Has De Beers cracked the fair trade diamond code?

Rob Bates

Fifteen years ago, I went on a trade mission to Sierra Leone organized by Martin Rapaport. It was right before the movie Blood Diamond, starring Leonardo DiCaprio, came out, and people in the country were worried the film would hurt its already fragile economy—in particular its diamond industry, which employs an estimated 300,000 to 400,000 people.

Rapaport, however, had a solution—Fair Trade diamonds. As I wrote at the time:

[T]o qualify as Fair Trade, a stone would have to be mined under certain conditions: The diggers must be paid decent wages; a “fair” price must be paid for their stones; and 5 percent of the profits have to be reinvested in the community to build schools, roads, and hospitals. These conditions would be strictly monitored by outside experts.

This could cost a bit of money, but Rapaport insists that consumers will pay it. “I know it sounds crazy,” he says, “but if we tell consumers there are diamonds that make the world a better place, there are rich women in California who will pay extra for that.” In fact, he calculates such diamonds could earn a 20% premium. As a result, Sierra Leone diamonds will actually be worth more than other diamonds. “If we do this, everyone will make bigger profits,” he says. “You don’t have to be an idealist. You can be interested in Fair Trade diamonds if you are a greedy pig.”

In the years since, many products—from Fairmined gold to Moyo Gems—have used that formula: They improve conditions for workers in the artisanal and small-scale mining (ASM) sector, mitigate a mine’s eco-footprint, invest in the local community, and sell the resulting project as a socially conscious product, sometimes for a premium.

But there hasn’t really been much success in bringing that model to diamonds, despite numerous attempts, spearheaded by Rapaport and even the U.S. government.

Now, De Beers believes it may have cracked the code. Its GemFair program, which was introduced in 2018 in Sierra Leone, mostly follows the fair trade playbook, making mines commit to a long list of labor, environmental, and human rights standards.

Its business model, however, is completely different.

The first parcels of GemFair rough were sold [September 30] at a Singapore auction alongside De Beers’ regular production. While buyers can sell those gems with the GemFair story—provided they are tracked and traced—they aren’t required to do so. In fact, GemFair has no real ambition to become a brand. It’s possible the gems will be sold as regular polished, which means they may not fetch a premium. (Auction results were not available at press time.)

Moreover, Fairmined and Moyo are run by nonprofits, and backers concede the brands may never make money. De Beers is a business, and it wants this program to be profitable.

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Source JCK Online 

Photo © De Beers.