Bahan Conflict[1] Diamond

8/14/2019 Bahan Conflict[1] Diamond

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ConflictDiamonds

P O S S I B I L I T I E S F O R T H E I D E N T I F I C A T I O N ,

C E R T I F I C A T I O N A N D C O N T R O L O F D I A M O N D S

a working document by global witness. 10 may 2000


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This working report has been produced by Global Witness.Partial funding for this report was kindly received from theUN department of the UK Foreign and CommenwealthOffice (FCO), without which this report would not havebeen possible. The views expressed within are solely those ofGlobal Witness. There are many individuals, companiesand countries (too many to list) that kindly cooperated withthe production of this report and we are grateful for their

time, patience and genorsity without which the report couldnot have been produced.

Global Witness is a British based non-governmentalorganisation which focuses on the links between environ-mental and human rights abuses, especially the impacts of natural resource exploitation upon countries and their peo-

ple. Using pioneering investigative techniques Global Wit-ness compiles information and evidence to be used inlobbying and to raise awareness. Global Witness informa-tion is used to brief governments, inter-governmentalorganisations,NGOs and the media.Global Witness has no

political affiliation.

Global Witness LtdP O Box 6042,London N19 5WP,United KingdomTelephone: + 44 (0)20 7272 6731Fax: + 44 (0)20 7272 9425e-mail: [email protected]://www.oneworld.org/globalwitness/


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c o n f l i c t d i a m o n d s 1

Introduction

This report seeks toexamine the possibilities for controlling the entry of

conflict diamonds into the legitimate diamond industryand to establish a basis of understanding about whetherdiamonds can be identified by country of origin.

The basic debate is that several of the most desta-bilising and destructive conflicts in Africa are partlyfunded through the mining and marketing of highquality gem diamonds.These diamonds end up for salein jewellery shops around the world as beautifullycrafted gifts of love, a paradox that the internationalconsumer is beginning to feel increasingly consciousand wary of.

Currently the diamond trade, as a unified whole,have failed to put recognisable or verifiable controls in

place that will render the certification of diamonds asbeing conflict free. If any of these diamond funded con-flicts in Africa are to have a chance of peaceful conclu-sion and if the threat to the international market is tobe negated, then the international community, throughthe G8,G77, UN, SADC and EU must act swiftly anddecisively to prohibit the sale and marketing of theseblood diamonds.

Since late 1998 there has been a shift in worldopinion on the issue of conflict diamonds, which initself is a new term. No longer is the soaking up ofopen market goods from areas of conflict deemed to bean inevitable consequence of the need to stabilize theworld price of diamonds. Governments have ceased to

accept this as an argument for non-interference, as haveconsumers. Indeed, perhaps most importantly, in termsof long-term change, the commercial part of the dia-mond industry has itself begun to change its positionon this issue.There have been encouraging actions andstatements but these have been in response to pressurefrom governments, the United Nations and from asmall number of non-governmental organisationsincluding the Fatal Transactions campaign, comprisingGlobal Witness, Niza, Medico International andNovib, which is seeking to encourage consumers toinsist upon conflict free diamonds.

It is vital that a long-term solution to this very

complex problem be found, and that can only work ifsome of the underlying structures are addressed ratherthan the commercial sector of the industry dealing witheach problem country on a case-by-case basis. This isno way to deal with the atrocities and horrors inflictedupon the peoples of affected countries nor protect thelegitimate diamond economies. It is clear that there is aneed to create a chain of custody within the diamondtrade an auditable trail from the mine to the con-sumer that can work with existing structures and pat-terns of trade. The initiative of the South AfricaGovernment on bringing together government and

industry in a Technical Forum, for the 1112th May2000, to work on ways to address the problem is to be welcomed and should be widely supported. It is thefirst meeting of government and industry and shouldbe a starting point for coordinated reform by govern-ment and industry.

Global Witness, in this report, has a number ofkey recommendations, building towards a system of

control that we believe is implementable and necessary.These recommendations need much debate and are notintended to be exhaustive. We look to governments andthe commercial sectors of the industry to use this reportas a building block towards controls that will severelyreduce the flow of conflict goods and enable a diamondto once again be A girls best friend. Initial research, which was not exhaustive, has identified applicabaletechnology that is either developed, or is being devel-oped. Global Witness advocates that trade and govern-ments consider the following existing possibilities.Currently there are systems that can: calculate andrecord the individual surface profiles of rough dia-

monds; confirm the identity of a parcel of stones thathas been registered using this method; mark rough dia-monds with individual bar codes or other readableinscriptions; mark cut diamonds with codes, bar codesand logos; identify and verify the identity of cut orrough diamonds that have been coded; record and ver-ify the individual optical signature that a cut diamondexhibits using laser refraction.

A system using elements of these coupled withimproved regimes in exporting countries, and the intro-duction of relatively low technology identificationtechniques including work on surface features and pro-filing of run of mine production could be used as a basisfor reform by both governments and trade.

CONFLICT DIAMONDS

What exactly are conflict diamonds and why do theyhave such an impact? There is much debate as to whatconstitutes a conflict diamond and it will requiredetailed discussion before an exact definition is con-cluded. The extremely high profile role that this com-modity is having in funding some of Africas civil wars itmakes it logical that we should start there. However thedefinition of conflict diamonds should not be restrictedjust to Africa and could feasibly cover any country.

In Africa it is possible to be clear as to what con-stitutes conflict diamonds. Diamonds that originatefrom areas under the control of forces that are in oppo-sition to elected and internationally recognized govern-ments, or are in any way connected to those groupsshould be considered as conflict diamonds. Drawing ontheir considerable experience in this area De Beers hasrecently defined conflict diamonds to be, as diamonds which originate from areas in Africa controlled byforces fighting the legitimate and internationally recog-nized government of the relevant country. This is, infact, a working definition.


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Diamonds are one of the most concentrated formsof wealth known to man and as a result they offerpotentially huge financial returns. In addition they aresmall and easily concealed. They occur in many coun-tries across the globe many in Africa. They can bemined using sophisticated equipment and techniquesor they can be manually dragged from the earth byhand often in terrible and unsafe conditions. Tragically

Angola, Sierra Leone, Liberia and the DemocraticRepublic of the Congo are beset with a terrible paradox enormous mineral wealth and devastating civil con-flict.

Rebel armies need financing to buy arms andmunitions, to pay and feed troops and to keep strategicallegiances alive. Since the end of the Cold War theprotagonists in these wars have not had access to thefunds needed to maintain the apparatus of a military ora political regime. Instead they have turned to any com-modity that has a fiscal worth and a readily accessibleand consumable market such as timber, animal tro-phies, gold or diamonds. The wars in Angola, Sierra

Leone and the Democratic Republic of the Congo arecurrently the most notable examples of where rebelshave used diamonds in this way. However diamondsand the wealth they generate are not sensitive to bor-ders and the profits have been used to finance conflictabroad as in the case of Liberia.

This can be readily seen by the staggering amountof revenue that Unita were able to generate during the1990s over a 6 year period they amassed US$3.7 bil-lion, which was far more than they ever received duringthe period of the cold war. Due to this funding theywere able to maintain a sophisticated military operation which effectively ensured that no peace process inAngola would work. In Sierra Leone the Revolutionary

United Front were transformed into a well equippedand lethal fighting force due to the control and sale ofhigh value gem diamonds. The UN urgently needs totackle the problems of the RUF generating continuedrevenue from diamonds. Despite deploying the largestforce in its history as of February 2000, it did not havea single member of staff responsible for monitoringdiamonds. Current work by the international commu-nity to strengthen the official diamond sector are verypositive but action must be taken over rebel diamondsales.The current crisis in Sierra Leone is also a chanceto for the diamond industry to prove to the seriousnessof its intent to deal with conflict goods. It should use

the opportunity of the South African technical forumon conflict diamonds to take immediate steps to endthe purchase of RUF origin diamonds. The strategiccontrol of the diamond producing areas in the DRC isone of the key driving forces in the conflict and thecontrol of them will be critical to a lasting negotiatedpeace settlement.

This report is divided into six sections:

Section 1 The Structure of the Diamond Industryseeks to provide those who are not diamond-

industry experts with a grasp of the scale of theindustry and how the different parts of the dia-mond pipeline relate to each other; providing out-line information on the most significant diamondproducers, the main polishing countries and thefinal end markets.

Section 2 Diamond Identification Methodologies

examines the different ways in which diamondshave been studied to aid exploration, mine devel-opment and geological understanding. However itcan be seen that a number of these techniqueshave resulted in the ability to identify the produc-tion from a diamond mine and in some cases indi-vidual diamonds.

Section 3 Legislative Overview identifies the loop-holes in the international diamond trade from acustoms perspective and looks at import andexport regulations for a number of key countries,and briefly looks at trade and consumer issues.

Section 4 Technologies and Control Systems in Use inthe Diamond Industry describes some of thenewer technologies used in working with dia-monds which could be applied to diamond con-trols and looks at current control systems in thetrade.

Section 5 Certification Systems for Other Productsgives examples of verification schemes in opera-tion in other industry sectors.

Section 6 Recommendations for a Control Systemdraws upon the rest of the report to make a series

of recommendations regarding controls to addressthe problem of conflict goods.


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1

The Structure of theDiamond Industry

This section seeks toprovide those who are not diamond industry expertswith a grasp of the scale of the industry and the way inwhich the different parts of the diamond pipeline relateto each other; it provides some outline information on

the most significant diamond producers, the main pol-ishing countries and the final end markets.The total world production of diamonds for 1999

is estimated at $6.8 billion1. Of this total $3.8 billion was from countries that are well regulated, namelySouth Africa, Namibia, Botswana, Canada and Aus-tralia. Rusia produced US$1.6 billion, but it is difficultto assess regulatory capacity due to lack of information. The remaining US$2.4 billion came from Angola(US$600 million), which appears to be attempting toreform controls, and also smaller production from awide range of countries, which accounts for $800 mil-lion (Democratic Republic of Congo would account fora significant proportion of this). In other words, just

over half of the worlds production by value came fromfive countries with tightly controlled diamond produc-tion, and just a small number of mines. If one includesRussia that would total approximately 70% of worldproduction.

Diamonds are mined in a total of approx.26 coun-tries. The overwhelming majority of diamonds aremined under government control and about 80% of alldiamonds mined are used for industrial purposes2.Working of diamonds takes place in about 30 countriesworldwide3.

Polished production in 1998 amounted to approx.860 million stones3. India polished the vast majority of

these stones, at an average size of 2.3 points3

. This is avery small average size, given that there are 100 pointsto a carat and does point to considerable difficulties inan individualised product audit trail. Worldwide about600,000 diamonds of half a carat or more were pol-ished. Interestingly the value of these two different cat-egories of diamond were roughly equal3. StandardEquities, using 1996 data, gives a country and mineanalysis that points to 4.195 million carats of roughgem diamonds of over 2 carats with an average value of$560 per carat and a total value of $2.352 billion, orapprox. one third of the market4. This is detailed in

their 1998/1999 report De Beers/Centenary and theglobal diamond industry in which they note Esti-mates such as this are highly complex and the latestavailable data we have is for 1996. 4

In 1999, $13 billion worth of diamonds were soldin jewellery worldwide with a wholesale value ofapprox. $27 billion, which in turn was worth $56 bil-lion in retail sales. The diamond content of jewellery

varies widely and an accepted average is that 23% ofdiamond jewellery retail value is actual diamond value.The wholesale market breaks down as follows: the USAwas the largest market with $6.24 billion (48%); Japanthe second largest with $1.82 billion (14%); Asia Ara-bia $1.43 billion (11%); Europe $1.56 billion (10%);Asia Pacific $1.3 billion (10%); the remainder was$0.65 billion (5%). In terms of retail sales of jewellerywhich included diamonds the percentages are very sim-ilar, although the values are much higher: the USAaccounted for 44% of sales ($24.6 billion); Japan for19% ($10.6 billion); Europe 14% ($7.8 billion); AsiaPacific 5% ($2.8 billion); and Asia Arabia 4% ($2.2 bil-

lion). De Beers has estimated that the value of diamondjewellery at wholesale terms was $27 billion in 1999. 5,6

The diamond industry is a major player in theeconomies of a number of countries. In Africa it is asignificant contributor to the South African economy,the Guinean economy and to others, and is the domi-nant revenue source in Botswana and Namibia. In Rus-sia the picture is less clear but the country producesabout $1.6 billion of diamonds. In Canada the impor-tance of diamonds is growing fast, with a projected 12%share of total world production within the next fewyears7. Belgium is the worlds biggest market for roughdiamonds, with an estimated 80% of rough and morethan 50% of polished diamonds passing through

Antwerp8, although tax income to government is verylow. Switzerland is important because it is the countrythrough which large quantities of diamonds are trans-ferred by De Beers London based Central SellingOrganisation (CSO) for, it seems, tax purposes. Britainplays a unique role as it is the country from which DeBeers, through its sightholder system, sells its dia-monds, which alone account for approx. 70% of all dia-monds mined.

EXTRACTION

The majority of the worlds diamonds are mined by ahandful of companies:De Beers which mines approx. 50% of world pro-

duction, some of which is in partnership with govern-ments; Debswana which is equally jointly owned by theGovernment of Botswana and De Beers; Namdebwhich is also equally jointly owned by the Governmentof Namibia and De Beers; Alrosa which accounts for allofficial Russian production, with the Udachny minealone producing approx. 75% by value and 68% by out-put in 1998, although this is due to change in the verynear future as another mine increases output9; Argyle of


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Australia, which includes a 60% holding by RioTinto10, and 40% by Ashton Mining11; BHP DiamondsInc. (a wholly owned subsidiary of Broken Hill Propri-etry Company Ltd), in a joint venture with Dia MetMinerals Ltd and two geologists, is currently mining allthe production from Canadas North West Territoriesunder the Ekati name12.The mine produces circa 3 mil-lion carats per year, about 5% of world diamond pro-

duction12; MIBA (80% shares held by Government ofDRC and 20% by the Belgian Sibeka), which controlsthe mines at Mbuji Mayi in DRC13. There are also asignificant number of medium-sized companies.

About $300 million is spent on exploration annu-ally, of which about $145 million is spent by De Beers4.Standard Equities forecast that world rough productionwill increase by about 2 3% per year4. Tacy Ltd haspointed out the astonishing returns that are possiblefrom mining; It is not unusual for diamond mines torecover their capital expenditure within two years.Thecapital expenditure of the new small Marsfontein mine[in South Africa] was recovered in five days.14

TRADING AND MOVEMENT OFDIAMONDS

Trading of diamonds falls into several broad categories:diamonds traded by large companies that have beeninvolved in the mining of the stones; government bod-ies selling official production; companies licensed tobuy diamonds mined by others; small scale miningcompanies selling their own production; licensed buy-ers; unlicensed buyers buying unlicensed production;extensive trading in diamond bourses and betweencompanies/individuals.

Whilst there is definitely some intra-Africa trad-ing of rough diamonds, the majority of diamondsbought on the open market are flown directly toAntwerp or other trading centers such as Tel Aviv, NewYork and Bombay. It has been claimed that most of thediamonds are mixed whilst in Africa and then importedto Belgium as mixed goods, thus rendering identifica-tion of the stones impossible.This seems initially plau-sible, and was an argument put forward by De Beers inearly 1999. However, profit on trading of rough isbased upon swift turnover of capital, the faster a deal isturned around the quicker a trader can move onto thenext parcel of goods and hence build overall profits on a

percentage basis. It does not make commercial sense tohold up goods, away from the market place whilst wait-ing to put together a suitable mixed parcel. Addition-ally, security is an important issue, as the moving ofstones across national borders in Africa may call foreither smuggling or for paying-off officials15. This notonly increases costs but raises risk. Furthermore, cur-rent implementation of country of origin and countryof provenance is very lax, resulting in no real need tomix parcels overseas to disguise true country of extrac-tion. It is, of course, true to say that mixing does occurbefore entry to the key markets, as does some sorting of

goods. This involves sorting goods from an area by sizeor value. Once the original export from country ofextraction has been made, a process of sorting, mixingand trading-on does take place. It has not been possibleto ascertain what percentage of the annual productionis traded in this way, and what percentage has a muchmore direct trading history up to being set in jewelleryand sold to the public. Global Witness recommends

that this work be carried out, hopefully with the co-operation of key industry players including De Beers,sightholders, traders and manufacturers and invitesinformation from any of these groups to complete thisanalysis.

De Beers holds it diamond stocks in the 100%owned Diamond Corporation (Dicor) apart from thoseheld at the mines, and those held by the variousCSO trading companies to the point of sale by the Dia-mond Trading Company (gem) at the ten sights peryear, and through regular sales by the various industrialdiamond companies.4 Diamond brokers have tradi-tionally played an important role in the sightholder sys-

tem.There are only a small number of brokers and theirrole is to liaise between the client and the CSO and tointroduce new sightholders. They are paid a one percent commission by the client on an ongoing basis16.

The polished goods are traded and sold on to jew-ellery manufacturers, or are set in jewellery by the pol-ishing company. The total timeframe from point ofextraction to the final sale to the consumer is known asthe pipeline. This appears to be shrinking from approx.two and a half years to about two years and may shrinkfurther17.

CUTTING CENTRES

There are around thirty countries worldwide wherediamonds are cut, polished and processed into jew-ellery. Details are given below of a number of the maincountries to give an indication of the scale of the busi-ness. It is not meant to be an exhaustive list.

india

India overwhelmingly dominates the polished diamondmarket with exports worth over $6 billion and about50% by value of the world market share of polished dia-monds (approx. 90% by weight). The industry provides

an estimated 700,000 jobs18

,19

. An estimated 95% of allthose employed in cutting diamonds work in India20. Itis said that Nine out of ten diamonds set in jewelleryare cut and polished in India. 18 India has a polishedproduction of 820 million stones3.

belgium

More than half of the worlds rough and polished dia-monds are traded in Belgium through over 1,500 com-panies. There are approx. 60 De Beers sightholders,some of whom are also manufacturers, which total


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about 320 companies. Most of the companies employ asmall workforce of less than 20 people, and in 1998there were only 40 companies whose workforce wasmore than 40 people.There are a small number of com-panies employing very large numbers of people.21 In1998 the total workforce was estimated at 3,000 butthere are a number of figures from different sources21. The High Diamond Council (known by its Flemish

initials HRD) states that 30,000 people are directly andindirectly employed in the diamond sector8. The HRDalso states that the industry accounts for 8% of Belgianexport activities8.

israel

Israel exports approximately half of its diamonds to theUSA. In 1999 it exported more polished diamonds, by value, than India and Belgium combined. This was worth a total of $4.2 billion, which is 46.5% of theUSA import market.22 India was the second largestexporter with $2.2 billion which formed 24.9% of the

USA import market and Belgium was the third largestwith $1.8 billion of exports forming 20% of the importmarket.22 Israel was initially affected by the Asian crisis,and the workforce decreased to an estimated 4,000people. There has since been some recovery, and theworkforce has begun to increase.21 23 In addition thereare an estimated 2,000 workers employed by Israelicompanies overseas, in countries with lower labourcosts.24 Israel processes about 75% of the annual pro-duction of higher value gem diamonds, and so is verysignificant in terms of any control system3.

thailand

The diamond cutting industry of Thailand was badlyaffected by the Asian financial crisis of 1997. Diamondexports are an important part of gemstone exports andthe country is ranked as the worlds ninth largest dia-mond exporter. There are about 30 companies that pol-ish or provide services to manufacturers and about 70%of these are foreign owned. There are approx. three DeBeers sightholders, and another 16 that are described ashaving direct access to CSO goods. The industryemploys about 5,000 people21.

the usa

The USA is also a very important cutting centre, seesection immediately below for further information.

KEY CONSUMER MARKETS

The world diamond jewellery retail market was worth$56 billion in 1999, and the figure is on a continuousgrowth curve5, with the major market being the USA.Diamond jewellery sales worldwide are dominated bysales of rings, which account for 79% of sales, followed

by pendants with 8% of sales (a very fast growing sec-tor), and earrings with 7% of sales.25

the usa

The USA is the worlds biggest diamond market21.New York has about 1,800 licensed dealers suppliedmainly through 25 De Beers sightholders and there is

long-running concern about obtaining sufficient sup-plies of rough diamonds to meet demand. It is oftendescribed as the most skilled cutting centre because itpolishes many of the larger very high quality diamonds,usually specialising in stones of 2 carats and over.Thereare about 100 manufacturers employing about 600 cut-ters. The industry tends towards companies employingsmall numbers of polishers, with only a few companieshaving more than 20 polishers. Also, a lot of the work issub-contracted out to independent polishers. Somepolishing is also carried out in other countries includ-ing Thailand and Mauritius as well as Israel andAntwerp. Although this tends to be for smaller stones

of less than half a carat polished21

,23

. The structure of the industry has altered some-what in recent years with middlemen being forced outof business and diamond manufacturers working moreclosely with retailers, and increasingly being involved inselling finished jewellery to retailers directly23.

In 1999 American jewellery sales (not just dia-mond), as noted by Gemkey Magazine, accounted forapprox. 25% of all consumer sales including clothing,consumer electronics, toys and sporting goods. Thistrend looks set to continue. In 1998, 33 million piecesof diamond jewellery were sold in the USA with anaverage price of $655 per item, worth $22 billion.26

However the market is dominated in quantity terms by

diamonds of half a carat or less, which in 1999accounted for 78% of imports22.

The importance of the American market can beunderstood by the fact that diamond exports form thelargest product export category by value from Israel,India and Belgium.

asia and saudi arabia

Asia and Arabia tend to prefer large diamonds of goodquality, as does the US market and Japan4. Many suchstones have potentially come from conflict areas, hencethe need for all importing countries to get involved. Of

particular concern are developments in the UnitedArab Emirates about which there is credible informa-tion of factories having been to set up to polish Unitaand other conflict goods for which Indian cutters havebeen sought27.

The following diagram from Terraconsult/Dia-mond International, although dating from 1997,gives auseful breakdown of the flow of goods and the increasein value along the pipeline from mining to sale of fin-ished item to the consumer 28.


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BANKS

A small number of banks specialise in diamond financ-ing which requires very fast and short-term loans; themost well known is the specialist banking arm of theDutch ABN Amro Bank. In Antwerp, just two bankshandle about 90% of the financing29. ABN has esti-mated that the Israeli diamond industry puts up $1.5 of

its own capital for every $1 borrowed4. The banks areclosely involved in the financing of the diamond indus-try and this gives them a unique perspective on theactual flows of diamonds and a responsibility to ensurethat their financing does not support the trading ofconflict diamonds. To date, they have been very reluc-tant to take any actual measures on conflict goods,although recently this does appear to be changing30,31.

CHANGING STRUCTURE OF THEINDUSTRY AND NEED FOR REFORM

Charting the changes in the worldwide diamondindustry is a never-ending task. The industry seems tobe permanently in the throes of some crisis or majorchange. The latest of these is the much talked aboutand reported review undertaken by Bain & Co. for DeBeers, which has resulted in some seemingly majorshifts in the way the company plans to operate in thefuture. The details of this review have been extensivelycovered in the media and the long-term implicationswill doubtless become clear in due course.

It is, however, true to say that this current period isa time of real change within the trade, and specialistobservers are noting some changes which do seem to beof long-term importance and impact on the structure of

the industry. They point to the fact that the diamondtrade is dynamic and responsive to change even if ittakes a while to come to terms with the need forchange.

In August 1999, B. Janowski, a diamond industryconsultant, was quoted on the Tacy Ltd websitedescribing how The search for profits and marketposition has produced a multi-level market, with eachsegment seeking viable profits through a variety oftechniques consolidation, product differentiation,exclusivity, disinter mediation, technology, geographicexpansion and both lateral and vertical alliances andacquisitions.The evolution of the industry, most visibly

at the retail level, has accelerated to such a point thatentire segments are at risk, often without the principalsbeing adequately aware of changes afoot. Janowskipoints to about 40 shopping mall jewellery operationsthat have disappeared in the last seven to eight years asan indication of the speed of change32. HSBC, report-ing on the 2nd International Rough Diamond Confer-ence in Tel Aviv in March 2000, states It is clearplayers in the rough diamond industry have to adapt ordie.31 And pointing to the rough industry it notes that,in coming years, [it will face] significant levels ofthreats to consumer confidence, market equilibrium

and price stability, and from a shorter pipeline. Theseare as a result of social and technological change and,most importantly, De Beers strategic reviewAshake-up is imminent.Maybe it has already begun? Allcomponents of the pipeline will be impacted. Addi-tional reasons for changes in the diamond pipeline areThe Just in Time supply method, production effi-ciencies and faster store turnovers. 16

Linked to these changes are growing concernswithin the industry about the impact that synthetic dia-monds and sophisticated treatments such as heat treat-ments and laser infilling of imperfections, could haveupon consumer confidence. The industry has begundebates about how to tackle these problems because ofthe threat they pose to consumer confidence in theintegrity of the industry and to the perceived value ofnatural diamonds. The GIA has already talked of apassport for diamonds, and many have raised the needto find a way to ensure consumer confidence in theproduct. It would seem clear that these business con-siderations overlap with the ethical considerations over

conflict diamonds and together form an overwhelmingcase for the industry to institute reforms to addressthese issues.


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2

DiamondIdentification

Methodologies

This section examinessome of the current ways in which diamonds have been

studied. These studies have primarily been carried outto increase understanding about the formation of dia-monds as an aid to exploration and geological under-standing, and not as a way of determining whetherdiamonds originated from one country or another aspotential conflict goods. It clearly shows that it is possi-ble to identify diamonds and that more research focus-ing on product audits and conflict diamonds is needed.The first two methods described, studying surface fea-tures and profiling of mine production, are clearly ofuse and could be developed immediately to assist in anycontrol scheme. Some of the more technical method-ologies, including mass spectrometry, need furtherresearch.

Kimberlite and alluvial diamonds have the samecrystalline structure but they have different surfacecharacteristics.The most well known is that many allu-vial diamonds have a frosted surface as a result of abra-sion during transport from the volcanic pipe. There areother surface features such as differing patterns of chipsand scratches.

The locations of diamond deposits are deter-mined by the geologic fact that diamonds are foundprimarily in two rare types of rocks kimberlite andlamproite. These rocks occur as pipes (cone structurespushed to the surface by volcanic activity) only in cra-tons; those portions of the earths crust that have been

stable for long periods of time.When a diamond-bear-ing kimberlite or lamproite pipe reaches the surface ofthe Earth, it is subject to weathering and erosion,which results in the release of its diamonds. The dia-monds thus released can be transported for varying dis-tances before they become concentrated into any one ofa variety of secondary deposits. Such concentrationscan remain close to the primary source and formdeposits referred to as eluvial (above a pipe) or colluvial(adjacent to a pipe), as at Mbuji-Mayi in DRC. Whengreater distances are involved, alluvial (stream-trans-ported) deposits are formed, such as those found in

India, Brazil and Angola. When diamonds are trans-ported for even greater distances, to a marine environ-ment, either onshore or offshore marine deposits canform, such as those in Namibia. 33

THE ISSUE OF DIAMONDIDENTIFICATION

Why has the question of whether one can identify adiamonds country of extraction become so central tothe debate over conflict goods? The importance can be judged from the comment by George Burne, recentlyretired president of De Beers Canada Corporation Itsvery evident to our buyers what a parcel of Sierra Leonegoods looks like. Its not rocket science.29 IndeedP.Wagner writing in 1914 noted The leading SouthAfrican experts are agreed that, between the diamondsof the mines of certain definite areas, there exists amore or less pronounced family resemblance, clearlyimplying community of origin. This holds good for

example, with regard to the various occurrences in the vicinity of Kimberley, notwithstanding the fact thatparcels from the principal mines may be distinguishedeven by a novice.

Identification and Security

In The Diamond Fields of Southern Africa (pub-lished in 1914) P. Wagner described

Precautions against Illicit Traffic:

As a precaution against illicit traffic, all dia-monds purchased on the River Diggings have to

be submitted to the experts of the DetectiveDepartment at Kimberley, whose powers of dis-crimination have come as an unpleasant surpriseto quite a number of adepts in the gentle art ofgem trans-plantation. Thus, to a certain gentle-man who would persist in finding typical Damar-aland stones in his claim at Bloemhof; and toanother bright individual who, in direct defianceof the fundamental law of hydrostatics whichteaches us that water flows from a higher to alower level, succeeded in extracting from Klipdamgravels quite a number of Koffyfontein diamonds.Happily for the peace of mind of South African

geologists the lining of the diggers coat was exam-ined! 34

However it is possible that that the issue of single stoneidentification (the word here is used in terms of coun-try of extraction rather than whether synthetic ortreated) has become a red herring; an attempt by someplayers in the diamond industry to divert attentionaway from the broader issue of controls on conflictgoods and the well-established principle that a parcel ofdiamonds can, in many circumstances, be identified tocountry of extraction, or at the very least provide good


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grounds for doubt in cases of intentional mis-declara-tion of origin of goods. It is of course true to say that amixed parcel would be very difficult to identify,although this would depend on the nature of the dia-monds being mixed and the rigour of the examinationto which the parcel were subjected. The majority ofsuch problem parcels would be alluvial goods from asmall number of countries such as Sierra Leone,

Angola, DRC, Liberia and would tend to be thehigher-value goods.

In the last 16 months there has been a radical shiftin international attitudes to conflict diamonds. Eventhe term is new. Prior to this point, it was well known,and widely reported, that diamonds from conflict areassuch as Angola, Sierra Leone and Liberia were beingsold on the open market and were being purchased by a wide range of companies. Not only was this acceptedbusiness practice but it was actively promoted by DeBeers, the worlds largest diamond company, who in itsliterature and press relations promoted its role as thestabilizing force on world diamond prices throughout

the 1990s. De Beers 1995 Annual Report stated, typi-cally,Our outside buying operations are a vital ingredi-ent of our management of the world market for roughgem diamonds. 35 In 1996 Julian Ogilvie Thompson inhis Chairmans Statement in the Annual Report wrote,Outside Buying.The CSO buys diamonds in substan-tial volumes on the open market, both in Africa and inthe diamond centres, through its extensive network ofbuying offices, staffed by young diamond buyers often working in difficult conditions. Purchases in 1996reached record levels largely owing to the increasedAngolan production. Angolan diamonds tend to be inthe categories that are in demand, although in the mainthese buying activities are a mechanism to support the

market. 36 A clear illustration of just how far the issuehas shifted is the statement from a De Beers director, ina letter to The Times in August 1999, The fact thatthe sale of diamonds by UNITA has helped to fund thecontinuing civil war is without question. 37 It is to bewelcomed that De Beers is including a guarantee not tosupply conflict goods on all its sight holder boxes,beginning with the March 27th sight. This is the firstformal recognition that conflict goods are not accept-able to the end consumer, and a move that the rest ofthe trade need to make. However, to be credible, DeBeers needs to show how the guarantee will be inde-pendently audited. The initial press announcement of

29th

February 2000 and subsequent press statementsdid not commit to never buying such goods again,however following a rigorous interview on BBC Radio4s Today Programme the Chief Executive, Gary Ralfe,made an on-air commitment on this issue.38

Perhaps not surprisingly, governments movedbefore the commercial diamond industry began toshift. There was a fairly immediate understanding froma number of governments that the humanitarian andeconomic impacts of conflict funded or perpetuated bydiamonds was simply too high a price. Within thecommercial trade there was initially considerable reluc-

tance to face up to the scale or nature of the problem,however an increasing range of players have acceptedthe issue and are looking at ways forward.

DE BEERS AND UNITA DIAMONDS: ACASE OF CORPORATE AMNESIA?

In October 1997 Gary Ralfe, De Beers CEO, during apress conference in Russia stated, You are absolutelyright to say that in fact it is Unita that has over therecent few years been responsible for most of the pro-duction in Angola. One of the essential jobs that we DeBeers [sic] carry out worldwide is to ensure that dia-monds coming onto the markets do not threaten theoverall price structure and therefore although we haveno direct relationship with Unita, there is no doubt thatwe buy many of those diamonds that emanate from theUnita-held areas in Angola, second-hand on the mar-kets of Antwerp and Tel Aviv. And as the diamondmarkets have weakened recently (inaudible)...in buying

up this Angolan production which otherwise will bethreatening the overall price structure has increased.39

On June 20th 1999, in a letter to the UK Observernewspaper, Tim Capon, a director of De Beers, statedunequivocally We have never purchased diamondsfrom Unita.40 And again on August 22nd 1999 Con-trary to your assertion, we have never purchased dia-monds from Unita 37 This assertion was repeatedfollowing the publication of the UN Expert Panelsreport on Angola in March 2000.

The South African Mail & Guardian article of17th March 2000, Unita gems went to De Beerspoints out Before then [UN diamond sanction of1998], the situation was murkier the company said it

did not knowingly buy Unita diamonds with the quali-fier that it could not identify where the diamonds camefrom. 41

Whilst it is repeatedly stated by De Beers thatthey may never have directly purchased diamonds fromUnita, this is a complete abdication of corporateresponsibility, and it further raises the question of whom exactly the De Beers staff, who were based inDRC along the Angolan border, thought they werepaying for the diamonds that flooded across that borderup until the fall of Mobutu in 1997. Perhaps the answeris contained in their monthly field reports that detaileddiamonds bought and monies spent?

WHAT TRADERS SAY ABOUT THEIDENTIFICATION OF ROUGHDIAMONDS

Diamond traders, especially when talking off therecord, are open about the fact that they can identifythe country of origin of diamonds. Parcels of run ofmine production are described as being relatively easyto identify, as are distinctive diamonds, especially inlarger sizes. One trader noted that mixing diamonds


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does make it difficult to be certain of origin, again,depending on the stones mixed, but that it would nor-mally be likely to raise a question as to the origin of thediamonds. Even De Beers has admitted that it canidentify specific production. In October 1998, JimMcCluskie of De Beers admitted to a journalist wecan identify Angolan production with 90% accuracyand 50% of certainty [to] Unita production.42

DIAMOND EXPERTS

Worldwide there are a small number of academicexperts studying diamonds. Several of the leadingexperts work for, or are consultants to, De Beers. Theirexpertise could be brought to bear upon the issue ofidentification in regard to conflict goods. De Beersitself has a GeoScience department that looks at arange of identification methodologies, mostly in termsof exploration, but also mine security43. The depart-ment, despite its obvious expertise and knowledge, does

not seem to have been briefed to look at ways to bringthis to bear upon the issue of identification. Indeed, thedetailed briefing given to Global Witness, in February2000, though very interesting in itself, was all the moreso for what it did not say. The team raised legitimateconcerns about some of the methodology currentlybeing used (see section below) but were clearly verysceptical about any possibilities for identification. Theydid not appear to have looked at the issue from a con-structive point of view and this would seem to be adirect result of management policy.

One independent expert is Dr. Jeff Harris of Glas-gow University, who also works as a consultant for DeBeers and has carried out detailed research on the sur-

face features of diamonds, and on run-of-mine output.His work on statistical analysis of such output for sizeand shape produces interestingly individual graphs (seecase study below). Doctor Harris has concluded that itis entirely possible to identify run of mine productionusing a combination of these techniques, and has fur-ther noted that many surface features are unique to par-ticular production44. Indeed, he has noted thepossibility of combining such techniques to help build amethodology for identification, and feels there wouldbe potential to use detailed analysis of surface featuresas a way of checking parcels - as part of a regulatoryframework. He notes that this is a slow process, and

could take one to two weeks to check a parcel limitingits usefulness if used in this way. Nevertheless, possibil-ities of combining human expertise with intelligentcomputer software to speed up the process should beexplored.

Detailed below are a number of different identifi-cation techniques which point to the ability to identifythe provenance of diamonds to a fairly significant level.

I. SURFACE FEATURES

There is a wide variety of surface features, some ofwhich are the result of the growth of the crystal, e.g.terracing, and others which are the result of externalfactors such as distinctive patterns of scratches causedby abrasion from other diamonds or stones due to thebrittle nature of the diamond44.

In 1994 Swash, Whiley, Nqidi, Mzobe andNcube, noted that Over seventy distinct diamond sur-face textures exist and allow for the quantification andcharacterization of diamond populations. In SouthernAfrica numerous localities have one or more distinctsurface textural feature or morphological peculiarity which allows them to be characterized. 45 However,they point out that Problems in diamond studies arethat few real differences exist betweenpopulationsThe use of provenance studies is thatthey provide an extra piece of information to the explo-ration jigsaw 45

It is clear that the numerous, and in many cases,

individualistic surface features of different diamondscould be of immense use in identifying country andeven mine of origin. For example, Dr. Jeff Harris notesthat there are 44 surface features for the octahedron,which, when coupled with statistical analysis of run-of-mine production and known colour characteristics,could lead to a practical and relatively low-techmethodology to assist identification. This coupled withan audit system that involved producer and importingcountries would provide a practical and fairly immedi-ate system of controls. Some interesting work has beendone on surface features which clearly indicates thepotential importance of such information. It is not clearwhat work has been done by De Beers but it would be

surprising if it had not looked at this issue.

case study 1: southern africa

This is taken from The Genesis of the Diamond byAlpheus F Williams, General Manager of De BeersConsolidated Mines,Ltd which dates from 1932.46Thebook gives a very detailed analysis of diamonds fromthe production of different mines in South Africa, anumber of which are no longer operational, and itclearly demonstrates the level of detailed informationthat can be gathered on surface features which could beof use in providing a comprehensive understanding of

the production of different countries. The author notesthat As pointed out elsewhere, every diamond mineproduces a diamond characteristic of it... 46.

Williams describes the capacity of diamondsorters to identify individual diamond production:The term sorter is applied to an expert who classifiesparcels of diamonds from the economic aspect that is,according to purity, colour, size, shape, etc. An expertdiamond sorter can nearly always allocate any diamondput before him as coming from a particular mine orfield, as there are peculiarities which definitely place astone. In every production there are stones which per-


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c o n f l i c t d i a m o n d s 1 1

or very irregular; exposed portions suggest they mayconsist of magnesium ilmenite.

The paper goes on to note The results of a precisestudy of the stones from one particular kimberlitesource in Sierra Leone are here recorded as a matter ofscientific interest, but although the source containsmost of the types known, their proportions and sizescannot be regarded as necessarily characteristic of any

other source, or of the field as a wholeThe parcel on which these observations were made weighed 285carats, comprising 422 clear stones and 196 coated of+2 mm.size, together with an estimated number of 910of both clear and coated stones of 2 mm. size.

Patches, or particulate spots, are another surface featurethat is a subject of study. They are found in a range ofcolours including yellowish-brown and dark brown as well as green. Green and brown patches sometimesoccur on the same diamond, 48 and are a distinguishingfeature44. Diamonds from kimberlite deposits havebeen found with green patches, and diamonds from

placers in areas such as the Urals, the Lena region inYakutiya and in Brazil48 .

II. PROFILING OF MINE PRODUCTION

This process involves building up profiles of a minesproduction using a variety of classifications. The infor-mation gathered can be used to analyse whether thediamonds originated from the same mantle source andit can also be used to try to understand the forces anddynamics involved after this point. The measurementstaken build up a statistical profile of the diamond pro-duction. The paper, which is quoted extensively below,

points to a useful technique for identification of mineproduction if one focuses upon events that happened tothe diamonds after they were first formed. This wouldinclude the study of the varying shape characteristics ofthe diamonds and of levels of plastic deformation.Doc-tor Jeff Harris notes that profiling of production hasalready been carried out for some official mines, includ-ing South Africa, Botswana, Australia and someunpublished data on Namibia.44 Russian productionhas been profiled but using different sieve sizes which would make comparative checks difficult. Thus, itwould appear that work has already been carried out forwell over half the worlds production by volume. This

leaves Angola (for which some profiling may have beendone44 ), DRC and Brazil which are very significantproducers (although DRC is predominantly industrialgrade goods). In addition to this is the comparativelysmall volume percentage of production from the otherdiamond producing countries that would need to bedone. It would seem probable that De Beers has pro-filed the production from its Williamson mine in Tan-zania.44

case study

In 1984 J Harris, J Hawthorne and M Oosterveld pub-lished a paper, A comparison of diamond characteris-tics from the De Beers pool mines, Kimberley, SouthAfrica49, which describes how mine output varies on astatistical basis and the paper includes graphs thatclearly demonstrate this.

Two diamond valuation parcels from each of thefour mines at Kimberley have been examined using aclassification scheme which determines physical prop-erties of diamond as a function of their size.

Diamonds from the four Kimberley mines ( theso-called De Beers Pool Mines comprising Bult-fontein, De Beers, Dutoitspan and Wesselton) havebeen recovered for over 100 years, but little recentinformation is known about the diamond characteris-tics from these sources. In part, this dearth of knowl-edge arises because a single recovery plant serves allfour mines and therefore diamonds from individualmines cannot generally be obtained. In recent years,

however, samples of diamonds have been recovered andaccumulated from the individual mines for the pur-poses of mine valuations [an interesting pointertowards the need for mining companies to profile pro-duction] and it is from such samples that the compar-isons of diamond characteristics reported here arecompiled.

Valuation parcels from each of the four mines havebeen classified according to the scheme devised byHarris et al. (1975, 1979) With the first set of parcels,crystal habit, colour, UV fluorescence and plastic defor-mation levels were determined for at least 1500 stones,or the total number of diamonds, in each of ten sievesize classes covering all but the smallest diamondsIn

addition the relative abundances of syngenetic inclu-sions within the diamonds in the smallest sieve sizeclass (-6+5 maximum diamond diameter 1.83mm)were determined.

With the second set of valuation parcels, the clas-sification procedure only included variations of crystalhabit and colour with diamond size, but this allowedcomparisons to be made with the first set. However, inaddition, a detailed shape breakdown of the irregulardiamonds from this set was completed. This workdetermined the primary shape characteristics of thediamonds from Kimberley (see Harris et al. 1975) andfrom a comparison of these and other characteristics,

allowed some conclusions to be drawn as to whetherthe diamonds at Kimberley could have a commonupper mantle source.

The results from the six studies completed on thediamonds from De Beers Pool mines fall into twogroups. Inclusion abundances, primary crystal shapes,colours and UV variations provide information perti-nent to the original growth environments of the Kim-berley diamonds. The levels of plastic deformation anddiamond shape characteristics, where irregular dia-monds are a major category, provide insights intoevents which have affected the diamonds after their


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formation. If diamonds from Kimberley are derivedfrom a common source, results for the first group ofstudies should show close similarity. Excluding colourfrom further consideration because of the problems ofreproducibility, the results from the three remainingstudies all indicate a strong uniformity in characteristicbetween mines. The growth environment is over-whelmingly peridotitic in its mineralogy, with octahe-

dral diamonds, which exhibit similar UVcharacteristics, dominant over other primary crystalhabits.

In the second group of studies, similaritiesbetween the mines are not necessarily to be expected,because these results relate to events which may influ-ence each of the four kimberlites differently. For exam-ple, if plastic deformation of the Kimberley diamonds iscaused by the dynamics associated with the separationof four kimberlites from a common reservoir in theupper mantle, then the stresses associated with such anevent may well be different for the four kimberlitesinvolved; hence, distinctive plastic deformation levels

amongst the diamonds recovered from these kimber-lites. Similarly, differences in the rates at which theindividual kimberlites move upwards or the number ofmagma pulses involved, could determine the final pro-portions of dodecahedral crystals derived from octahe-dra in a particular kimberlite. Also, the percentages ofirregular (usually broken) diamonds at each of themines will be strongly influenced by such factors as 1)differential expansion of syngenetic inclusions whichmay break the diamond, or 2) whether the kimberlitewas associated with internal explosive brecciation dur-ing uplift, or 3) near the surface, whether the kimberliteeruption was phreatic.

From the results of these studies the bulk of the

diamonds from the four Kimberley mines could well bederived from a single source. The primary characteris-tics of the diamonds are very similar. Major differencesin diamond characteristics between the mines relate toprocesses acting on the diamonds once they haveformed, and these most probably occur in response todifferences in the dynamics of the individual kimberliteeruptions.

III. MINERAL INCLUSIONS

In brief, inclusions are normally impurities of micro-

scopic minerals and have been the subject of a consider-able amount of study as they throw light upon theformation of the diamond and factors subsequent tothis50. These are analysed using a number of techniquesincluding x-ray diffraction, electron microprobe, neu-tron activation analysis and a specially designed massspectrometer. Harris and Gurney50 describe a study thatlooked at the occurrence of a number of mineral inclu-sions from the mines of Premier, Finsch and Kaffie-fontein and found that there are marked differencesin the relative abundances of inclusions in the dia-monds from these three sources.50 However, mineral

inclusions can occur in diamonds from very differentgeographical areas and geological times. Harris andGurney note that work on inclusions is being carriedout at the mines listed above and elsewhere. GlobalWitness invites the various experts in this area to bringtheir collective expertise and knowledge to this issue,and perhaps to help build a database of such informa-tion. This could be linked to the academic and com-

mercial DIAKIM database currently underconstruction, which will compile information on worlddiamond occurrences and production from a very widerange of sources51.

IV. SURFACE SCANNING

The concept of profiling the surface of a diamond usingeither x-rays or optical scanning as a way to fingerprinta diamond, relies on the principle that each diamondhas unique characteristics and that the technologyexists to record this. If there exists a technology that

can fingerprint a diamond in its rough stage, and thisfingerprint can be stored in a database to be recalled forcomparison, then there exists a method by which totrack the movement of rough diamonds, without theneed to tag or otherwise mark them. Surface profilingtends to be done as part of the process of evaluatingrough diamonds. The aim of the evaluation process isto build a very detailed model of the rough diamondthat becomes the basis on which a computer will calcu-late the different cutting options for the diamond.

Issues to bear in mind is the minimum size of dia-monds that can be scanned, the speeds at which surfaceprofiling can be done, and the transfer of the profile asstored information. This would require the movement

of large amounts of data across computer networks.However, with the current advancements in data pro-cessing and transfer speeds,as witnessed in informationtechnology industries everywhere, this does not seem tobe an insurmountable barrier.

Sarin is an Israeli diamond technology companythat has been a pioneer in the field of precise diamondmeasurements and grading, which changed themethodology for analysing the proportions of a dia-mond in preparation for cutting.52Using Sarins evalua-tion technology, it is possible to map rough and cutdiamonds. The system is based on image processing,with the diamond being placed on a revolving disc in

the path of a parallel beam of light. A silhouette of theobject is created and captured as an image on a com-puter. The diamond is continuously sampled in thisway until the system using triangulation geometry soft-ware can recreate the 3D structure of the diamond.53

Currently, the system profiles a single stone at a time,taking approx. 25 seconds to do so, though this doesdepend on the size of the stone.54With specific devel-opment, the company expects the time could bereduced to approx. 15 seconds per stone.55This systemcould also quite conceivably be designed into a work-station that could scan more than one stone at a time. It


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was suggested by Global Witness, and agreed by a rep-resentative from Sarin, that designing such a worksta-tion was a feasible option.55

verification / matching corresponding stones

Information derived from surface profiling must bestored on a database for the subsequent verification of

stones. Repeating the profiling scan allows the identifi-cation of diamonds by matching corresponding infor-mation held on a database. To overcome the issue ofrecognising the stones at different angles, softwaredevelopment would be necessary, though again this wasdiscussed and was not considered to present a prob-lem.54 It is important to note that the amount of infor-mation that is produced by profiling can be somewherein the region of one megabyte of computer memory.This information could also accompany parcels of dia-monds in a CD-ROM format which could address thisproblem. The information could easily be encryptedand thus could not be read by anyone other than the

intended recipient, such as customs, using widely avail-able but secure encryption software.

V. OCTONUS

OctoNus is a Moscow State University-based companythat develops software for the diamond industry at thestage of diamond manufacturing. Its systems includethose similar in purpose and methodology to the Sarinrough evaluation machines mentioned above. Since1997, and using a system known as PaCor, OctoNusdeveloped what it describes as Electronic Passportsfor rough and polished diamonds.The developer of this

application stated that the idea of the electronic pass-port for the diamond was raised from the problem ofcorrespondence between a regular diamond certificateand the actual diamond. According to the designer ofthe system, Sergei Sivovolenko, there is no reliable andfast way to decide if the certificate corresponds to agiven diamond. Again, this is a technology that has thepotential to be applied to a chain of custody.56

VI. MICROTOMOGRAPHY

Tomography is defined as a technique for displaying a

cross section through the human body or other solidsusing X-rays or ultrasound 57 Computer Tomography(CT) scanners can be used to visualize the 3D internalstructure of objects in a non-destructive way and with-out any special preparation. CT scanning is currentlyapplied widely in medicine to diagnose the internalpathology of organs. Micro Tomography is principallythe same technique as CT scans but is far more power-ful, scanning with resolutions up to 8 microns.58 MicroTomography is widely used to perform non-destructivetesting, and representation of a variety of solids suchas bones, fossils, and metals and of course diamonds.

The relevance of microtomography, in this instance, isnot so much its internal analytical capacity, but becauseit can also be used to create a unique external profile ofa diamond.

Two scientists at the University of Antwerp havedeveloped a miniaturized version of the medical CTscanner. They claim that their microtomograph is theonly scanner that can be used to scan the external con-

tour of a diamond at such a high resolution. It may bethat such a high resolution is not needed though thisneeds to be examined in practice. As yet, microtomog-raphy has not been optimised for surface scanning andfurther research and development would incur a reengi-neering to increase processing capabilities of themachines. In any case the developers of this applicationbelieve that their technology can be applied. Howeverthey raise the important issue of speed being central toapplications being considered for use in an industry which works with very high units of goods. We areconfident that we can realize a system that can be usedto fingerprint rough diamonds in a unique way, but the

market needs to decide what measuring time is accept-able.59

VII. INDUCTIVELY COUPLEDPLASMA/MASS SPECTROMETRYLASER ABLATION ICP - MS

Any method to reliably determine the origin of dia-monds would be an important tool for diamondprospecting, industry security (identifying stolen dia-monds by mine) and for helping to identify diamondsthat have originated in conflict zones.

Determining the provenance of diamonds60 a

1998 article in Diamond International, described howrecent developments in analytical techniques are mak-ing it possible to identify the source pipe of individualdiamonds. The article described the work of JohnWatling, associate professor in the School of AppliedChemistry, Curtin University, Western Australia.

In a 1994 paper 61 based upon Watlings limitedstudy, it was concluded that;

Studies so far have shown that it is possible toidentify the provenance of different diamonds on thebasis of their unique trace element association pat-terns[and that].it is hoped that the identificationof a particular diamond will be achieved using a com-

puterised database of mass spectra.62

The pursuit of quantitative chemical data for thepresence of trace elements within the diamond is notthe intention of the fingerprinting technique describedby Watling and his workers, it relies entirely upon therelationship between prescribed elements within thediamond.63

The reliability of such a qualitative approach hasbeen questioned, and it was stated by a leading expertin this field, Professor W.L. Griffin, who conductsanalyses of diamonds using the same technology, thathe would regard the qualitative approach as invalid and


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probably misleading.64 From recent research carried outusing a quantitative method Professor Griffin con-cluded that it was unlikely that individual diamondsfrom different sources could be identified using thismethod.65,66 However it was also agreed that moreresearch on other pipes was needed and that resultsfrom certain pipes did suggest that some pipes mayprove to be identifiable.

The technique also rests on the existence of a rep-resentative database which has yet to be established.One projected cost of doing this was $2 million andthat it would take three years67; another estimate wasthat this would take five years68, but it is not clear howeither of these were arrived at (nor is it clear how muchalready exists, or what samples exist ready for analysis).

An attempt to clarify the situation was made bythe HRD Institute of Gemmology, who tried to bringtogether several current researchers working on thisissue, for an origin determination conference.69 Theconference was planned for January 2000, but accord-ing to one source at the HRD, there was insufficient

response by the organisations and individualsapproached to attend, and the conference never tookplace.70The HRD also conducted its own research atthe University of Leuven, Belgium; this failed to pro-vide any conclusive results.71

It is likely that current research using LA ICP-MS will throw up more information in the near future. The Royal Canadian Mounted Police, (as part of awider plan to address the law and order implications ofhaving a diamond industry), is involved in researchusing LA ICP-MS technology. The RCMP are mak-ing contact with producing companies worldwide toseek their participation through the collection of dataon the unique identifying feature characteristics of dia-

monds from their mines.72

However, the RCMP remains cautious in itsapproach in terms of its expectations of what this tech-nology might be able to offer. With regard to deter-mining the provenance of an individual diamond, asource from the RCMP stated that; All indications arethat this would be difficult to accomplish.The ability ofthe science involved hinges on a representative databasethat has yet to be established. Validating the profilingprocess needs to be accomplished through applicationand not conjecture. The application is very complex,just as comparing the chemical signature of diamondsis very complex. While it would be very optimistic to

think that the science will provide for a 100% certaintyof source, it may support other existing circumstancesthat are indicative of source. Of equal importance, itmay be more conclusive that a sample did not comefrom a specific location.73

Also of relevance to the future prospects for thistechnology is that there is a major initiative currentlyunderway at Curtin University, Australia, to establish aCooperative Research Centre (CRC) in Forensic Sci-ence.74

Inductively Coupled Plasma Mass Spectrometry(LA ICP-MS) involves vaporising a small sample of

matter (in this case a diamond) with a laser, then subse-quently analysing the trace impurities present in a dia-mond.The ablated sample is carried in a stream of inertgas, usually argon, into a high-temperature field. Thiscauses the dissociation of molecules and the ionisationof the resultant atoms. The ions are finally passed to amass spectrometer detector where the ions are identi-fied and quantified in terms of their mass and charge

such that the relative intensities of the elements presentare recorded.75/76 The system is so sensitive that thepresence of 65 elements can be determined at concen-trations down to a few parts per billion.77


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3

LegislativeOverview on the

Export and Import

of Diamonds

This section presentsa brief overview of customs procedures for countries with significant diamond interests. It is intended tohighlight the failures and loopholes of the global trad-ing system which is partly a result of the increasedderegulation of trade through the World Trade Organ-isation (WTO) and partly due to various country s leg-islative oversights, the weakness of informationprovision about diamond trade patterns and interest incustoms enforcement except for tariff provision. Theoverriding conclusion is that international legislativechange is needed regarding the country of origin decla-rations for rough diamonds. Global Witness believes

that the true country of extraction must be declared andnot just the last country it was exported from if theissue of conflict diamonds is to be resolved. Thereneeds to be a comprehensive and detailed review ofnational and international legislation and trade agree-ments to determine a legislative basis for requiringcountry of extraction on import documents. Such areview is a major undertaking and is beyond the scopeof this report. It is also not clear which is the best wayto achieve such legislative change, for example it mightbe best done via a UN Security Council resolution thatwould oblige member states to take action. Alternativesto the UN would include the EU-ACP, the WTO, G8

and G77. Consideration should also be given to whichgovernment body should implement controls. Cur-rently there is a lack of international mechanisms todeal with diamond trade from countries such as SierraLeone where there are diamonds from both rebel andofficial sources.

Global Witness asked the major exporters andimporters of diamonds to clarify their procedures andrequirements for the trading of diamonds. The picturethat emerges, overall, is one of few requirements forCertificates of Origin (CO) relating to diamonds.Although import and export documents require

exporter, importer and origin information as standard,there are various loopholes in the system with regard todefining the origin of goods.

It should be noted that Global Witness hasincluded information about the WTO, but this shouldnot be read as an indication of support of the WTOframework.

THE EUROPEAN UNION

All diamonds entering the EU are zero rated for dutyand do not require COs unless they are Angolan dia-monds (UNSC RES.1173), in which case they must becontrolled through the Certificate of Origin schemeoperated by the Government of Unity and NationalReconciliation of Angola (GURN).

Under Council Regulation (EEC) No.2913/9278,the origin of diamonds is determined by the countryfrom which they were extracted. This is the origin which should, where known to the importer, be

declared to Customs.This information is for trade sta-tistics purposes under Council Regulation No (EEC)1172/9579 Article 10. At present there is no require-ment to give the country of origin, but this could bechanged by the EU. For manufactured goods, where nopreferential rate of duty is involved, country of origin isbased on the last substantial processing under CouncilRegulation No (EEC) 2913/92.80 In cases where theimporter does not know the country of origin, Com-mission Regulation No (EC) 840/9681 requires thecountry of consignment to be shown where the countryof origin is not known.

IMPORTERS

the european union

Europe is a key player in the international trading ofdiamonds. Antwerp and London are major funnels fordiamonds reaching the world market. Most of theworlds rough diamonds are sent to the London CSOfor sorting while Antwerps main business is the tradingand re-routing of diamonds.

belgium

Diamonds imported or exported from Belgium mustgo through the Diamond Office in Antwerp whichtakes care of all import and export formalities on behalfof the Government of Belgium. Customs officers anddiamond experts are present at the Diamond Officeand all parcels entering or leaving Belgium are openedand checked by sworn-in experts under the supervisionof an officer of the Ministry of Economic Affairs.

In the case of diamonds coming from outside theEU from developing countries, the importer has to paySocial Funds i.e. one-third of the value of the goods,


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on the import of rough diamonds (valued at more than300 Bf/ct, return shipments excluded).82

switzerland

Diamonds arriving at the Swiss border have to bedeclared at a Customs Office. Again, parcels areopened on a discretionary basis. This is determined by

how clear the information on the standard import doc-uments is and whether there is any doubt as to its veracity. Not all parcels will be opened only thosewhere information is deemed insufficient or suspect.83

usa

When importing diamonds to the USA no special doc-umentation requirements and no special proceduresmust be followed. Diamonds imported to the USA arefree of duty, and basic Customs documentation andprocedures apply under Part 177 of Customs Regula-tions (19 C.F.R. 177)84

canadaCanadas Trade Policy and Interpretation Direc-

torate confirmed to Global Witness that diamondsimported to Canada are free of duty and there is no cer-tification requirement on imports of diamonds. TheDirectorate states that the origin of the diamonds mustbe declared on the import documents at time of impor-tation.85

israel

Israels Diamond Controller confirmed that standarddocumentation should accompany imports of dia-

monds except for Angolan diamonds where a Certifi-cate of Origin is required. The Diamond Controlleralso stated that all imported shipments of diamonds areopened and inspected by diamond evaluators withoutexception.86

india

Diamonds imported to India are free of duty. Certifi-cates of Origin are not, in general, required documents.However, they may be requested from time to time byimporters or banks. Imports to India are made underlicences obtained from the Director General of Foreign

Trade. India is an adherant to the Standards Codenegotiated under GATT and now assumed by the WTO and has also taken up the implementation ofISO 9000 quality systems standards.

asia-pacific / other

The Asia-Pacific Region is the largest retail market forcut and polished diamonds and diamond jewellery nextto the United States.

thailand

For imports to Thailand, Certificates of Origin aregenerally not required documents. Most goods can befreely imported. Import licenses are still required foritems including certain raw materials. Although unableto obtain detailed information from Thai customs, ADiamond Imprest Licence may be issued, in advance,

for the import of rough diamonds from any source.87

According to Thai customs notice No. 2/2514 of 1971it requires the country from which goods were pur-chased and the consigning country, as well as the coun-try of origin of imported goods to be stated.

japan

Diamonds imported to Japan are free of duty and onlyrequire Certificates of Origin if they are Angolan.Japan also determines the origin of goods according towholly produced criterion and substantial transfor-mation criterion. Wholly produced criterion means

that the origin of the goods is the country where thegoods have been wholly obtained, whereas substantialtransformation criterion are used when more than onecountry is involved in production of the goods; the ori-gin of the goods to be the country where the last sub-stantial transformation has been carried out. Japandescribes its policy as to the opening of parcels and thecarrying out of physical examinations as being when itdeems necessary. These rules originate from the Direc-tor-General of the Customs and Tariff bureau, and arebased on the WTO Agreement on Rules of Origin.88

EXPORTERS

russia

In the Russian Federation,processing and trading firmsmust obtain a special licence from the local governmen-tal power. The export of both rough and polished dia-monds is under the control of the federal governmentwhich maintains a list of approved exporting firms. Forrough gem diamonds there are two exporters: Alrosaand Almazyuvelirexport. Every processing firm canexport its polished diamonds directly. The Presidentregulates by decree the export of special size rough(over 10.8 carats) and diamonds with special proper-

ties.89

AFRICA

south africa

Diamonds exported from South Africa are packed andsealed in standardised containers by the South AfricanDiamond Board. The Export Permits issued by theDepartment of Trade and Industry include the har-monisation code, weight, carat, value, description,exporters name and clients name and address. Cus-


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toms in South Africa operates in an administrativecapacity to verify and perform final checks on theSouth African Diamond Board procedures. It also works in conjunction with the South African Policeservice which has a diamond and gold squad. In caseswhere Customs is unsure about a parcel or procedurerelating to diamond exports they refer it to the SA Dia-mond Board.90

namibia

There are only three companies that export diamondsfrom Namibia - Namco, Namdeb and Namgem.Namgem, a 100% owned subsidiary of De Beers, is theonly company which imports diamonds to Namibia.Namibian diamonds are mined on and offshore andtransferred directly to Windhoek, arriving sealed atGovernment offices.Diamonds are then evaluated withrepresentatives from the Minerals and Energy depart-ment present at all times. In the final stages, a Govern-ment Diamond Valuation (GDV) takes place and an

export certificate is produced.

botswana

Diamonds from Botswana are entirely under the super-vision of one company, Debswana, and all diamonds goto the CSO in London. Goods are exported with anaccompanying barcode that contains pertinent infor-mation: consignment number, weight, value, shippingdate, and which mine the diamonds came from. Thisinformation is computerized and can be checked at thepoint of export and import. Remarkably, Botswana cus-toms and police do not have the power to open pack-ages of diamonds being shipped out. Diamonds may

only be exported from Botswana under and in accor-dance with an export permit issued by the MiningCommissioner.91

sierra leone

To export diamonds from Sierra Leone, applicationsfor Export Licences must be approved by the Ministerof Mineral Resources on the recommendation of theDirector of Mines. An Exporters Licence is issued fora year. Each exporter is allowed to employ buyingagents approved by the Director of Mines. Diamondparcels are sealed at the Government Gold and Dia-

mond Office (GGDO) in the presence of Customs andother security personnel. Thereafter the exporter is freeto leave Sierra Leone without further checking or theparcel being opened again at the airport.92This is thetheory, in reality exporters openly flout the GGDO andofficial exports have reduced to an all time low in 1999of approx. $1.2 million.

EXISTING INFRASTRUCTURES TOBUILD ON

The infrastructure to support a Certificate of Originscheme for all diamonds already exists. Most majortrading countries are parties to the International Con-vention on the Simplification of Customs Formalities1923, under which they have agreed to accept Certifi-

cates of Origin issued by official authorities. Under theConvention, Customs officials in various countries cancheck the reliability of Certificates of Origin by refer-ring to a list of authorized organizations officially des-ignated by their respective Governments.93

The formulation and application of origin rules issupported by the Harmonised System, the interna-tional classification tool administered by the WorldCustoms Organization (WCO). Under the Har-monised System, imported and exported goods have tobe declared under nomenclature subheadings. Thisdetermines what rate of customs duty applies and howthe goods are treated for statistical purposes. Effectively

everything depends on this classification, as all trademeasures use the nomenclature to describe which treat-ment is to be given to what goods. This instrument iscrucial when the precise description of goods and clas-sification has to be used for trade legislation. It is alsoused in formulating and applying origin rules, as theyare based, to a large extent, on the end product being ina different tariff heading than the imported productsused in manufacture.94

The EUs single market has generated the legalframework for all its members, but there needs to begreater cooperation and integration if smuggling is tobe combated.

Every country has technical requirements for the

import and export of goods and services. In the mainthese laws aim to protect the health, safety and welfareof citizens; protect the environment and national secu-rity, and guard against fraud. However, with the grow-ing international acceptance that some naturalresources in international trade are responsible forfunding conflict, (re: timber in Cambodia and dia-monds from Angola and Sierra Leone) there is anurgent requirement of governments, policy makers andtrade bodies to monitor and regulate the trade in theseassociated industries to ensure that they do not con-tribute to the funding of conflict.

The expansion of world trade has meant that gov-

ernments have looked at ways to reduce so called tech-nical barriers so that goods can move across borderswithout delay or added cost this has often been to thedetriment of social, economic and environmental con-siderations. Most trading nations are members of the World Trade Organisation (WTO) which dictates world trade policies, through the General Agreementon Tariffs and Trade (GATT) and the General Agree-ment on Trade in Services (GATS). Most WTO mem-bers use the internationally recognized standards of theInternational Organisation for Standardisation (ISO).Currently, trade requirements generally consist of the


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following components. Regulations, which are manda-tory and cover labelling, country or origin, packaging,product characteristics and environmental protection.Standards, which are voluntary technical specificationsfor products and are developed in conjunction with therelevant industry. Standards may become mandatory when included in a regulation. And, ConformityAssessment, which is the process of qualifying whether

a product meets a standard or complies with a regula-tion.

Regulations relating to the declaration of a prod-ucts country of origin has become a contentious area,as for many products there are serious environmental,social and welfare issues to be considered. With theharmonization of rules of origin in the 1980s, anincreased number of origin disputes and a surge in theuse of anti-dumping laws occurred. This led to the issueof country of origin being included in the UruguayRound of trade talks during which the principles gov-erning the application of rules of origin were estab-lished. In fact there is work to simplify the rules on

country of origin.

country of origin: wto definition

Rules of Origin can be defined as the criteria needed todetermine the territorial origin of a product. TheAgreement on Rules of Origin is concerned primarilywith those used in non-preferential commercial policyinstruments, such as in the application of most-favoured- nation treatment, anti-dumping and coun-tervailing duties, safeguard measures, markingrequirements and any discriminatory quantitativerestrictions or quotas.By definition,each good can onlyoriginate in one territory. In a world where more and

more goods are produced from parts coming from otherorigins, conferring origin to a product is not always aneasy task.95

In 1998, the WTO Committee on Rules of Ori-gin harmonised the rules of origin. Due to WTOmembers having differing rules of origin there werebarriers for exporters, particularly for those from devel-oping countries. In 1998 the Committee examined thesubstantial transformation test which would determineitem-by-item where a product originates. Thisapproach has allowed products to carry certificates oforigin according to where the substantial trans-forma-tion from raw materials to finished or semi-finished

goods has taken place. Agreement has been made ongranting country of origin status to some product cate-gories according to this criteria. Examples include furs,lubricants and concentrates from metal ores.96

Recent labelling disputes between the US and theEU over textile rules of origin and hormone treatedbeef highlight how important rules of origin are totrade and, indeed, international relations. In the case ofthe EU-US textile dispute under the USA 1996 rulesof origin, the USA considered for labelling purposesthe country of origin for a finished product as the coun-try which produced the raw material used in the textile

product.97The dispute was finally settled in July 1999,when it was agreed that European textile imports couldbear Made In Europe labels for products transformedin Europe from fabric produced in third countries. Thecountry of origin textile issue is considered so impor-tant that a Textile Monitoring Body is in operation.More recently in 1999 the US offered to label US beefexports with its country-of-origin in order to end an

EU. ban on US beef products. The EU did not acceptthe offer stating that the US did not include crucialinformation on the label which was the central issue ofthe EU ban.98

There has been draft agreement that the countryof origin for rough diamonds should be the country inwhich the goods of this substance are obtained in theirnatural or unprocessed state. This means where theywere extracted. However this only applies to unsortedrough diamonds and as diamonds are routinely sortedbefore the first export takes place, for exampleBotswanas production, it excludes most of the roughdiamonds in trade. There needs to be clarification

about how the term unsorted is applied.

the european community: consumer affairs

It is established that consumers have a legitimate rightto information regarding products they are buying.This can range from sufficient labeling of ingredientson food to stating which country a particular garmentwas made in. As a consumer product, diamonds are inthe same category for information provision. As DeBeers Director Tim Capon said, The consumer ismuch more aware, and the diamond industry has torespond to that consumer awareness and interest inwhat it is that they are buying, and I think that is not a

bad thing.99

The European Community has a fully functioningand very active consumer policy action plan for 1999-2001. Within this plan, the protection of the consumer with regard to safety, disclosure of information andquality guarantees is set to gain momentum. Indeed,the French and Belgian delegations to the EU on 7th

December 1998 put forward a recommendation to theCouncil requesting the Commission to lay down alegal framework for establishing a social label for con-sumer products and for enterprises that respect thebasic social rights, as determined in the ILO Conven-tion, in their production. 100This is clear evidence that

there is a political will to have labelling for consumerproducts that are based on social and ethical considera-tions. At this same meeting the Council approved a res-olution on consumer policy action plan for 199

Bahan Conflict[1] Diamond

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