Diamonds are beautiful, mysterious and rare, formed millions of years ago, they have survived an incredible journey to reach us, transcending the forces of nature, and of time itself. Each and every diamond is totally unique, with no two stones identical.
With their name derived from the Greek word “adamas” meaning “unbreakable” – diamonds are the hardest natural substance known to man, and only a diamond can scratch another diamond. It is 58 times harder than the next hardest mineral on Earth.
The formation of natural diamonds requires very specific conditions. Firstly, it requires the exposure of carbon-bearing materials to high pressure but at a comparatively low temperature. These conditions are known to be met in two places on Earth – in the lithospheric mantle below relatively stable continental plates, and at the sites of meteoric strikes.
Having been formed deep beneath the Earth’s crust, there they remained, keeping their previous secrets, until powerful forces carried them upward within volcanic lava, only to be concealed again by falling ash and rock. Over millions of years, the wrath of nature in the form of winds, water, heat and cold would rework the landscape time and time again. But awaiting discovery, the stones remained below the earth’s surface, their beauty concealed by the very process that created them.
Diamonds come from two types of deposits. Primary deposits generally consist of diamond-bearing “pipes” of a volcanic rock called “kimberlite.” From deep in the earth these deposits were carried to the surface in molten rock, known as magma. Secondary deposits, also referred to as alluvial, were formed as a result of erosion of material from primary deposits and contain diamonds that have traveled some distance from their original source.
Even though world diamond production has tripled since 1980, diamonds remain a scarce resource. More than 12,000 kimberlite deposits have been found worldwide in the last 25 years, yet fewer than 1% have contained enough diamonds to make them economically viable.

 

PROCUREMENT AND VERIFICATION

 Steps:

  • Procurement of rough diamonds (take-off agreements have been signed with 37 African mines);
  • Verification of consignments which includes confirmed declarations from the mines management that the diamonds were mined from that specific mine;
  • Obtainment of legal and legitimate documentation from mine owners and relevant government organisation;
  • Facilitate export procedures as laid down by the UN Security Council regarding the trade in rough diamonds including custom clearance and transportation.

SORTING
Once mined, rough diamonds are delivered to sorting experts who categorize and assign a value to them. It is here that industrial quality diamonds – which are small, lower quality stones – are identified. These industrial diamonds are then used in equipment such as drill bits and lathes.

Those diamonds that are of gem quality are classified into categories based on size, shape, quality and color. The majority of diamonds fall within a range of standard colors from colorless to faint yellow or brown tints. Almost all rough diamonds have some distinguishing marks, known as inclusions, which make each one unique.

The GEA main sorting activities are broken down into production sorting and aggregation.

No two diamonds are the same and production sorting is the classification of the various sizes, shapes, colours and clarities of rough diamond into several categories used by GEA. The three distinct categories are (a) Gem quality, (b) Industrial quality and (c) Crushing- boart or boart. Once the production sorting is complete the process of aggregation can begin.

Aggregation involves the blending of categories of rough diamonds like-for-like, regardless of their country of origin, then splitting these into the appropriate types and quantities to be sold to clients.

VALUING
The valuing of the GEA rough diamonds is associated with sorting. The GEA’s sorting categories correspond to price items in the GEA price book. This means that once a diamond has been sorted into one of the categories, it can be assigned the relevant value from the price book.

This pricing structure has been developed specifically for GEA, and it benefits both the current owners and future owners of the rough diamonds depending were they are in the value and supply chain.

Our valuations will be categorised according to our client’s wants and needs, and will be in size lots of 10, 000 carats up to 100,000 carats, and grouped according to the cutting and polishing facilities at the client’s factory.

CUTTING AND POLISHING
After sorting, the diamonds are cut and polished. In ancient times, diamonds were left uncut and mounted into their settings, which gave each piece a dark, deep, mysterious look. In the 1400’s diamonds started to be cut and polished, which gave them their telltale sparkle and brilliance.

Currently cutting and polishing take place in southern Africa, Belgium, China, India, Israel, Russia and the US, among other countries. Cutting a rough diamond takes great skill. A well-cut diamond reflects light within itself, from one facet to another, as well as through the top of the diamond, bringing out its spectral brilliance. The most popular cut is the 57 facet round brilliant.

After a stone has been cut, it is then polished and classified again, this time by its cut, color, clarity and carat weight, also known as the “Four Cs.”

Cut: The art of polishing a diamond is to maximize its brilliance and fire (dispersion). A diamond that is cut too deep or too shallow will be less brilliant and ultimately, less valuable. The cut is the only factor of a polished diamond’s value that is controlled by human hands.

Color: With diamonds, even the smallest variation in color can make a big difference. Colorless diamonds are the most popular, but nature has also created diamonds in all colors of the rainbow. All other ‘Cs’ being equal, the rarer the color, the more valuable the diamond is.

Clarity: Most diamonds contain naturally occurring inclusions, which developed while they were forming in the earth. The number, type, size, position and brightness of these inclusions can affect the clarity of a diamond, although most are too small to affect the beauty or brilliance of a stone.

Carat: As with all precious stones, the weight – and therefore the size – of a diamond is expressed in carats. One carat (equivalent to 0.2 grams) can be divided into 100 “points”.

BUYING AND SELLING
To complete our value chain, GEA not only trades in rough diamonds from our mines to the beneficiation factories, but we also trade in cut and polished diamonds that have been graded by a GIA grading facility and have the appropriate grading certification.

Here we would assist the beneficiation factory to maximize their margin in finding the appropriate market for their cut and polished goods.

We also have the financial capability to purchase rare and exquisite cut and polished diamonds for investment purpose

CONFLICTS DIAMONDS
Conflict diamonds are diamonds illegally traded to fund conflict in war-torn areas, particularly in central and western Africa. The United Nations (UN) defines conflict diamonds as “…diamonds that originate from areas controlled by forces or factions opposed to legitimate and internationally recognized governments, and are used to fund military action in opposition to those governments, or in contravention of the decisions of the Security Council.” These diamonds are sometimes referred to as “blood diamonds.”

Eliminating conflict diamonds

To prevent diamonds from areas of conflict entering into the legitimate diamond supply chain, diamonds are monitored at every point of the diamond pipeline, from mining through to retail. These monitoring processes are called the Kimberley Process and System of Warranties. The Kimberley Process is a UN mandated system, and today over 99% of all diamonds are certified through the Kimberley Process to be from conflict free sources.

At the November 2007 Kimberley Process review meeting held in Brussels, Belgium, 74 nations, non-governmental organizations, including Global Witness and Partnership Africa Canada, and the World Diamond Council met and came to agreement on several important measures designed to strengthen the Kimberley Process. These included:

  • The endorsement of guidance on strengthening internal controls of Participants with rough diamond trading and manufacturing (known as the Brussels Declaration);
  • The announcement of the Brussels Initiative which will enhance the control and monitoring of rough diamonds from the Ivory Coast;
  • Completion of the first round of peer review visits of Kimberley Process Participants was completed;
  • The first publication of diamond production statistics;
  • The Working Group of Artisanal Alluvial Producers (WGAAP) presentation of a matrix of challenges facing artisanal/alluvial producing countries to be used as a tool to help improve their internal controls;
  • The growth in the number of Kimberley Process Participants to 74, with the inclusion of Turkey, Liberia and the Republic of Congo.
  • Ensuring a Conflict Free Diamond Industry

Mining

After rough diamonds are mined, they are transported to Government Diamond Offices.

Export (Kimberley Process):

After arriving at the Government Diamond Offices, the source of the diamonds is checked to ensure it is conflict free. The diamonds are then sealed and placed into tamper resistant containers and issued a government-validated Kimberley Process Certificate, each bearing a unique serial number. There are 74 countries that have implemented the principles of the Kimberley Process and have it enshrined in their national law. Only these countries may legitimately export rough diamonds.

Import (Kimberley Process):

Diamonds can only legally be imported into one of the 74 Kimberley process countries. Once diamonds are imported, the government customs office, in conformance with its national procedures, checks the certificate and seals on the container. Any rough diamonds without a government-validated Kimberley Certificate or that are unsealed are turned back or impounded by Customs.

Manufacturing/Trading (System of Warranties):

Once a diamond has been legitimately imported it is ready to be traded, cut and polished and set into jewelry. Several companies may be involved in this process. Each time the diamond changes hands it must be accompanied by a warranty on invoices stating that the diamond is not from a conflict source. This is called the System of Warranties. Manufacturers/traders are required to audit these System of Warranties statements on their invoices as part of their annual audit process and to keep records for 5 years.

Retail (System of Warranties):

Retailers are responsible for ensuring that the diamonds they stock and sell carry a warranty that they are conflict free. Retailers are required to audit these Systems of Warranties statements on their invoices as part of their annual audit process and to keep records for 5 years. The System of Warranties does not require the warranty to appear on the consumer’s receipt. But by implementing measures for greater supervision, compliance and accountability, through the System of Warranties, within the diamond trade, consumers can be assured that the diamonds they buy are from sources that are free from conflict. Consumers can ask for assurances from their retailers that their diamond is from sources free from conflict.

For more details read The Kimberley Process Communiqué and The System of Warranties.

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