The hidden cost of gemstone mining

“Origin seldom accompanies a stone from the mine and beyond”

When someone is given a diamond or coloured gemstone in the form of a ring, it is often attached to a promise of sincerity and commitment. But what commitment can mining companies and gemstone dealers give their customers about where their precious stones are coming from?

 

The question of when, where and how a gemstone is mined has become an important concern for customers who are ever more informed about issues within the mining industry. Films such as ‘Blood Diamond’ brought the human rights issues and inequalities within the gemstone industry to customers who had never had reason to question the origins of their jewellery. However, what has the mining and gem dealing industry done to eradicate these issues?

The real cost of gemstones

Billions of carats of diamonds and coloured gemstones are mined annually. Both large scale and artisanal mining operations supply the western market, however, regulations surrounding working conditions and human rights protection differ drastically between the two types of operation.

 

Artisanal mining, when unregulated, presents the largest risk to the surrounding communities, employees and environment due to the absence of health and safety and due diligence procedures; pit collapses, the use of child labour and forced labour

are not unusual. Mozambique, a country with a wealth of coloured gemstone reserves, has recorded modern slavery in the illegal ruby mining industry. Often young men are lured into a false sense of security, promised work, food and board but end up in a forced labour gang.

 

 

 

 

 

 

 

Artisanal miners sell their findings to international traders who frequent small villages close to artisanal sites for a fraction of the price they are worth on the international gem market. These gemstones make their way onto the western market, either being passed off as responsibly mined from reputable mines or with a lack of origin. These stones subsequently enter branded fashion houses, selling for hundreds of thousands of dollars. It has to be asked, if end consumers knew the true origins of their stones, would they purchase them?

How can blockchain revolutionise the gemstone industry?

Currently, the gemstone industry is built on trust which has been established over generations. Blockchain has the capacity to modernise and disrupt the current and outdated status quo. Not only do customers have a right to know the provenance of their stones but large players within the industry such as Sean Gilbertson, CEO of Gemfields, has spoken out about how ‘responsible sourcing will receive ever increasing attention and become progressively more important to the consumer, making gemstone provenance perhaps the key driving factor”. Blockchain can aid the growth of providing a digital record of the gemstone and instil integrity within supply chains of both large diamond/gemstone mining companies and small cooperatives.

 

Blockchain has the capacity to track stones from mine to market. The technology can capture where and who mined the stone as well as the carat and general characteristics of a stone or parcel of stones. Blockchain also has the capacity to track the carbon footprint of the stone, which can be astronomical for such a small product, as it travels from mine to trader to cutter and so on, all often situated on different continents.  

Blockchain within the gemstone industry has the opportunity to protect vulnerable people. The Kimberly process, used to “ensure that diamond purchases are not financing rebel movements and their allies seeking to undermine legitimate governments ” is no longer capable of fulfilling the task it set out to achieve. The certification has slowed the flow of conflict diamonds into the mainstream market; however it does not address working conditions, use of child labour or fair pay of miners. Additionally, the certification only applies to a rough parcel of stones that are split and distributed across the world, leaving them vulnerable to smuggling and concealment within responsibly sourced stone parcels. The alternative for coloured gemstones doesn’t exist.

 

Here we come back to the question of what the industry and traders have done to protect the people within the mining industry as well as the product. The answer to this would seem to be not as much as they could have done. Responsible and ethical stones are available on the market but for it to become commonplace on the open market, the driving force has to come from large players within the gemstone industry. Companies have the opportunity to motion good practice within the industry rather than drive illegal and dangerous practices further underground that put some of the most vulnerable people on the planet in danger. Blockchain can, and should be, a part of this movement.

Circulor’s approach 

Circulor’s solution is a scalable platform that allows distributed trust. The platform can be applied to small mining cooperatives or large multinational mining companies operating across several continents. The platform is built on Hyperledger Fabric, a private, permissioned ledger that only allows certain, verified users, to view particular information. This type of blockchain is attractive to the gemstone industry because it preserves the privacy of all parties and only allows validated information to be inputted.

 

As identified above, for such a small item a stone has a large carbon footprint. Circulor can include the stone’s carbon footprint as part of the blockchain record, dynamically attributing the carbon footprint that the stone accumulates as it travels around the world. Understanding the carbon footprint of the stone can add an extra layer of transparency to the gem trading process.

 

Blockchain is not the solution to all of the gemstone industry’s problems, however, it can flag the issues and alert fashion houses, traders and so forth, allowing them to take action as they deem suitable.

For more information, please email info@circulor.com 

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