclusively for polished diamonds and was initiated by a few private companies and organisations,” says Blom, giving an over view of the subject matter.

However, he also feels that the new definitions will help COC. “If the definition is agreed upon by all the members, it should not detrimentally affect the COC. As far as the RJC rules are concerned I believe they are robust enough and I cannot see any need to change the COC as the new reforms, if pursued, will be sufficient and encompassing. The COC is a voluntary system that has been devised and in operation for some time and it is my opinion that they fill a niche within the areas they operate.”

He states that the WFDB supports any initiative that improves any process that will benefit the industry. “The KP has been operational for ten years and I have always believed that a system must never remain static but always be proactive. Reforms are necessary but it must be an inclusive process that has the buy-in of all the industry players,” says Blom.

Yet another renowned industry figure and President of Bharat Diamond Bourse, Anoop Mehta, preferred to talk on a different tangent altogether. “Before implementing a COC, it needs to be studies in depth. We need to understand that it work differently in every country. If we talk about inclusion of human right abuse in the new definition of conflict diamonds, we must know that it may happen at two levels—first, a government may do it, secondly, a private company involved in mining may do it. So before punishing the country or branding it as a land of conflict diamonds, there should be a global body that looks into it and helps the nations. I appreciate the fact that KP is considering it that it’s important to help countries and not punish it by banning them from the trade.”

About RJC diamond COC, Mehta said that the rules are a bit too stringent and may choke the business. “It’s practically impossible to track every piece of diamond, especially after its polished. Even if one wants to track a rough, we need computerization. And in a country like India, where we follow the Mom and Pop business model and not a very corporate culture, it will be further more difficult. We now have KP certification, which is serving the purpose and no other rules is required. Tracking the carat though sounds possible, but tracing the origin of every stone is not very feasible idea,” he concludes.

While the industry is looking forward to the new definition with bated breath, COC may not be a huge concern, as most of the industry insiders feel that it will remain unchanged or will undergo minor changes. However, the change in the definition may have serious affect on the industry. As far as the COC is concerned, the implementation of the standard may send ripples in the market, but may also have some positive affect.

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