(Reuters) – Group of Seven (G7) officials will discuss options on Thursday for imposing a ban on Russian diamonds in response to Moscow’s invasion of Ukraine with a view to reaching a deal by the end of the year, according to documents seen by Reuters.
The G7 announced its intention to reduce Russian revenue from diamonds in February and again in May when it said it would look at including tracing technologies for that aim.
Below is a brief summary of four proposals, submitted by Belgium, India, France and the World Diamond Council, that will form the basis of the discussions.
A Belgian official said in September the plan for the G7 proposed by Belgium, where the city of Antwerp is the world’s No. 1 diamond trading hub, would be announced in 2-3 weeks and come into effect on Jan. 1.
The Belgian plan is the strictest of the four with the compulsory use of third party blockchain technology to receive a “G7 certificate” on the relevant diamond sizes. New tracing methods can be used as the technology becomes more widespread.
It also says India will have to segregate its supplies.
Only non-Russian polished diamonds of at least 1 carat, and rough stones of at least 1.4 carats would be able to enter the G7 market. Diamond origin would have be verified and shipments would not be able to be mix origins with the exception of De Beers’ operations in Botswana.
Enforcement would be government regulated through customs at a single point of entry for rough diamonds and several G7 entry points for polished stones.
The proposal said a single entry point would be needed for rough diamonds without specifying where. Antwerp would be the favoured option for Belgium and the city also already handles most of the rough diamond trade.
India’s diamond industry employs millions of people who cut and polish 90% of the world’s diamonds. Backed by the government and through its Gem Jewellery Export Promotion Council (GJEPC), India proposes that diamond firms, including laboratories, must register with the government and receive a “GEMPACT certificate” in order to export diamonds to G7 countries and be compliant with the ban.
The GEMPACT rules would only apply to rough and polished diamonds that are 1 carat in weight or larger. Exports of diamonds below 1 carat would be exempt from the system.
The certificate would be valid for one year and require companies to segregate Russian and non-Russian diamonds.
No tracing or blockchain technology would be used and the system will be largely self-regulating.
Entities will be divided into three categories based on turnover with “spot checks” undertaken by a verification agency on 5% of them in each. An entity that repeatedly violates the scheme will be blacklisted.
The taskforce overseeing the scheme would include members of India’s ministry of commerce and industry, customs, the GJEPC and G7 representatives.
India said a G7 office could be opened in the diamond hub Surat or Mumbai to oversee the scheme.
France’s national jewellery and gemstones union UFBJOP wants all polished Russian diamonds that are round, white and larger than 1 carat to be banned from G7 markets in the first year of the ban with the aim of encompassing 0.5 carats and larger later.
Sellers would have to declare the country of origin regardless of origin and shipments would not be able to be of mixed origins with exception of De Beers’ gems sorted in Botswana.
The plan does not include coloured gems and other shapes.
The system would rely on a “robust auditable quality assurance system” and yearly third-party audits would be conducted according to international standards. It said a high-tech tracing system could be included later if the technology matures.
WORLD DIAMOND COUNCIL
The World Diamond Council, which includes the world’s largest rough diamond producer by value, De Beers, has proposed a version of the ban that is largely self-regulating.
The WDC suggests banning all diamonds that are Russian and at least 1 carat in size.
Any diamond sellers would then have to include with the stone they sell a declaration called the “G7 Diamond Protocol Declaration” that the diamond is not Russian. Firms would also have to set up a diamond segregation mechanism.
The WDC said in a statement earlier this month that its proposal “aims to put forward a comprehensive approach that would not favour one commercial centre over another.”
Spot checks would be undertaken by relevant trade bodies and third party audits.
(Reporting by Julia Payne, Editing by Jan Strupczewski and David Evans)