Discount Diamonds Carrying Reputational Risk Contribute to Soft Polished Prices

Compliance
13/07/2015 11:23

Yelena Levina writes at Rough&Polished that despite having KP sanctions lifted, diamonds from Zimbabwe, Angola and now possibly rough exports from the Central African Republic carry "reputational risks" that leads to them being available at heavily discounted prices - up to 50% - and suggests that this could be a contributing factor to the current stagnation of polished diamonds prices. "By and large, diamond cutters in Surat cannot be blamed for their willingness to support their own business. The problem rather lies in the lack of regulation. The zealous pursuit of ethically clean rough (which in itself is a good intention) did not make diamonds from Zimbabwe more or less 'clean' ... It is no secret that even after the embargo was lifted the trade in diamonds from Zimbabwe has long remained not quite legitimate and quite far from being transparent." 

The "good news" is that sooner or later this dubious rough supply will be exhausted. The "alarming news" is that this does not solve the problem, as "there are small and closed companies in the market, whose pricing remains a mystery to the whole industry." Levina suggests that Angolan and now CAR diamonds may only further cloud transparency.