India’s diamond industry, reeling under the impact of G7 sanctions on Russia, has found a glimmer of hope in the African Diamond Producers Association‘s (ADPA) opposition to the G7 diamond protocol. The G7 countries are pushing for this protocol to prevent the entry of Russian diamonds into their countries.
India cuts and polishes 9 out of 10 diamonds sold in the global market and diamond exporters in the country say it is very difficult to ascertain the origin of a diamond once it is cut and polished.
ADPA has written to the chairman of the Kimberley Process Certification System (KPCS) to convey its resentment at not being included in the G7 discussions held since February on the matter and has rejected the G7 diamond protocol.
Russian diamonds cut and polished outside Russia are considered originating from the country that “transformed” them. To counter this loophole, the G7 block plans to prohibit the import of diamonds mined in Russia, including those cut and polished in other countries. “The grouping is also working on a tracing system that would help it block imports of gemstones mined in Russia. These sanctions are likely to come into effect in January,” said a veteran Indian diamond exporter, who did not want to be named.
The KPCS is an internationally recognized certification system that imposes extensive requirements on its members to enable them to certify shipments of rough diamonds as ‘conflict-free’ and prevent conflict diamonds from entering legitimate trade.
ADPA represents the interests of 19 diamond-producing countries in Africa that together accounted for more than 60% of global rough diamond production of 119.96 million carats in 2022.
A copy of the ADPA letter, seen by ET, states that the association recently became aware that since February 2023, G7 countries and the EU have been working on measures aimed at restricting Russian diamonds from entering the G7 markets.
Several proposals including the G7 Diamond Protocol proposed by the World Diamond Council (WDC) and the Belgian Government Proposal supported by Antwerp World Diamond Center (AWDC) are being considered for implementation by January 2024.
“It is our understanding that one of the initiatives, known as the ‘G7 Certification Scheme’ or ‘G7 Diamond Protocol,’ is intended to impose a new set of restrictive measures on the global trade of rough diamonds. The G7 Diamond Protocol” clearly bypasses, undermines, and substitutes the Kimberley Process Certification Scheme (KPCS), which was developed 20 years ago,” the letter added.
ADPA said it has not been consulted in any of the G7 deliberations, which would lead to drastic changes in rough diamond trade since the KPCS was established.
The proposed changes will bring supply chain disruption and added burden, and costs to the ADPA mining nations. It will also set the precedent of the segregation of diamonds by their origin. Additional costs will be incurred when a parcel of rough diamonds needs to be first shipped to Antwerp and later re-shipped to the country of origin to be polished, according to ADPA.
