JEAN-MARC LIEBERHERR: Trucost Affirms Diamond Mining’s Positive Impact

JEAN-MARC LIEBERHERR, CEO, Diamond Producers Association (DPA), in an exclusive email interview with REGAN LUIS, shares his insights on the recently published report by Trucost, the research arm of Standard & Poor’s. For the first time ever, this independent study quantifies the diamond industry’s socio-economic benefits at $16 billion, and reveals that the CO2 emissions of earth-mined diamonds are three times lesser than that of the laboratory-grown diamond industry.

What is the significance of the Trucost study about the socio-economic and environmental impact of large-scale diamond mining?

This comprehensive report is the first of its kind. Trucost noted that it was one of the first times that such a broad swath of an industry have come together to provide a window into their collective impact. Our members publish Sustainability Reports, but this report marks the first time we have come together to produce a consolidated view of our members’ collective impact on employees, communities, and the environment – in short, it captures the overall socio-economic and environmental impact of large scale diamond mining around the world. Together, DPA’s members represent 75% of the world’s diamond production, so this report is a reflection of the predominant reality of our industry.

When it comes to socio-economic development, the report establishes that modern diamond mining has a very significant net positive impact, estimated at $16 billion per year. A very large proportion of that value (well over 60%) is infused into local communities through high quality employment, local purchasing of goods and services, and monies paid to government in turn re-invested locally. Very few industries have such an extensive positive impact in the communities in which they operate. The creation of lucrative employment represents a key contribution to livelihoods in communities surrounding mine sites. This helps create resilient economic ecosystems that help communities prosper beyond the life of the mine.

On the environment front, the diamond mining industry has a small environmental footprint, compared to similar industries, because it uses little land and recycles more than 80% of the water it uses. Its environmental impact is almost entirely attributable to green gas emissions, which – per polished carat – are only about 31% of those of laboratory-created diamonds.

Was the report an eye-opener for you personally?

While we knew that the diamond mining industry is contributing towards socio-economic and environmental benefits in its own way, it is the very first time that we have a common picture and common measures that allow us to benchmark ourselves with other industries and monitor our progress. The Trucost methodology – applied to over 100 companies and industries over the past 15 years – is invaluable in that respect. It provides an objective valuation of impacts and benefits.

Despite significant progress towards ever more transparency and responsibility over the past 15 years, the current reality of the diamond sector is largely unknown. As an industry organisation which believes in transparency, we take the initiative to educate stakeholders about how the members of the diamond mining industry embrace their socio-economic and environmental responsibilities.

The report is a very balanced, rigorous report which, of course, some will contest because it runs contrary to some industry stereotypes or clichés. This is why we make the methodology available to all who wish to consult it, and Trucost themselves, part of the S&P Global Group, have made themselves available to comment on their method and their findings. The reality is that large-scale diamond mining, as exemplified by DPA members, creates significant wealth and benefits for the communities in which it takes place and has a very controlled environmental footprint. Our key challenges as a group of companies, is to continue to keep our employees safe, or even safer and to continue to reduce our environmental impact. A lot of good work takes place in the area of biodiversity, with three times the surface we use for mining being protected by DPA members, and some very promising work takes place in the area of carbon emission reduction which must be continued and even intensified.

How is the DPA leveraging the data uncovered in the study? Will this information find its way into your consumer-related diamond promotions/ads? Does the DPA plan to educate the trade about these facts too?

Yes, we are actively communicating this information to key stakeholders, including the media, the trade and consumers. We have organised extensive press briefings and presented the results of the study in international conferences dedicated to sustainable business and fashion/luxury. It has been met with great enthusiasm by those who know our industry and the reality of how we operate our businesses, and with surprise or even scepticism by others who do not know our industry or have an outdated perception of its reality. Changing minds is a long process and it is essential that many voices relay this important information, including from the trade. This is why we have developed simple communication tools such as videos, infographics and social media posts for the diamond trade to use and support us in communicating this information. It is everyone’s responsibility to make full use of this data to promote the modern reality of our industry. It has taken two years to collect and compile it; it is robust, objective, and compelling.

What misconceptions about the diamond sector do you believe this report will put right?

An important misconception is that diamond mining happens at the expense of local populations and to the sole benefit of mining companies. It could not be further from the truth. Out of the $16 billion of net value created by DPA members in 2016, $4 billion was linked to employment of local populations, about $7 billion to local sourcing of goods and services, and $3 billion to payments to local governments. In comparison, private shareholders of DPA members received, that same year, $500 million in dividends!

Another misconception is that diamond mining is a dangerous business for its employees. We have demonstrated that it is actually safer today to work in a modern diamond mine operated by a DPA member than it is to work in retail or even do some gardening work at home! On the environmental side, misconceptions are plenty. Large-scale diamond mining has a very small environmental footprint and is a very clean activity. And when it comes to its main environmental impact, CO2 emissions, it is three times cleaner than the laboratory-grown diamond industry.

Why would you use tons of fossil-fuel generated energy emitting large amounts of CO2 with no social benefit whatsoever other than to a few investors, to produce an artificial product of no value when the real, natural thing can be extracted from the Earth with much lower environmental impact while creating billions of dollars of benefits for local communities?

I think this is one of the main counter-intuitive interrogations the report should trigger.

Some of the key facts that the report brings to light:

People

  • $3.9 billion in benefits created locally through employment
  • 77,000+ people employed by DPA members
  • DPA member employees earn on average 66% more than the national average salary and five times the living wage

Planet

• 83% of water used is recycled
• 69% less carbon emissions per carat than a lab-created diamond
• 1,023 sq miles protected – thrice the amount of land DPA members use

Communities

  • Over 60% of the value created is retained locally and benefits local communities
  • $6.8 billion in benefits infused into communities through the purchase of local goods and services
  • $292 million in benefits through social programmes, including education and health care

It is startling to note that the CO2 emissions of lab-grown diamonds are three times greater than those associated with natural diamonds…

It is not so surprising when you think that diamond mining uses energy to extract a diamond that has been created by nature over millions of years, which is what takes most energy, whereas producing a synthetic diamond over a couple of days requires huge quantities of energy to submit the stones to extreme temperatures that can be several times hotter than the sun. This is what leads to an average energy consumption per polished carat of 591KwH vs 375 kwH for natural diamonds. Trucost then obtained the CO2 emission levels by applying the local energy mix from different production locations.

Some synthetic diamond producers have tried to get around that fact by claiming that they use renewable energy, like solar energy for their production. This is simply not true. The temperatures required to keep a reactor at the temperature required for the production of synthetic diamond can simply not be obtained with solar energy. What some companies do is purchase carbon credit and claim carbon neutrality. The media and consumers need to know they are being deceived. In April this year, the Federal Trade Commission formally warned 8 lab-grown diamond brands for misrepresenting their product and for making eco-claims that were not substantiated and would be very difficult to justify.

What similar studies does the DPA have in the pipeline?

We are reviewing the needs for information about our industry and considering a number of possible areas of investigation but nothing in the short term. This has been a significant undertaking.

Anything else that you may wish to add.

This is an important report because – even though it has been commissioned by the DPA – it has been written independently by Trucost, who are known for the rigour of their methodology. It sheds new light on our activity and I think gives us an opportunity to celebrate our industry for its positive impact on so many lives, its transparency and its responsibility.

We must, however, bear in mind that it does not touch on the reality of Artisanal and Small Scale Mining (ASM), which represents about 15% of diamond production in volume, 5% in value, and impacts the livelihood of millions. The industry has a collective responsibility to work together with NGOs and governments to support the evolution of the diamond ASM sector towards better practices that will guarantee the rights of the artisanal miners, minimise the environmental impact of this activity, and control the flow of diamonds from problematic regions. While DPA members are not directly involved in artisanal mining, they play their part, individually and through the DPA in supporting the evolution of this sector.

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