GemFair: Raising the Standards

RAPAPORT... The artisanal and small-scale (ASM) mining sector plays an important role in the diamond industry, accounting for around 25% of global supply by volume. However, the sector is largely informal, using rudimentary technology and processes. Miners often lack access to capital, the knowledge to carry out mining safely and in an environmentally responsible manner, or access to the international market. While these dynamics increase the risk associated with sourcing from the ASM diamond sector, the sector provides a crucial livelihood for more than 1.5 million people and their dependents. Perception issues associated with the sector can also impact the reputation of the diamond industry as a whole. De Beers Group therefore sees the challenges associated with the ASM sector as an industry-wide issue, and we want to play a role as a key industry stakeholder to set an example for responsible sourcing from the sector. In 2018, we introduced GemFair, which was born of our strong belief that purchasing from artisanal miners - and in turn, raising standards in the sector - is the right thing to do. We've set out to create a model that sends a signal that not only must we support the ASM sector, we can establish scalable models that ensure responsible and ethical sourcing of ASM production. From mine to marketGemFair's aim is to provide a secure route to market for ethically sourced ASM diamonds, while uplifting standards and improving livelihoods in the sector. Our solution combines dedicated software (the GemFair app) and hardware (a diamond valuation "toolkit," including a tablet) that enables the digital tracking of ASM diamonds throughout the supply chain, from the mine site where they were discovered to eventually being scanned on the Tracr platform. Traceability and provenance are especially important for diamonds from ASM sources because consumers continue to have a negative view of the sector. So our aim is to change that narrative from the ground up. While GemFair will only purchase diamonds from its registered members - and will make a fair offer on any diamond offered for sale - members are under no obligation to sell to GemFair. GemFair operates as a diamond buyer, but the program is much more than that. Artisanal miners who join our program also benefit from training and capacity building opportunities to raise their operating and business standards, ensuring that mining is carried out responsibly. GemFair's standards have been developed based on best practices for responsible sourcing. The material issues of the standards align with the OECD's Due Diligence Guidance, while the rest of the requirements form a larger picture of best-practice expectations for the ASM sector. Compliance with the standards is monitored, with our staff visiting mine sites throughout the year. Our management system is also third-party audited. When we launched in 2018, GemFair had 14 participating mine sites in a small pilot in the Kono district of Sierra Leone. We now have more than 150 mine sites registered in the program and continue to grow. With as many as 25 people working at each site, we estimate there are already approximately 2,250 direct beneficiaries of the program and 13,500 indirect beneficiaries. Access to financeWe've also learned a lot about the unique challenges and needs of the ASM sector and have evolved the program accordingly. One such area is in relation to access to finance for our members. It became clear to us early on that preexisting dynamics and interdependencies in the ASM sector were creating a barrier for some miners to engage in the GemFair program fully, as these miners relied on "supporters" within the industry for their financing, who in turn purchased all of the miners' diamonds. These relationships often - although not always - take place under unfair and exploitative arrangements.In 2019, we launched a Forward Purchase Agreement (FPA) pilot program to provide eligible GemFair members with fair access to finance without leading to debt. Under the FPA, GemFair and the miner develop a work plan, which includes a budget for the mining season. The miner must also agree to adhere to GemFair's wages, safety and environmental standards. GemFair then provides the miner with capital at each phase of the mining activities in exchange for the right to forward purchase the miner's production from the area funded by the contract. The goal of the pilot is to create a win-win solution between the miner and GemFair where the miner receives financing and GemFair can positively influence the improvement of working and business practices.Cultivating the landAnother program we've recently introduced is our responsible mine-site closure program, focused on reclaiming abandoned mining areas and making the land available for cultivation by the local community - both shoring up food security and providing supplementary income to local artisanal diamond miners and farmers. We started the program last year, with GemFair hiring diggers and farmers to work on backfilling, and then we handed over the land and made a donation of seedlings at each site. Since March, we've been working with a group of farmers - 80% of whom are women - providing their wages, tools and seeds as they cultivate the land. The farmers just had their first harvest of several types of vegetables. We also made a significant contribution to ensure food security for our members and their families during the pandemic, delivering more than 4,700 food parcels.So we've come a long way since 2018 and are proud of our progress, but we have much more to achieve as we look to further expand and scale GemFair, and deliver on our mission to provide ASM diamonds with a secure route to market and to foster the sector's development and formalization.Feriel Zerouki is the senior vice president for corporate affairsat De Beers Group, and general manager at GemFair.gemfair.comThis article was first published in the August 2021 issue of Rapaport Magazine.