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Kimberley Process under fire again as watchdog coalition launches boycott

November 18th, 2015

by Greg Klein | November 18, 2015

Angered by the upcoming leadership of the United Arab Emirates, an alliance of watchdog groups plans to boycott the Kimberley Process next year. The Civil Society Coalition made the announcement November 17 at a KP meeting in Luanda, Angola. The UAE, home to the world’s third-largest diamond trading centre but accused of lax policies towards conflict stones, takes over the rotating position of chairperson next year.

Through its diamond certification scheme, the KP works to eliminate the trade in conflict stones that finance rebel violence against legitimate governments. Enforcement is left to its 81 member nations.

Judging by UAE’s favoured status as the go-to place for illicit gold and diamonds, it would appear Dubai is not only a tax-free haven, but an ethics-free haven as well.—Jaff Napoleon Bamenjo,
Civil Society Coalition

“In the last year, repeated concerns have been raised by Partnership Africa Canada, Amnesty International, the United Nations Panel of Experts on the Central African Republic and others about negligent import controls that allow illicit diamonds from conflict areas such as the Central African Republic to enter the legitimate supply chain,” Civil Society stated.

“Judging by UAE’s favoured status as the go-to place for illicit gold and diamonds, it would appear Dubai is not only a tax-free haven, but an ethics-free haven as well,” coalition representative Jaff Napoleon Bamenjo told KP members. “From the Bangui to Kinshasa to Marange, the UAE’s policy of not checking values on imported parcels, or applying added vigilance on diamonds emanating from problematic areas, has had grave implications on the integrity of the entire diamond chain.”

Bamenjo also accused UAE companies of “the obscene theft of African diamond revenues” by undervaluing imports, then exporting stones at prices 40% higher. “With competing trading centres averaging a 10% mark-up on re-sorted and re-exported parcels, it does make one wonder what Dubai knows about ‘value addition’ that competitors in Antwerp and Tel Aviv don’t know.”

Bamenjo said his group had been working with the KP to prevent the UAE from assuming the leadership role. The KP’s contrary decision “will send a message to the world that the KP no longer has standards, that the lowest common denominator still gets to lead, whatever the reputational and long-term impacts to this initiative.”

The 11-member Civil Society’s founder and co-ordinator is Partnership Africa Canada, whose 1998 study was one of three seminal reports that launched the campaign against conflict diamonds, according to the coalition. The KP was established in 2002.

The boycott follows charges that the KP is being used to certify conflict diamonds from Brazil and allegations from Amnesty International that the process “camouflages” conflict stones from the Central African Republic.

High-grade glitter

November 13th, 2015

Dunnedin Ventures surpasses historic results at its Nunavut diamonds project


Just the first bulk sample released by Dunnedin Ventures TSXV:DVI, it shows “some of the best diamond results reported in Canada,” declared CEO Chris Taylor. The November 12 announcement distinguished the Kahuna project in Nunavut as “having kimberlites with both high grades and large diamonds.” That would seem especially auspicious following the company’s first field season. But this is a project with a history, in a region that saw roughly $25 million of past exploration. And it’s getting some help from the dean of Canadian diamond exploration, Chuck Fipke.

“This is not grassroots,” Taylor emphasizes. “We know the diamonds are there. We just have to add to those we’ve found.”

Dunnedin Ventures surpasses historic results at its Nunavut diamonds project

Dunnedin CEO Chris Taylor ventures
into the Notch kimberlite last summer.

Dunnedin signed a four-year, 100% option on the property in November last year “after a lot of tire-kicking,” Taylor says. A former Imperial Metals TSX:III geologist who moved into the juniors about six years ago, he was attracted to diamonds as “the only real bright spot I could see in resources over the last couple of years.”

There was a family connection too. His Flemish great-grandfather imported diamonds into Belgium, where he had “about 100 guys cutting stones for him.” Taylor has family business heirlooms decorating his office, some from his grandfather, who worked with gems in this country.

A “contact of a contact” knew people at De Beers, where a geologist pointed Dunnedin to Kahuna.

The project, about 25 kilometres from the hamlet of Rankin Inlet on Hudson Bay’s northwestern shore, had previously been part of a regional program that included radar, airborne magnetics and electromagnetics, and ground-based EM surveys. Over 10,000 till samples revealed approximately 20,000 indicator minerals.

But the Kahuna claims lapsed after the last operators left, Stornoway Diamond TSX:SWY to focus on Renard and Shear Diamonds to tackle the ill-fated Jericho project, Taylor says. Vendors re-staked the claims and signed the option with Dunnedin late last year.

Besides finding kimberlite pipes, past explorers “found this series of kimberlite dykes, which is what our project is based around, and realized these were the sources of the indicator minerals. When they popped holes in them, they realized they had good diamond grades,” relates Taylor.

“When we looked at the bulk sample data, there seemed to be enough work done to do an initial resource, which is what we ended up publishing earlier this year.”

Announced in January, the inferred resource for the Kahuna and Notch dykes, 12 kilometres apart, provided figures for two sieve sizes over 0.85 millimetres, considered commercial sizes.

  • Kahuna (+0.85 mm cutoff): 3.06 million tonnes averaging 1.04 carats per tonne for 3.19 million carats
  • (+1.18 mm cutoff): 0.8 ct/t for 2.45 million carats

  • Notch (+0.85 mm cutoff): 921,000 tonnes averaging 0.9 ct/t for 829,000 carats
  • (+1.18 mm cutoff): 0.83 ct/t for 765,000 carats

  • Total (+0.85 mm cutoff): 3.99 million tonnes averaging 1.01 ct/t for 4.02 million carats
  • (+1.18 mm cutoff): 0.81 ct/t for 3.22 million carats

The two kimberlites are exposed at surface and remain open along strike and at depth. The project holds six other diamondiferous kimberlites, four of them between Notch and the PST dyke, location of the November 12 results.

PST’s 820-kilogram sample gave up 526 diamonds, 96 of them above 0.85 millimetres and totalling 5.34 carats. The sample grade hit 6.5 carats per tonne, nearly tripling the historic 2.18 carats per tonne. And for that, Dunnedin thanks Chuck Fipke.

“He’s an old school friend of one of our directors, Pat McAndless, and the first person I went to when we started on diamonds,” Taylor says. “Chuck’s a very open, genuine guy. He showed me some of the methods they used to make the discovery at Ekati, the characteristics of diamond deposits. It provided guidance for me to find a project that our company could work with.” An adviser to the company since July, Fipke’s “guiding us on the ongoing sample processing and exploration methods, and we’re using his lab.”

Fipke’s CF Mineral Research has developed unique methods of diamond recovery, Taylor says, accounting for dramatic improvement. Also, Fipke “can recover all the indicator minerals at the same time, which is a helluva bonus. Usually, if you do caustic fusion, which is how most companies get their diamonds out of the rocks, you destroy all the minerals that came up in that kimberlite. But we can use them to hone in on our exploration.”

Chad Ulansky, Fipke’s “right-hand man in diamond exploration,” accompanied Dunnedin’s first field season last summer. The company has its own expertise too in McAndless, recently retired as VP of exploration for Imperial Metals, and his near-namesake Tom McCandless, Dunnedin’s technical adviser. With diamond experience in Africa, Europe and the Americas, McCandless took part in the discovery and assessment of Stornoway’s Renard kimberlites and in earlier work at the Kahuna project.

Still to come are sample results for over three tonnes taken from the Notch and Kahuna dykes as well as other targets. Another 180 concentrated till samples from last summer also remain to be processed, which Taylor hopes will point to additional targets.

There’s a real efficiency in getting those diamonds because of the high grade and the location near town. It’s not going to cost us anything near what it costs other companies to do bulk samples.—Chris Taylor,
CEO of Dunnedin Ventures

But the big question remains: What are the diamonds worth? For that, Taylor would have to send a 1,000-carat package to his family’s former city of Antwerp for evaluation. The resource estimate noted a 2008 description of Kahuna diamonds “as having encouraging value characteristics, with a high abundance of colourless and near-colourless varieties with octahedral shapes being the dominant morphology.”

The PST sample reported November 12 included “an octahedral crystal weighing 0.77 carats and a polycrystalline diamond weighing 2.22 carats. A preliminary examination of the diamonds suggests approximately 50% to 60% are clear and colourless.”

In his previous work McCandless reassembled a 13.42-carat Kahuna diamond that “blew up in a jaw crusher,” Taylor says, leaving fragments as big as 5.43 carats.

Aiding the economics of the 13,000-hectare project is Meliadine, where Agnico Eagle TSX:AEM has underground development underway. An all-weather road linking the site to Rankin Inlet covers about half the 25 kilometres from the hamlet to Kahuna.

“There’s a real efficiency in getting those diamonds because of the high grade and the location near town,” Taylor maintains. “It’s not going to cost us anything near what it costs other companies to do bulk samples.”

Dunnedin has just closed a $158,000 first tranche of a $1.1-million private placement offered in August. Fipke stated his intention to participate.

The company has also held its first consultations with the Kivalliq Inuit Association. “It’s really nice to work with a community that’s knowledgeable,” Taylor says, pointing out that Rankin Inlet began as a nickel mining town and now has Meliadine 25 kilometres away. “They know how to work with mining companies, what the KIA can bring to the table and what the company can bring to the table.”

Diamonds evoke cuisine as jewelry designers look to food for inspiration

November 3rd, 2015

by Greg Klein | November 3, 2015

Diamonds evoke cuisine as jewelry designers look to food for inspiration

Rice Husks (second from right), along with the four HRD Awards runners-up.
(Photo: HRD Antwerp)

The practice of wearing food is no longer limited to sloppy eaters. Some especially imaginative designers have turned diamonds into food-themed jewelry for wealthy sophisticates. On November 2 HRD Antwerp announced winners of its biennial contest intended “to foster creative talent while extending the limits of contemporary diamond jewelry design.” After inviting designers “to find inspiration with their own culinary heritage,” HRD awarded the US$10,000 first prize to Tomoko Kodera of Japan for a brooch containing 400 diamonds shaped like rice husks.

Diamonds evoke cuisine as jewelry designers look to food for inspiration

Tea Time, by Sancha Livia Resende of Brazil.
(Photo: HRD Antwerp)

She attributed her inspiration to a man she saw with several rice husks stuck to his coat. “I started to imagine the smell of the rice harvest, the sound of the husker, the aroma of cooked rice wafting from a grandmother’s kitchen, the shiny surface of cooked rice and a dinner table surrounded by family members,” she explained. “When you wear this jewel or see someone wearing it, you will find the doors of your imagination opening one by one.”

Out of 1,531 entries, a jury selected 29 designers who were then supplied with stones to work with. Four other finalists got US$2,500 each for adornments ranging from a bracelet dangling with diamond-stuffed chili peppers to a teapot necklace pouring diamonds into a teacup. The winning collection will go on public display in Belgium and abroad.

HRD Antwerp describes itself as one of the world’s largest and most respected diamond grading facilities, with the most prominent laboratory adhering to International Diamond Council standards.

But for all the artistry of the HRD contestants, their carbon-based creations probably got less publicity than a calcium-based effort. Gone viral was the nose-rings-across-the-border proposal in which a Canadian man offered his American girlfriend a wisdom tooth-studded engagement ring. “Diamonds are so overrated,” bride-to-be Carlee Alisan Leifkes told

Illicit diamonds

October 16th, 2015

The industry pledges further reform as more accusations hit the Kimberley Process

by Greg Klein

Confidence in the Kimberley Process took another blow with allegations that it’s being used to certify conflict diamonds from Brazil. Environmental degradation and corrupt practices of illegal miners and traders threaten indigenous tribes with “cultural genocide,” journalists Fellipe Abreu and Luiz Felipe Silva wrote in Folha de S.Paulo late last month. An English translation appeared on on October 14, two weeks after Amnesty International released a report alleging KP failings in the Central African Republic.

If anything, Brazil’s ban on outsiders mining native lands merely demonstrated the persistence of illegal miners. Having been expelled previously, diamond hunters poured back into the territory of the Cinta-Larga people in the country’s northwest. The rush peaked at over 5,000 miners in 2004, then subsided after natives killed about 29 intruders, Abreu and Silva write. “Since then, mining operations in the area have been closed and re-opened several times.”

The industry pledges further reform as more accusations hit the Kimberley Process

The reporters quote state prosecutor Reginaldo Trindade, who calls the current situation worse than 2004. “In March of this year, there were no less than 500 armed miners who told the Cinta-Larga that they would not leave the indigenous land.” Although natives managed to halt mining in May, “in July the area was retaken by armed miners,” according to Abreu and Silva.

The miners are garimpeiros, mostly working small alluvial operations. Some bring families with them, others bring drugs, guns and prostitutes. Investors supply equipment, bribe state officials and sell the contraband stones, the reporters say.

Collaborating with the illegal industry are Cinta-Larga leaders, the article adds. As for other natives, illegal mining and the sharp practices of those who control it introduce “a systematic process of acculturation. At first grudgingly, the indigenous permitted the mines with conditions, but the large sums of money and their growing consumer habits led to corruption and generated insurmountable debts for the indigenous communities.”

The reporters quote Trindade saying, “The Cinta-Larga people are on the brink of genocide, if not physically, then at least ethnically and culturally.”

Abreu and Silva say the illicit stones can be advertised online, then sold to buyers who sneak into the country on a light plane. Or the diamonds can be smuggled into Venezuela or Guyana. “The advantage in Guyana is that one can get the Kimberley seal—stones that enter a certified legal zone are registered as if they were extracted from there.” Another route to KP certification is to mix the diamonds with those from legitimate mines within Brazil, the reporters allege.

“We have always believed powerful people are involved in the mining,” Trindade tells the journalists. “There are many reports about the involvement of officials from different agencies, politicians, businessmen and even multinationals in [diamond] exploration.”

Obviously there’s money to be made in a country still reeling from the Petrobras scandal, even if few Cinta-Larga benefit. Following the Portuguese conquest, Brazil was the world’s leading supplier of diamonds until the great South African discoveries of the mid-19th century. Abreu and Silva cite highly speculative numbers that claim the native lands might still hold the world’s richest diamond resources.

But if the journalists are accurate about the stones’ journey to market, the article provides another indictment of the Kimberley Process after Amnesty International argued that states and companies use KP “as a fig leaf to reassure consumers that their diamonds are ethically sourced.”

The World Diamond Council is the first to agree that there is more work to be done when it comes to managing the global diamond supply chain. While the vast majority of diamonds contribute a significant benefit to the countries in which they’re produced, as an industry we are committed to staying the course until we reach the goal of zero conflict diamonds.

Amnesty’s claims drew strong criticism, however, with the Antwerp World Diamond Centre challenging the group’s accuracy. The centre said its expert staff conduct thorough checks on all diamonds moving in and out of Belgium. As a result, the AWDC seized two shipments last year from the Central African Republic, focus of the Amnesty report. The companies involved later lost their right to trade in Antwerp, the world diamond capital.

World Diamond Council president Edward Asscher credited KP with removing more than 99% of the world’s conflict diamonds from the market, Bloomberg reported. But in a formal statement the WDC stated it’s “the first to agree that there is more work to be done when it comes to managing the global diamond supply chain. While the vast majority of diamonds contribute a significant benefit to the countries in which they’re produced, as an industry we are committed to staying the course until we reach the goal of zero conflict diamonds.”

The council said it welcomed Amnesty’s recommendations. Among them is a call to broaden the definition of conflict stones, which KP limits to “rough diamonds used by rebel movements to finance wars against legitimate governments.” Diamond Development Initiative executive director Dorothée Gizenga told Rapaport Magazine that Russia and some Asian countries resist broadening the KP’s mandate. “There are those that don’t even want to hear about human rights,” she said.

Next March representatives of the industry supply chain from miners to retailers will take part in a forum on sustainability and responsible sourcing at the three-day Jewelry Industry Summit in New York.

Read Kimberley Process indicted: Tougher measures needed to end conflict diamond trade, says Amnesty International.

Kimberley Process indicted

September 30th, 2015

Tougher measures needed to end conflict diamond trade, says Amnesty International

by Greg Klein

One of the advantages Canadian diamonds bring to the market is their certifiably ethical character. Ensured by a tiny laser inscription on each stone and a verifiable record of its movements from kimberlite to consumer, the gems distinguish themselves for a quality apart from their beauty. The Kimberley Process was supposed to do the same for diamonds from all countries by banning the trade of conflict stones. Instead it simply “camouflages” the problem, according to Amnesty International.

“This is a wake-up call for the diamond sector,” the group stated on releasing a September 30 report focusing on the Central African Republic. “States and companies can no longer use the Kimberley Process as a fig leaf to reassure consumers that their diamonds are ethically sourced.”

Tougher measures needed to end conflict diamond trade, says Amnesty International

Amnesty castigates the organization, which describes itself as an initiative of governments, industry and civil society “to stem the flow of conflict diamonds—rough diamonds used by rebel movements to finance wars against legitimate governments.” Its membership consists of 81 countries, with the EU counting as a single state. But failures by both countries and companies mean consumers might unwittingly buy diamonds “associated with conflict and abuses,” the report states. “Despite more than a decade of the Kimberley Process, diamond supply chains are characterized by opaqueness, abuse and unjust enrichment.”

Amnesty’s report comes as the KP reconsiders its ban on CAR diamonds.

Those stones have long provided a major source of revenue to the CAR, one of the world’s poorest countries. In 2010 roughly 80,000 to 100,000 workers relied on artisanal diamond mining for their employment. Rough exports under the KP brought in US$60.8 million in 2011 and $62.1 million the following year, producing about half the country’s exports. Global rankings placed the CAR 12th by value and 14th by volume up to 2013.

But in March of that year, Muslim rebels known as Selekas overthrew the government. Reprisals by Christian and animist Anti-Balaka militias followed, along with atrocities on both sides. Over 5,000 people died. Diamonds, mined by artisanal workers in small operations, helped fund both groups. In May 2013 the KP banned its members from importing CAR diamonds.

The multi-million-dollar production and trade of CAR conflict stones persisted, however. Already rife, smuggling increased. Export companies located in the CAR continued buying the gems, which they stockpiled while waiting for the KP to end the ban.

Thanks to foreign peacekeepers, a transitional government took office in January 2014 and now holds a degree of control over parts of the country. A presidential election is scheduled for October 18. Not surprisingly, the country wants to regain revenue from its largest export.

In July of this year, the KP said it would allow exports provided certain circumstances were met. Seeing no indication they can be met, Amnesty fears the KP will lift the ban nevertheless.

The KP would require that diamonds come from “compliant zones” free of effective rebel activity. The organization would also allow stockpiles to be exported, provided they stand up to a forensic audit. Amnesty maintains neither condition’s plausible.

Control over compliant zones is tenuous, the group states. One zone considered potentially compliant by the KP actually suffers from significant rebel activity. Peace, where it exists, is fragile. Just days before the report’s release, the worst outbreak of violence in a year hit the CAR’s capital of Bangui, home to most export companies. By September 30, media reports said the death toll reached at least 42.

Meanwhile diamonds from rebel-controlled zones have been mixed with compliant output. No one can realistically verify the stockpiles’ sources. And unless buyers can find a way to verify that, their stockpiles should be confiscated and sold, with the money being spent for the good of the people, Amnesty argues.

Nor does the KP effectively address smuggling. Amnesty’s report takes the major sorting and distribution centres of Antwerp and Dubai to task for taking advantage of what it calls the limitations and weaknesses of the KP. The Antwerp World Diamond Centre quickly shot back, criticizing Amnesty for “factual errors.” The centre insisted it “implements a 100% strict control mechanism for each import or export of diamonds, which led to the interception and seizure of two shipments, containing rough diamonds potentially originating from CAR.”

Amnesty also charges that the UAE government “may be complicit in the illicit flow of wealth out of Africa.”

Despite more than a decade of the Kimberley Process, diamond supply chains are characterized by opaqueness, abuse and unjust enrichment.—Amnesty International

The report sees human rights abuses in other aspects of the trade as well. Sharp practice, extortion and outright theft deprive miners of reasonable remuneration. Tax evasion deprives the government of money that could alleviate poverty. Mining itself involves heavy, unnecessarily dangerous work—and often child labour. The KP doesn’t consider such problems, labelling conflict diamonds simply as “diamonds used by rebel movements or their allies to finance conflict aimed at undermining legitimate governments.” That also exempts diamonds that finance abusive government forces, Amnesty states.

Meanwhile the KP holds countries, not the companies themselves, responsible for ensuring ethical sources.

Amnesty’s report complements the work of other NGOs scrutinizing conflict minerals. But its scathing indictment of the Kimberley Process casts a shadow on much of the world’s diamond trade. In an announcement accompanying the report, the group calls not only on governments but companies like De Beers and Signet to push for wide-ranging reform. In addition, “diamond companies should be investigating their supply chains for human rights abuses, conflict and other illegal or unethical practices, and disclosing the steps taken.”

Next March responsible sourcing will be the featured topic at the Jewelry Industry Summit, a three-day international event preceding the JA New York trade show.

Download the Amnesty International report Chains of abuse: The case of diamonds from the Central African Republic and the global diamond supply chain.

Renowned Saskatchewan diamond cutter to shape tourist’s chance find

August 28th, 2015

by Greg Klein | August 28, 2015

It all started when a vacationer spotted a nice-looking rock lying in the dirt. That turned out to be a truly exceptional diamond that’s to be transformed by a Saskatchewan master cutter in a four-day public event. Next month Mike Botha, a renowned craftsman based in Prince Albert, travels to Little Rock to apply his skills to the Esperanza, an 8.52-carat gem found last June by Bobbie Oskarson in Arkansas’ Crater of Diamonds State Park. After setting up a mini-factory at Stanley Jewelers Gemologist he’ll offer the public “a unique opportunity to watch a master craftsman’s precision as he cuts and shapes the rough stone to bring out its inherent beauty, value and luminosity,” according to the retail store.

Renowned Saskatchewan diamond cutter to shape tourist’s chance find

Mike Botha
(Photo: Embee Diamonds)

Speaking to, Botha extolled the qualities of Oskarson’s chance find. “The stone is absolutely colourless,” he enthuses. Quite unusually, an analysis found zero parts per billion nitrogen. “So we have reason to believe this is one of the most colourless diamonds you could ever find. And the clarity is phenomenal. There are absolutely no inclusions [impurities] from what we could see.” Further analysis found no stress zones, “which is also a good indicator of it being absolutely inclusion-free. It’s a pretty pure stone.”

His craft calls for “planning, planning, planning,” he explains. “It’s like doing wood, but measure 10 times, cut once. It’s very painstaking.

“We did 3D solid modelling of the rough crystal and out of that we chose a design called the triolette that would maximize the visual appeal as well as maximize the material. It’s like an elongated teardrop but it has angles instead of being a smooth curve, unlike the briolette. But the angles are very obtuse and there’s a mixture of emerald and trapezoid configurations in the diamond.”

Could there be any risk? “Through stupidity, yes,” Botha responds. But with no apparent stress zones, “we have reason to believe it’s a very healthy diamond so we do not foresee problems with the stone breaking spontaneously.”

Renowned Saskatchewan diamond cutter to shape tourist’s chance find

The Esperanza
(Photo: ©AGS Laboratories, Peter Yantzer)

The result will inevitably weigh less than the original. But he anticipates finishing up with the “magic five” carats, considered an optimal size for jewelry.

The gem then goes to a lab for final grading before being mounted in a custom-designed pendant. It’s expected to go on sale this autumn.

Oskarson sold Esperanza to a consortium in which she retains an interest, Botha says. “We believe there’s a lot of blue sky in the project.” He’s not at liberty to discuss his own remuneration, however.

As for having an audience throughout four days of painstaking work, “it doesn’t bother me, as long as I don’t have to do the talking. We’ll have some spokespeople to do that.”

Botha began his career in South Africa and briefly worked in Russia before coming to Canada in 1997. His first contract here had him cutting some exceptionally large stones, “a 314-carat and a couple of 100-carat diamonds” from Brazil. The Northwest Territories, the world’s third-largest rough diamond producer by value, recruited him to write a curriculum and provide training, as well as do consulting work for the government.

Renowned Saskatchewan diamond cutter to shape tourist’s chance find

Bobbie Oskarson
(Photo: Arkansas State Parks)

There had been some diamond cutting in Yellowknife “but I don’t know what the status on that is,” he says. Although the territory tried to encourage home-grown professionals, “it’s not cost-effective,” Botha maintains. “Just to run an operation in the Arctic is senseless. Everything’s so expensive. You cannot compete with countries like India and China in that respect.”

Canada currently has “one outfit in Vancouver, one in Montreal, more than one in Toronto. But these are not large facilities. The largest at the moment is HRA in Sudbury.” His family business, Embee Diamonds, describes itself as a “world-class diamond cutting and polishing atelier” located in Prince Albert. “The reason we’re surviving is most of our business is with United States jewellers, so we don’t go through a middleman. It’s direct to the retailer.”

As for diamonds mined in this country, almost all go to Antwerp. “The Diamond High Council in Belgium did a phenomenal job to recruit all the mining companies to put up distribution and sorting facilities in Belgium.” From there, “probably 90% of Canadian stones go to India for cutting and polishing.”

World diamond capital forges closer ties with Canada

May 8th, 2015

by Greg Klein | May 8, 2015

Last week’s visit by representatives of the Antwerp World Diamond Centre bodes well for an even closer relationship with the world’s third-largest rough producer by value, the organization announced May 8. Among the mission’s other findings were “strong indications” that Stornoway Diamond TSX:SWY “is considering to commercialize its entire production” from the Renard mine, expected to begin production in H2 2017, through the Belgian city. Renard’s projected output of 1.6 million carats a year worth $304 million could mean a 64% increase in Canadian rough on the Antwerp market, the world’s most important diamond trade hub.

De Beers channels its Canadian-extracted gems through the vertically integrated company’s operations in Gaborone, Botswana.

While Canada is already one of the largest diamond mining countries in the world, trailing only Botswana and Russia, the country still has tremendous untapped potential.—Antwerp World Diamond Centre

“Throughout our conversations with the Canadians it was very striking all of them praised Antwerp as a reliable and highly transparent trade partner,” said Antwerp province governor Cathy Berx, following meetings in Montreal, Toronto and Yellowknife. “We clearly share the same values, such as transparency, the importance of correct controls and corporate social responsibility. These shared values can only further strengthen our good relationships.”

Between 2012 and 2014 Canadian production jumped from 1.5 million carats to 3.6 million carats, with their value climbing from $2.5 billion to $3.8 billion, the AWDC stated. “While Canada is already one of the largest diamond mining countries in the world, trailing only Botswana and Russia, the country still has tremendous untapped potential.”

With diamond production concentrated in the Northwest Territories’ Lac de Gras region, Canada’s largest operation is Dominion Diamond’s (TSX:DDC) majority-held Ekati mine followed by Rio Tinto NYE:RIO/Dominion’s Diavik and De Beers’ Snap Lake. Gacho Kué, a De Beers/Mountain Province Diamonds TSX:MPV joint venture considered to be the world’s largest diamond development project, has production scheduled for H2 2016. De Beers also operates the Victor mine in northern Ontario. Renard will be Quebec’s first diamond mine.

Of global rough diamond supply, 84% currently passes through Antwerp, as does 50% of all polished diamonds, according to the AWDC.

Read about diamond supply and demand.

Read about diamond mining in Canada.

Blood diamonds prominent as multi-billion-dollar Swiss Leaks scandal hits HSBC

February 9th, 2015

by Greg Klein | February 9, 2015

HSBC’s secret Swiss bank accounts facilitated billions of dollars in money laundering, tax evasion, fraud, arms trafficking and possibly terrorism, a team of investigative journalists reported February 8. Almost 2,000 of the account-holders are associated with the diamond industry.

The probe began in 2008 when a former HSBC employee handed files over to French tax authorities. After Le Monde got ahold of the info the paper turned to the International Consortium of Investigative Journalists, which assembled a team of over 140 reporters from 45 countries to “sift through the data from all angles.” Excerpts from their Swiss Leaks report were released February 8 and 9.

Their revelations have rich and famous—from celebrity athletes to politicians, and from rock stars to royalty—running for their spin doctors. Diamonds were central to several enormous crimes.

Diamonds have a long history of being linked to conflict and violence. The ease with which diamonds can be converted into tools of war, when not sourced responsibly, is astonishing.—Michael Gibb
of Global Witness

The report noted that the HSBC files “document huge sums of money controlled by dealers in diamonds who are known to have operated in war zones and sold gemstones to finance insurgencies that caused untold deaths.”

A co-founder of the Kimberley Process, Ian Smillie, told the ICIJ that “diamonds are a great way to launder money, to hide money, to evade taxes and all the rest.” Referring to wars financed by conflict diamonds, he added, “Half a million died in the Angolan civil war. Tens of thousands died in Sierra Leone, Congo and elsewhere. It was a huge humanitarian crisis that destabilized huge regions.”

One HSBC client, Emmanuel Shallop, got a six-year prison sentence and lost $59 million in diamonds and real estate to Belgian authorities in 2010 after being convicted of crimes related to blood diamonds from Sierra Leone.

“Diamonds have a long history of being linked to conflict and violence,” the report quoted Michael Gibb of the human rights group Global Witness. “The ease with which diamonds can be converted into tools of war, when not sourced responsibly, is astonishing.”

HSBC replied that it has “taken significant steps over the past several years to implement reforms and exit clients who did not meet strict new HSBC standards.” Its Swiss unit has shed about 70% of account-holders, the bank added.

Read more about the ICIJ Swiss Leaks report here and here.

UN fails to staunch flow of blood diamonds, gold from Central African Republic

November 5th, 2014

by Greg Klein | November 5, 2014

Even after the Kimberley Process banned diamond imports from the Central African Republic last year, the country exported an estimated 140,000 carats worth $24 million, according to a November 5 Reuters story. As violence escalates again, a UN panel wants mining sites monitored by troops and drones.

Following an outbreak of sectarian fighting in late 2012, Muslim Seleka rebels established regional strongholds. Between December 2013 and last August, about 3,000 people were killed amid reports of looting, kidnapping and rape. Mining licences and commodity taxes help fund the carnage, the UN found.

About 8,000 peacekeepers out of a 12,000-strong commitment are currently deployed in the CAR, Reuters added.

Diamonds are a rebel’s best friend in CAR, as armed groups smuggle blood diamonds and trade them for arms.—Sasha Lezhnev,
senior policy analyst
with the Enough Project

In August at least 25 illegal miners died after an open pit collapsed at or near AXMIN Inc’s (TSXV:AXM) Passendro gold project in the south-central CAR. It was the second such accident in the area since June 2013, when at least 37 people died. AXMIN had already suspended its exploration and pre-development work at the location, declaring a force majeure in December 2012.

“The victims of the deadly collapse were artisanal miners, who use their hands and cheap tools to dig minerals out of the earth in illicit operations that help finance the violent conflicts in the war-ravaged country,” the Globe and Mail reported.

French uranium giant AREVA pulled out of the CAR in 2012, where its 90%-held Bakouma project began test mining in 2010 and was scheduled for full production in 2014 to 2015.

A May report from the Enough Project blamed illicit diamonds, oil and ivory for funding weapons, fuel and poaching equipment.

“Diamonds are a rebel’s best friend in CAR, as armed groups smuggle blood diamonds and trade them for arms,” said Sasha Lezhnev, the project’s senior policy analyst.

CAR diamonds “are sold to traders in the Darfur region of Sudan, as well as Chad, Cameroon and the Democratic Republic of Congo,” the report stated. “The traders circumvent the international Kimberley Process certification scheme and [the diamonds] are likely sold on the world market in the United Arab Emirates, Belgium, India, South Africa, Saudi Arabia and Qatar.”

Dominion increases its Ekati stake, Canada to more than double diamond production

October 15th, 2014

by Greg Klein | October 15, 2014

The world’s third-largest diamond producer by value just got bigger and a world-renown diamond explorer just got richer. Dominion Diamond TSX:DDC announced October 15 it had completed its acquisition of Chuck Fipke’s remaining interest in Ekati, the mine he discovered. In July Dominion stated Fipke’s entire stake would fetch US$67 million. But with co-discoverer Stewart Blusson and Archon Minerals TSXV:ACS exercising their right to pick up a proportionate share, Dominion now pays Fipke a total of $55.4 million.

Dominion increases its Ekati stake, Canada to more than double diamond production

After sorting and pricing its rough diamonds, Dominion
sells them in Antwerp, Belgium and Mumbai, India.

In return the company increases its previous 80% interest in Ekati’s Core zone, which includes the mine and other permitted kimberlite pipes, to 88.889%. Dominion also gets an additional 6.53% of the Buffer zone, which hosts pipes with development and exploration potential, for a total of 65.3%. Blusson now holds the remainder of Core, while Archon holds the rest of Buffer.

Fipke got $27.55 million from Dominion on closing, with the rest to come through instalments. The company may issue him shares to cover one or more instalments.

Dominion also holds a 40% interest in the nearby Diavik mine, which is operated by 60% owner Rio Tinto NYE:RIO.

For production by value, Dominion is the world’s third-largest company and Canada the third-largest country. Even if De Beers’ Victor mine in Ontario were excluded, the three mines of the Northwest Territories’ Lac de Gras region would retain the global third-place standing.

One day before Dominion’s announcement, diamond authority Paul Zimnisky stated Canada’s production would more than double within four years. While this country currently extracts about 14.2% of the planet’s supply by value, two new mines “are estimated to boost Canada’s global market share to 25.2% in value and 15.1% in volume by 2018,” he wrote. That would “give Canada the highest compound annual growth rate of production (20.2% in value and 17.4% in volume) among the world’s eight largest diamond-producing nations over the next four years.”

Only three large-scale mines are projected to open outside Canada during that period, Zimnisky added. None of them are expected to match production from either of the upcoming Canadian mines, De Beers’/Mountain Province Diamonds’ (TSX:MPV) Gahcho Kué in Lac de Gras and Stornoway Diamond’s (TSX:SWY) Renard project in Quebec. Meanwhile “some of the largest mines in the world are reaching exhaustion,” Zimnisky pointed out.

Apart from the new mines, Canadian diamond exploration has seen considerable new activity, especially in Lac de Gras.

Read more about Dominion Diamond.

Read more about Canadian diamond exploration.