In line with the more robust sanctions that go into effect against Russian diamonds on September 1, governments in the Group of Seven (G7) and European Union are working to ensure that diamonds get checked for provenance when they pass through certain import hubs. Blockchain technology is an essential tool in making sure that Russian diamonds — whether they’ve been cut and polished inside or outside the country — do not make it into key markets.
Traceability has been increasingly important to the diamond industry since it began implementing the Kimberley Process for rough in 2003. Over the past two years, though, the various rounds of sanctions against nonindustrial Russian diamonds have accelerated demand for technological solutions that can track a diamond’s whole journey.
“Retaining provenance information is something that has long been advocated, but wasn’t seen as a priority beyond the rough level at the Kimberley Process,” explains Sara Yood, deputy general counsel at the Jewelers Vigilance Committee (JVC). “The traceability mechanisms currently being considered could help the industry retain that information throughout the supply chain, helping end-retailers assure customers about the origin of their products and telling the real story of natural diamonds.”
Sourcing solutions
Diamond companies are currently scrambling to implement traceability solutions in time. The De Beers-developed Tracr platform first launched in 2018, and Forbes has since named it an example of best practice three times. Meanwhile, diamond supplier Dimexon is working to integrate a scanning system that will track stones of 0.30 carats and up from rough to polished.
“It will create a scan of the rough diamond at the source, and then again each time the stone changes throughout the cutting and polishing process,” explains Viral Mehta, Dimexon’s vice president for sales and distribution. “Every stage is documented securely via blockchain, creating a secure pathway that traces the journey of polished diamonds back to the original rough, verifying their origin.”
Authentia is a blockchain initiative that generates detailed certification data as tokens in the metaverse. Boasting integration with the Gemological Institute of America (GIA), the system is “the only patent-backed public blockchain platform for the precious-gem industry,” according to founder Bruno Scarselli.
In addition to its patented certificates of origin and titles-of-ownership protocols, the solution includes a smartphone-based nano-reader app that can detect proprietary nano codes in the diamond, yielding information like the mine location, pictures, stone data, certification, and rough-stone video.
“Authentia’s patents — which in their legal form will themselves live on blockchains — cover features which will change things for the world of diamonds, especially around tokenization,” says Scarselli.
Tracking smaller stones has been a challenge in the past, but last year, Sarine Technologies introduced a traceability system for melee diamonds, in partnership with French jeweler Rubel & Ménasché. Dimexon is currently involved in pilots with third parties to find its own melee solution, says Mehta, who is confident that the product will cover parcels in the future.
Overcoming obstacles
As these developments indicate, the tools are there — but their success depends on the ways governments and other parties implement them in different jurisdictions.
“The people working on this effort have been open and willing to engage with the industry in an unprecedented manner,” says Yood. “But ultimately, they all have to figure out how to make the changes within the boundaries of their own national laws.”
She recommends that businesses stay abreast of the latest sanction regulations and make sure to have traceability data ready in case recommendations change. The JVC is “always looking out for smaller players in the market and working to ensure a level playing field for everyone,” she adds. “The technology must be accessible to them at a price point they can afford so that they, too, can thrive.”
Cost is one factor that could ultimately limit the rollout of such tracking tools. “Although it’s an excellent solution, scan-based traceability technology requires a big investment,” acknowledges Mehta, echoing concerns about the solutions’ accessibility and scope. “Supply chains in the diamond industry are also heavily fragmented, which could make it hard to ensure that the data points are entered correctly at every stage.”
Additional processing steps will add extra time to the supply chain, which means authentic diamonds will move more slowly from mine to seller. It remains to be seen how this will affect demand and price, but with the technology continuing to advance, the options for accurate identification and tracking are stronger than ever.
Image: Workers polish diamonds at a facility in India. (Dimexon)
This article is from RDI Diamond’s Welcome to the Future special report. View other articles from the supplement here.
Stay up to date by signing up for our diamond and jewelry industry news and analysis.
