OECD Discusses Prices with World’s Biggest Diamond Producing Nations

May 9, 2016Commoditiesby EW News Desk Team

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The Organization for Economic Cooperation and Development (OECD) has called a special summit of the world’s leading diamond producers to take place on May 23 in Dubai, United Arab Emirates (UAE). The purpose of the meeting is to discuss the issue of rough diamond valuation, which is an issue that has plagued the diamond trade for many years.

The meeting, called a “special forum," will overlap with a meeting of the Kimberley Process (KP), the organization tasked with keeping “conflict diamonds” off the world’s markets. The UAE’s Ministry of Economy is leading the KP this year, hence the meeting in Dubai. The Ministry has appointed Ahmed Bin Sulayem, the head of the Dubai Multi-Commodities Center, as the KP’s Chairman during the UAE’s leadership term.

Discussing the OECD special forum meeting, the UAE Ministry of Economy said in a statement that an agreement on pricing would be the “most significant transformational change the KP has experienced within the last ten years.” The forum will consist of not only the nations that produce diamonds, but also large diamond corporations, non-governmental organizations (NGOs) interested in diamond production, as well as other organizations affiliated with the production and distribution of diamonds around the world.

As a center of the global diamond trade, many have been critical of the nation’s practices, particularly as it relates to conflict diamonds. This has led a few organizations to threaten boycotting the KP during the UAE leadership term.

In response, Bin Sulayem said: “The OECD is an institution with unparalleled global experience related to valuation common approaches and corporate supply chain due diligence…If we can come to a set of best practice principles on valuation, which could contribute to better living conditions of the many people that make living from diamonds around the globe, we will have accomplished something significant."

The UAE Ministry of Economy and OECD hope that the special forum will help all of the interested parties in the diamond trade finally tackle the issue of rough diamond valuation. “The initiative is aimed at reinforcing and strengthening the debate and agreeing on a consensus for universal conformity…The forum will bring together global industry players – from institutions, sovereigns and civil society – to experts and miners."

Diamonds are unique as commodities in that there is no universally recognized pricing mechanism for rough diamonds as there are for other commodities like crude oil or precious metals. Establishing such a benchmark, universally accepted around the world, would help combat issues like smuggling, differential market pricing, and demand for “conflict diamonds.”

Ángel Gurría, Secretary General of the OECD, said: “We are ready to strengthen our contribution to global efforts on responsible supply chains of diamonds within the context of the KP…We believe that industry-led due diligence practices and responsible business conduct can and should complement government-led efforts to regulate the industry in line with international commitments, like the KP certification scheme."