JOHANNESBURG (miningweekly.com) – Kimberley Protocol (KP) chairperson Ahmed Bin Sulayem has called for a consensual approach to determining a set of criteria to create a universal methodology for the valuation of rough diamonds.
Speaking at the opening of the second in a series of three Rough Diamond Valuation workshop-style forums, in Dubai, he said that adopting the right methodology for a standardised approach, which will serve all areas of the rough diamond industry, from large corporations to artisanal miners, is complex.
“What we’ve achieved so far, however, indicates a willingness on the part of all diamond industry professionals to embrace the concept of a set of rough diamond valuation protocols,” he added.
Existing methods vary from country to country with some using price books and lists based on valuators’ individual categorisation of rough diamonds using references to colour, clarity, carat and cut (4 Cs).
The difference in value perspective, between large corporations and smaller artisanal miners, resounded clearly from the Diamond Development Initiative (DDI) representative, who outlined the fundamental needs of the smaller producers, whose requirement for immediate income often overshadowed their negotiation skills for fair market value.
A recognised valuation mechanism to determine real value, which could be applied to all operators, would be welcomed broadly by the DDI.
Antwerp World Diamond Centre president Stephane Fischler welcomed the opportunity created by Sulayem to focus on a critical aspect supporting the mission of the KP and bringing this series of seminars to Antwerp.
“Ensuring proper return on the export of diamonds, especially so for the most challenged KP member countries, the alluvial producers, is key to the sustainability of our common efforts.
“The discussions have produced interesting avenues, all converging towards the need to build expertise and capacity whilst ensuring solid governance processes,” she noted.
The workshop also identified a range of methods that could be adopted focusing in detail on reverse engineering based on the retail price of polished diamonds.
Reverse engineering is a method where the valuator will base his decision on the forecast of polished output of the stone applying a certain percentage of fixed costs, generally 15% including polishing and certain margins.
Tender and auction experts gave their opinion about price fluctuations and market forces, as well as citing seasonal influences, as all having an impact on final valuations.