Venezuela voluntarily withdraws from the Kimberley Process

The inter-sessional meeting of the Kimberley Process Certification Scheme ended Thursday in New Delhi with Venezuela agreeing to withdraw from the KP for two years.

KP Chairman Rahul Khullar announced that Venezuela will not export rough diamonds for the next two years, and that a KP team will visit Venezuela to assess the situation and prepare a report before the next plenary meeting in November.

Meanwhile, India called for a crackdown on fake KP diamond certificates.

Earlier this month several NGOs called for the expulsion of Venezuela from the Kimberley Process due to noncompliance and continued refusal to allow teams from KP member countries to inspect Venezuela's diamond industry. The county produces an estimated 150,000 carats of diamonds annually, but has reported no official exports after January 2005.

Venezuela's diamond deposits are found in Bolivar State. Diamond mining is carried out by teams of small-scale miners. Partnership Africa Canada said the small miners are supposed to belong to co-operatives, which are required to submit a monthly report to the regional mining officials of the co-operative's production. "Good as this sounds in theory, in practice co-operative members largely co-operate in hiding their production, so that little in the way of taxes ever finds its way to the government," according to PAC.

From Tuesday through Thursday India hosted 200 delegates representing 35 countries to review the progress of the Kimberley Process. India's Commerce Secretary G.K. Pillai urged members to "find a solution to the problem of KP certificates. It undermines the very core of what KPCS wants to achieve. The problem must be addressed."

Pillai said India's diamond industry has provided jobs to more than 1 million people and had a 60% share of the world's polished diamond industry by value and about 82% by volume.

Story Dorothy Kosich from The International Business Times

Polished Diamond Price Inflation Shows Dramatic Rise in April

Energy prices continue to spike; food costs are higher; clothing prices are up. Global prices of virtually all goods are on the rise, and inflation is the main topic in news headlines around the world. So it should be no surprise that polished diamond prices are also caught up in this inflation frenzy.

The economy of the U.S., which represents just less than 30 percent of the global economy and about 50 percent of global diamond consumption, appears to be mired in a recessionary mode, there is no shortage of demand for high quality polished diamonds in other world markets. Diamond buyers in Asia, the Middle East, India and China have stepped in, and they are bidding up prices, especially among the larger stones – three carats and above.

A common question today, will these diamond price increase hold at retail, or will merchants negotiate them down? – appears to have been answered. Because of strong demand for polished diamonds in other global markets, diamond suppliers have been able to maintain their price increases. If a U.S. customer bulks at paying higher prices for diamonds, the diamond supplier simply moves on to another market where demand is strong.

As long as the demand for diamonds and diamond jewelry remains strong, especially in emerging markets, prices are expected to rise. Further, since rough diamond prices have been rising faster than polished diamond prices, there is on-going pressure to pass along those price increases. So far this year, rough diamond prices are up about 8.5 percent based on results of DTC Sights; polished prices are up by just over 6 percent since the end of 2007.

While diamond prices showed a dramatic increase in April based on comparisons of the average prices for the month, the real spike in diamond prices occurred in March.In March, there was a sharp spike mid-month, and those higher prices carried over into April.However, while prices were at record levels in April, they were relatively flat throughout the month. The market was apparently digesting the price spike which occurred in March; many suppliers were waiting to see if prices would hold firm. They were rewarded for their patience: prices were steady in April.

Because rough diamond prices are rising at a pace faster than polished diamond prices, there is much pressure on cutters and polishers to raise their prices, a trend that is likely to continue. This will keep polished diamond prices from falling, and should provide support, along with baseline consumer demand, to send prices higher, but at a more moderate rate.