The diamond industry, especially in Antwerp’s bustling diamond district, is embracing cutting-edge technology to ensure the ethical sourcing of gemstones. This pivotal shift, primarily to circumvent the repercussions of Russia’s 2022 Ukraine invasion, involves using blockchain for authenticating diamond origins, confirming they originate from legitimate mines in Africa, Australia, or Canada, rather than Russia. This move is crucial as Russian diamonds, previously a third of the global market, face G7 sanctions. Belgian industry insiders predict a gradual implementation of these sanctions to mitigate market disruption.
Major traders and jewelry brands are now implementing sophisticated tracking technologies to ascertain the origins of their diamonds. This step is a response to past controversies over ‘blood diamonds’ funding African civil wars. The industry is keen to avoid any association with funding Russia’s military actions in Ukraine, which could damage its reputation.
The European Union is formulating bans on Russian diamonds as part of a broader sanction strategy to intensify economic pressure on Russia. The challenge lies in effectively curbing the diamond trade due to the ease of smuggling these valuable gems and their transformation through cutting and polishing, which complicates traceability.
Concerns linger that EU sanctions might not prevent Russian diamonds from reaching markets like Dubai and India. In response, G7 powers have agreed on a global ban, supported by industry leaders advocating for a universal traceability solution.
One such solution is being offered by iTraceiT, a company providing a digital method for tracing the diamond supply chain. The European Commission has proposed a ban that, if unanimously approved by member states, would prohibit the trade in diamonds originating from, transiting through, or exported from Russia. This ban, set to start on January 1, 2024, would include natural and synthetic diamonds, as well as diamond jewelry, and aims to phase out Russian diamonds cut or polished in third countries between March and September next year.
iTraceiT’s system in Antwerp demonstrates how technology can alleviate supply chain disruptions. This system allows stakeholders to trace diamonds back to their origin using QR codes linked to a blockchain-based filing system, ensuring secure tracking and proving non-Russian sourcing.
While these sanctions aim to impact Russia’s military funding, skepticism remains about their overall effectiveness due to diamonds’ minor role in Russia’s economy. Nonetheless, the diamond industry’s response reflects a significant stride towards accountability and ethical trade practices.
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