The Kimberley Process

2. Misreading the Numbers: The Faulty Logic Behind the Criticism

The trade “Value Gap” – A Misinterpreted Economic Reality

Critics highlight that diamonds imported into diamond trade hubs have a significantly lower per-carat price than their subsequent export value, suggesting possible profit shifting or undervaluation at the point of origin.

But let’s apply logic: The same pricing dynamics occur in other global commodity markets. Whether in gold, coffee, or crude oil, producer countries often export raw materials at lower prices, and pricing increases at trading hubs due to valuation adjustments, reclassification, or tax efficiencies.

The KP was never designed to regulate tax policy or commodity pricing. These issues require customs enforcement, OECD tax rules, and AML (Anti-Money Laundering) compliance frameworks, not a certification scheme for conflict prevention.

Dubai is a free trade hub. The nature of a trading center means that diamonds can be valued differently based on market conditions, demand, and buyer pricing mechanisms. This does not automatically imply wrongdoing.

The Mauritius “Disappearance” – An Incomplete Picture

Reports that Mauritius imported $400 million in diamonds between 2018-2023 but exported only 2% have led to speculation about hidden stockpiling or trade-based money laundering. But what is missing from this analysis?

Stockpiling in trade hubs is a common industry practice. Diamonds are often held as investment assets before eventual resale.

No evidence is provided that these diamonds re-entered the market illegally. The claim that KP should track intra-country stockpiling assumes an enforcement role that was never part of its design.

The focus should be on customs enforcement and financial regulations, not on changing the KP’s core function.

The Zimbabwe “Export Surplus” – A Lack of Context

Zimbabwe’s reported exports in 2019 exceeded its official production numbers, raising concerns about illicit diamonds being “washed” into the legal system. However:

Stockpile sales are a legitimate explanation. Countries frequently hold diamonds from previous years and release them when market conditions improve.

Production reporting in resource industries is rarely linear. Delays in production reporting and changes in government stock release policies often cause statistical distortions.

Rather than implying corruption, this calls for greater transparency in production reporting and customs oversight.