Diamonds are some of the world’s most valued gemstones, and the global diamond industry has managed to remain afloat despite being partially eclipsed
Diamonds are some of the world’s most valued gemstones, and the global diamond industry has managed to remain afloat despite being partially eclipsed by the emergence of modern stocks and novel virtual assets.
The diamond industry, however, appears to be undergoing a paradigm shift in recent times — incorporating modern technology such as blockchain to improve diamond production, tracking and ultimate sales.
Leanne Kemp, CEO of independent technology company EverLedger, stressed the need for blockchain integration in the industry to improve the tracking of a stone’s provenance.
Speaking on the issue of data manipulation concerning a diamond’s provenance four years ago, Kemp noted that “we see document tampering where one stone has been claimed across similar timelines with multiple insurers.”
While it has yet to directly provide a solution to all the concerns of the diamond industry, blockchain is being used to solve a few of them by facilitating transparency that helps track the provenance of diamonds. This is primarily aimed at suppressing the sales of “conflict diamonds.” Diamond mining corporation De Beers Group has pointed out the potential of blockchain in the industry for increased accuracy, trust and transparency with regard to determining a diamond’s origin.
The diamond industry maintains its distinction
Despite being impacted by the Great Recession of 2008, which saw the general stock market slump by an unprecedented margin, the diamond industry has managed to maintain its prominence notwithstanding a noticeable drop in global production of rough diamonds.
The idea of integrating blockchain into the industry — which was only introduced in recent years — is likely to reawaken mainstream interest and further improve global production.
The years leading to 2008 saw a steady increase in rough diamond production. According to data from German database company Statista, from 2005 to 2008, global production of rough diamonds never went below 160 million carats.
Following the economic decline of 2008, however, the average production in the last decade has averaged 142 million carats with 116 million carats produced in 2021. The year 2017 saw the largest turnover in the decade, with 152 million carats of diamonds produced.
About 99% of the global diamond mining process is carried out in nine countries with Russia, Botswana, The Democratic Republic of Congo, Australia and Canada respectively considered the top five countries involved. Diamond mining is almost monopolized, with companies such as ALROSA and De Beers controlling a large portion of the industry.
Ethical concerns about the diamond industry abound
There are a few reasons why investors do not seem to be flocking to the 68-billion-dollar enterprise that is the diamond industry, especially in recent times.
Lucrative as it is, ethical concerns regarding the backbone of the diamond industry are prevalent. This has scared away potential investors, especially in times like these when investor behavior is increasingly affected by consumers’ moral and ethical positions.
According to Johannes Schweifer, CEO of Crypto Valley’s CoreLedger, security and transparency challenges, as well as ethical concerns plague the diamond industry. Since over a decade ago, there have been claims of a link between diamond mining and regional hostilities, as noticed in some parts of Africa. Schweifer told Cointelegraph:
“The biggest problem in the diamond industry has always been transparency. Most gemstones aren’t able to tell their origin stories. But, what if the stone on your wedding ring is actually a blood diamond, wouldn’t you want to know that? Knowing the origin and ensuring transparency from the ‘mine to the finger’ can not only help you sleep better, but it can also save lives.”
Conflict diamonds, otherwise called blood diamonds, are diamonds mined in territories controlled by rebels opposing a legitimate government and subsequently used to fund these rebel movements.
Some instances of the unethical utilization of blood diamonds were evident in the 1990s in countries such as the Democratic Republic of Congo, Angola and Sierra Leone. Evidence proved that these diamonds were mined and used to purchase arms and ammunition for military and paramilitary movements.
Aside from the sale of diamonds to fuel conflict, numerous reports of unscrupulous labor tactics used to exploit workers in mining sites have surfaced. Child labor also appears to be prevalent in the majority of these areas.
Furthermore, the diamond industry has come under fire for the patent monopoly that exists regarding the control of mining processes, distribution and sale of diamonds. This has fueled concerns of an existing cartel that dictates the flow of the industry.
In addition, the industry appears to be swarmed with problems such as the environmental concerns of mining, hazardous working atmosphere and insecurity, to name a…
cointelegraph.com