This last year in the diamond industry was not what one would consider "normal". Standard business patterns disappeared, business relationships changed drastically, and traders adapted to new regulations and ways of trading. Many of us think we have seen all the possible changes one can be faced with in a year, but I believe this is just the beginning of a paradigm shift in our industry, where quality will be replaced by a new kingmaker: origin. Heraclitus said it best: “There is nothing permanent except change”. It is time to prepare for real change, as it will be at our doorstep sooner than anticipated.
How is it possible that origin will be so disruptive in the jewelry and diamond market of tomorrow?
First of all, the fears of supply shortages that the AWDC expressed from the beginning of last year are becoming a reality. We got used to the idea that the world of jewelry would keep running, with or without Russian diamonds. It made us blind to the fact that many companies relied on large volumes of diamond inventory, creating a false sense of security. Diamond producers chose not to increase production, which led to a squeeze, the effects of which the industry is starting to feel today. Being cut off from 30% of the global diamond supply is starting to create massive supply-chain concerns with retailers today. The reason for that growing shortage: the wrong origin. We are seeing a trend where the market is fundamentally shifting from a quality-based assortment to an origin-based one.
Secondly, we are confronted with new technology that is becoming more mature every day. Yesterday we thought that identifying the origin with spectroscopy was still 7 years away. Today it can be done in less than 2 years and probably even faster with devices delivered to market in 2024. Companies like Spacecode, with a their Chairman Pavlo Protopapa and their scientific team led by Professor André Rubbia, an experimental particle physicist and a world leader in neutrino physics (and son of Nobel Price winner Physics Carlo Rubbia) , are innovating the way we do business at a relentless pace. They are developing an affordable AI-driven technology that will be able to fingerprint every diamond and determine its origin. The sizes they describe are ranging from 0,2-50 Ct. It puts our way of approaching this debate in an entirely different light. Suddenly traceability will need to take a backseat because qualified origin can be determined with ease, and at an affordable rate, at the end of the value chain. There will be no need for declarations or endless paperwork, and there won't be any loopholes to be used, as a simple test will tell you all the consumer needs to know. Needless to say that governments will quickly adopt and embrace this kind of technology. More importantly, it will create a more equal level playing field that eradicates rubber stamping and greenwashing.
These developments put us in a position of enormous ethical and legal challenges. Trying to replenish this shortage, Russian diamonds are currently circulating jewelry stores all over the world. When soon these detection devices start showing up in the diamond value chain with easy access to information for the consumer, the retailer will need to face the music. What will they do with their supplies? How will consumers react when they realize that the jewelry stores kept selling those Russian diamonds because loopholes allowed them to do so? What will be the future value of those diamonds when they become illegal? Will stores issue refunds?
Nothing comes quick in this industry, except change. We need to prepare just as quickly to protect ourselves and the retailers, to address the consequences of what's coming our way. Traceability in all its many facets, many of which go beyond origin and include for example positive impact on people and planet, still remains valuable, as a vital element for the actors in the diamond value chain to enhance the integrity of their supply chain, but origin verification will quickly become the new normal as a means to truly verify this. Upstream, midstream and retail are warned, a simple test using this new technology will be able to detect idle claims easily and effectively. As an industry, we should work together and strengthen our companies and institutes to embrace this new reality head-on. At the same time, governments need to understand that we need time to adapt ourselves once again to the new reality of this world. But mark my words: origin will change the diamond industry and it will do so forever.
Also read this article on POLITICO - Tracking Putin’s diamonds: G7 push to ban Russian gems gathers pace https://www.politico.eu/article/new-technology-is-potential-game-changer...
Photo Credit: STEPHANIE LECOCQ