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24 november 2022

“The global diamond industry must now learn to steer clear of this obstructive and outdated “blood/conflict diamond” terminology,” says Dr M’zee Fula Ngenge, Chairman, African Diamond Council

26 september 2022
m_zee_fula_ngenge_xx.pngDr M'zée Fula Ngenge, the Chairman of the African Diamond Council (ADC), a Mining Engineer and highly respected Senior Strategy Advisor celebrated 40 years in the global diamond industry this year. He acts as a professional liaison within the international diamond trade and is well-positioned to influence, both, the public and private sectors.

In 1986, Dr M‘zee was instrumental in introducing the Ideal & Super-Ideal Cut diamonds to the global diamond supply chain. These highly sought-after Hearts & Arrow diamonds have rapidly increased in popularity since the 1990s. He also served as Chief Administrative Developer in 2000 and became Project Launch Team Coordinator in 2001 for Kimberley Process (KP), a diamond certification scheme to eradicate blood/conflict diamonds.

In 2001, Dr M'zée was a principal trustee and decisive proponent to establish Dubai as a major diamond and jewellery manufacturing centre, laying the foundation for the successful launch of Dubai Multi Commodities Centre (DMCC) in 2002.

In early 2017, M'zée drafted a bold and assertive revenue recovery proposal that urged the Republic of Angola to implement "Operation Transparency; and in late 2018 an internationally lauded campaign that was effective in combatting illegal immigration, unlawful exploration of diamonds as well as environmental crimes related to the plundering of natural resources, such as diamond smuggling.

At the beginning of 2019, Dr M'zée was assigned as Chairman and Managing Director of the African International Diamond Exchange (AIDEX), Africa's most transparent rough diamond supplier for four diamond exchanges in Antwerp, the Diamond Exchange District in Ramat Gan, the world's largest diamond bourse in Mumbai as well as the largest Free Zone in the United Arab Emirates. At the end of 2019, he was entrusted as Chairman of the Board of Trustees for the African Diamond Trust Fund (ADTF), a fully integrated, autonomous financial depository and vault operator for ethically mined rough diamonds originating in Africa.

Here, in an exclusive interview with Rough&Polished, Dr M'zée Fula Ngenge speaks about various issues impacting the global diamond industry currently, but not before touching on crucial matters concerning Africa’s diamond industry and his perception of his country’s future.

Some excerpts…

The definition change of ‘blood/conflict diamonds and the ‘principles of responsible sourcing’ has been discussed by KP with no conclusions reached to date. Your comments?

While I continue to place a great deal of conviction and credence in upstanding and constructive dialogue between key industry players representing the diamond trade worldwide, I still believe that it is imperative to bear an assiduous and conclusive plan of action which confronts industry setbacks that continue to haunt diamond proceedings, particularly in Africa. Without fail, I shall seek to continue encouraging industry leaders to boldly look in the mirror and come to grips with how negligent, timorous and mute we all have become when it comes to a possible collapse as well as the ineffectiveness of the Kimberley Process Certification Scheme (KPCS).

Woefully, our global diamond industry is not absent or removed from narcissistic behaviour at the top of the public and private sector, many of whom fail to realize that there is no room whatsoever in this industry for superficial and anti-social behaviour. I am referring primarily to those executives who have continually exposed themselves as risk-averse, and censorious and those decrepit decision-makers who have made a habit of falling victim to self-inflicted insecurity.

Diamond industry leaders possessing a history of sitting mute as well as those who result to retreating to a safe zone while turning a blind eye to existing problems that plague our industry, end up being more of a liability to this industry, than an asset. To be more specific, whenever an industry player refuses to engage in solution-driven discussions that confront or deals with one of the trade’s longest-standing hindrances, then they are doing a grave disservice to others in this industry.

As the global diamond trade gathered at the Kimberley Process (KP) Intersessional Meeting in Kasane, Botswana earlier this year, it became apparent on the first day that insensibility and indifference had successfully prevailed to unmask the shortcomings of our diamond industry’s certification scheme to a greater extent.

The mindless scepticism that dominated those KP meetings and the lack of consensus that was witnessed over those four days, not only exposed the fact that definition reform is not a bona fide priority. But this gathering of diamond officials exposed the internal industry conflicts that usually go unnoticed.

Much of the constructive criticism I have bestowed in the past regarding the Kimberley Process has not only proved to be useful in adding value to the certification scheme’s survival but has finally been deemed by the industry as nothing other than well-founded.

For those who have resulted in incognizance, allow me to clarify. “Blood” or “Conflict” diamonds under the Kimberley Process Diamond Certification Scheme (KP) are loosely outlined as gemstones sold to finance rebel movements possessing an aim to overthrow or undermine legitimate governments. This terse definition is what is exactly what is being viewed as easy to elude.

The global diamond industry must now learn to steer clear of this obstructive and outdated “blood/conflict diamond” terminology. If KP’s definition is not broadened or updated soon, I shall continue to exhibit a recurring and professional level of intrepidness in each of my industry undertakings. The global diamond industry has made numerous efforts to convince the world that the KP is not only relevant but necessary and if the definition was broadened and revised to include diamonds mined as a result of human suffering, I would be the first to jump back on the currently putrid and unavailing bandwagon. With that being said, the time has arrived for me to draw the inference that Russian diamonds should be included in KP’s present and distorted interpretation.

The certification scheme currently boasts that it has 59 participants, representing 85 countries, but these participants have yet to realize that they are not only contributing to the problem, but they are finding problems for every solution that has been presented.

The World Diamond Council’s (WDC) highly touted “System of Warranties” appears to be essential in its initial undertaking, however, the system appears to possess more appeal as a catchy soundbite than it does as an effective initiative. Only time - whatever that may be - will tell.

The global diamond industry possesses a reputation for being notoriously opaque, which is often plagued and accompanied by organizational misrepresentation, suspicion at the administrative level, labour abuses, systemic weaknesses, conflicting information, outright deception and numerous allegations of unethical practices.

On the other hand, the African diamond industry has been blessed with an abundance of opportunities that the sanctions on Russian diamonds left. Our industry has progressively been improving and the African Diamond Council (ADC) has shown a great deal of success in attracting investment to the sector. As luck would have it, the labours of those investments are now producing the expected fruits. The ADC has worked relentlessly to shift and eliminate the negative stigma that all African diamonds are produced unethically. At the same time, credibility continues to build with the presence of each discovery as well as with every new commitment from international diamond companies. If such objectives can be attained, why does our global diamond industry struggle to update a KP definition that would deter diamonds from being produced through human rights abuses?

In closing, it should be known that the African Diamond Council (ADC) is fully committed to assisting consumers as well as major diamond centres to attain a level of assurance that African diamonds are not only ethical but shall become an example of compliance for the entire industry. To successfully engage, transform and mobilize industry players, the entire diamond industry must focus more on the execution of effective initiatives. Only then, will we all reach satisfactory conclusions...

Pink diamond Lulo Rose mined in Angola was sensational news... but sceptics think extra efforts are not put into mining more such stones to retain the rarity/exclusivity of pink diamonds. Your thoughts!

With the November 2020 closing of the Argyle mine in Western Australia, where 90% of coloured diamonds have originated from in the last 39 years, pink diamonds have become exceedingly rarer and much more valuable. Pink diamond supplies have been somewhat reduced in the last 5 years and this slight decline is what caused prices to gradually increase. In many cases, pink diamond prices have doubled and even tripled in some instances.

The 170-carat Lulo Rose discovery in Angola is a historic achievement that the entire industry was thrilled about and the unearthing of this specific stone could not have come at a better time. The Lulo Rose is a diamond that eluded detection during colonization and with the advancement of technology, Angola will finally have a bona fide opportunity to demonstrate its full potential as a major diamond contributor. Not only is this pink find the desire of the three mining partners, Lucapa, Endiama and Rosas & Petalas, but their combined success has much to do with their cooperative commitment to provide further evidence that Angola was previously under-explored. The timing of this discovery could not have come at a better time and all the data is there that Angola will produce more fancy coloured diamonds.

The void that most believe the Argyle deposit in Australia left should not diminish the hopes of those placing a concentrated emphasis on fancy-coloured diamonds in Africa but should provide promise that Angola will prove to be a major contributor to the global fancy-coloured diamond supply chain.

The Republic of Angola possesses a great upswing and potential for further sectoral development and the Lulo Rose discovery is a clear indication that Angola is the new and perhaps final frontier in Africa to be truly blessed with exceptional natural diamond deposits. If managed properly, Angola will certainly leave a positive impact on the entire global diamond industry for years to come.

Post the Jagersfontein tailing dam failure that resulted in a tragedy in South Africa, the owners claim full due diligence was conducted for safety. What’s the true story?

The mining sector in general is classified as the most dangerous work in the world. The sector customarily ranks within the top three occupations for related diseases and fatal accidents. The diamond mining trade often suffers from non-compliance with health and safety standards.

The dam collapse in Jagersfontein resulted from the structural failure of a mine tailings dam in the Free State province of South Africa and home to one of the world’s oldest diamond mines. If I remember correctly, De Beers operated this mine back in the 1970s and retained the prospecting rights on the property until 2002.

Ownership of the mine has changed hands several times after that, beginning with Jagersfontein Development (formerly SonOp Group), who took control of the mine in 2010 and Luxembourg-based Reinet Investments got involved a year later before turning the assets over to Stargems, who eventually took over earlier this year. A significant amount of waste had been piling up and it was just a matter of time before a section of the dam disintegrates, resulting in a mudslide. What we saw taking place there could have been avoided if the mine followed the developed global standards that are in place. Just because Jagersfontein Development may believe that it followed all the requirements set by South African regulators, it does not mean that it would pass an inspection based on global requirements. The fact that there was also a lack of resources and the level of expertise to manage tailings dams simply did not exist.

The involved parties could be prosecuted and forced to pay compensation for violating South Africa’s environmental and water laws. Government officials in the mining department could also be held liable for the mishap, particularly since there were deaths and more than 300 people injured. The warning signs were initially there, however, in the end, there may be no consequences at all for the companies involved in the disaster at Jagersfontein, given that this is big business. We at the African Diamond Council (ADC) are fully aware that in some cases, diamond mining contributes to climate change, labour exploitation and environmental destruction without any distinct social value. One of the ADC's primary objectives is and has always been to change that.

How have sanctions on Russia impacted the diamond industry; and is it ‘business as usual" in terms of the supply of rough diamonds from South Africa?

Russia accounted for 31% of the world production last year and even though the USA and UK have now imposed sanctions on Alrosa, which is the world’s largest producer of state-owned Russian rough diamonds, the company has demonstrated creative ways to escape the consequences of being globally penalized, disciplined or punished for utilizing revenue generated by Alrosa to fund an invasion in Ukraine. This is why we saw countries such as Belarus, Central African Republic, Kyrgyzstan and Mali stand up to support Russia.

To be completely truthful, no one knows how U.S. sanctions are affecting Russia. Given that there are still several loopholes that can be easily taken advantage of and this is exactly why I can conclude that there has been minimal impact on Alrosa, the Russian mining giant.

I shall admit that the deceptive appearance of sanctions did spur vast opportunities for African diamond-producing nations to highlight their importance as well as their level of global authority.

If an industry insider were to pose the (off-record) question: “In my opinion, should Russian diamonds be considered blood or conflict diamonds?” My most rational response would be “yes, of course”. Despite that, those who would fail to agree with me could and would make a powerful argument that their viewpoint is solely based on the existing KP definition.

Admissibly, the respected exchange of views becomes immaterial, given that Russia’s military undertakings are not considered a proscribed breach of the Kimberley Process protocols.

Concerning South Africa, this African nation has been a major producer of diamonds since the 19th century and it is one of Africa’s most resilient members of the African Diamond Council (ADC). Despite that, I cannot fail to mention Botswana, Namibia, Zimbabwe, Lesotho, Democratic Republic of Congo, Angola, Tanzania, Guinea and Sierra Leone, who now possess greater opportunities to move up in ranking, especially if widespread blockchain and X-Ray transmission technology is implemented in those countries on a national level.

While Botswana’s bid to be the KP Permanent Secretary is still in ‘cold storage’, how do you think this move will be constructive if it materialises in favour of Botswana? Your views...

This particular aspect would be fascinating, much needed and well-deserved for a country such as Botswana, which has been successful in terms of establishing recognizable and mutually beneficial partnerships with leading private sector companies such as De Beers, in particular. Seeing that Botswana has learned to master the art of deepening relationships with private sector mining companies is what positions them to have favourable outcomes as they lobby to be the Permanent Secretary of the Kimberley Process. Their positive result is a clear indication that Africa’s top diamond-producing nation possesses several compelling solutions for the setbacks that currently exist within the African diamond industry.

Botswana’s President Mokgweetsi Masisi’s KP blueprint may prove to be more effective than any other producing nation on earth, particularly since he has not only been hands-on but has been fully engaged with the current issues surrounding the certification scheme. Having Botswana as the Permanent Secretary provides African diamond-producing countries with an unforeseen level of confidence, compliance and orderliness that is necessary for the African diamond industry to continue thriving. It is also the best course of action to highlight the success story between Botswana and the De Beers Group of Companies.

What’s the current situation in South Africa’s diamond industry? Should the global diamond industry focus on clear communication and collaboration among themselves? Any suggestions?

South Africa is still an African powerhouse in the eyes of global diamond-producing countries. Their diamond mines have aged and unfortunately, we no longer see large deposits being discovered in a country that possesses a robust reputation for producing diamonds from alluvial deposits and pipes. Nonetheless, many distractions prevent this modern nation from exceeding its full pecuniary potential. Much of what has to do with rising unemployment, profiteering, xenophobia and political misconduct.

One of the keys to enjoying success for a major global diamond centre begins with those working in communications & industry relations, particularly since this is where the first impression becomes most apparent and is typically a reflection of those who make up the diamond centre. The African Diamond Council (ADC) is open to cooperating as well as collaborating with each major diamond centre, given that there should be a stronger emphasis on the absence of diversity and inclusion within the global diamond industry.

South Africa is now asking Britain for the Great Star of Africa (Cullinan). Do you expect it to be returned anytime shortly? What are your views on this?

The African Diamond Council (ADC) is fully committed to defending as well as globally promoting natural diamonds of African origin. In addition, the ADC has always been rather assertive in the area of revenue recovery, whether it is through misappropriation or illegal transport. We also work to return African diamonds that have been confiscated on foreign soil as a result of attempted smuggling operations. The fact that many of the significant diamonds mined in Africa exit the continent without ever returning makes a very strong case to have looted jewels returned to their country of extraction. The case with the Great Star of Africa (or Cullinan I), should not be up for debate in my opinion.

Great Britain’s voluntary return of the diamond would prove to be the right decision and this gesture would also urge African diamond-producing nations to collaborate on the construction of an African Diamond Museum, where the diamond could be displayed. If returned, it would be the first significant diamond of its kind to find its way back home.

Unfortunately, diamonds such as the 170-carat Lulo Rose will not ever tour Africa and will not be featured in any exhibits or roadshows anywhere on African soil. With that being said, I would certainly be in favour of having the 530-carat, clear-cut Great Star of Africa diamond returned to South Africa in the most ceremonial manner and with the intent of having the diamond permanently displayed in a museum that securely establishes and encourages diamond tourism on the African continent.

Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough&Polished