Supply Chain

Study of Diamond Mining Reveals Impact on Local Communities, Challenges Stereotypes

Trucost finds the world’s large-scale diamond producers infuse billions of dollars in benefits into communities, provide higher than national average wages and are working to minimize environmental impacts.

Published 5 years ago | About a 7 minute read

Image: Diamond Producers Association

The Diamond Producers Association (DPA), a global alliance of the seven leading diamond mining companies — which represents 75 percent of the world’s diamond production — on Thursday released its first independent research report on Members' impact on local communities, employees and the environment. The Socioeconomic and Environmental Impact of Large-Scale Diamond Mining, authored by Trucost, is the world’s first comprehensive analysis of the contributions of DPA Members, examining socioeconomic and environmental benefits and impacts.

Data from Trucost, part of S&P Global, reveals that DPA Members generate more than US$16 billion in net socioeconomic and environmental benefits through their diamond mining operations. The report finds that the vast majority of these benefits are infused into communities through local employment, sourcing of goods and services, taxes and royalties, social programs and infrastructure investment. The report also uncovers that DPA Members pay employees and contractors on average 66 percent above national average salaries and that companies focus extensively on employee training to ensure a highly skilled workforce.

Despite significant progress toward responsible and transparent practices over the past 15 years — case in point: in January, Tiffany & Co. began disclosing the provenance of its diamonds, and committed to 100 percent geographic transparency by 2020 — the current reality of the diamond mining sector remains largely unknown. This report provides access into a highly scrutinized, yet largely misunderstood, sector.

“This report marks an industry first. Diamond producing companies representing three-quarters of the world’s production have come together to provide a window into the impacts and benefits of their activities on the communities and environments of the countries and regions in which they operate,” said DPA CEO Jean-Marc Lieberherr. “This independent research report breaks outdated stereotypes and misconceptions and identifies the next set of challenges that must be met to continue to evolve and improve as an industry. It also provides a baseline for industry participants and observers to track future progress.”

The analysis also creates a baseline from which DPA Members will further build to demonstrate progress toward their emissions-reduction goals. Collectively, Members emitted the equivalent of 160 kg of CO2 per polished carat produced — equivalent to the amount of carbon dioxide generated by driving 390 miles (628 kilometers) in an average passenger vehicle. Each Member has set goals to reduce these emissions, which constitute the majority of diamond mining’s environmental footprint.

The world’s leading diamond producers are comprised of seven companies — ALROSA, De Beers Group, Dominion Diamond Mines, Lucara Diamond Corp., Murowa Diamonds, Petra Diamonds and Rio Tinto — and employ more than 77,000 individuals globally. DPA Members operate diamond mines in Botswana, Russia, Canada, Namibia, South Africa, Lesotho, Australia, Zimbabwe and Tanzania.

Rio Tinto's Diavik Diamond Mine in Canada's remote Northwest Territories | Image credit: Dominion Diamond Mines

"This report marks the first time Trucost has seen an industry come together to measure its environmental, social and economic benefits and impacts," said Libby Bernick, Managing Director and Global Head of Trucost Corporate Business, part of S&P Global. "This data provides a baseline for future progress on issues, including environmental impact. We are very excited to work with the Diamond Producers Association and its Member companies to release this research on the total value of their benefits and impacts, promoting greater transparency on environmental and social performance to the capital markets."

Trucost measured the total benefits and impacts of the diamond mining activities of the DPA Members across 21 key socioeconomic and environmental indicators, based on data collected for over 150 different metrics, from DPA sites representing 70 percent of the DPA Member’s total rough diamond production. These data were verified by Trucost and then analyzed using Trucost’s proprietary methodologies for quantifying and valuing social and natural capital, which have been employed in more than 100 studies over the past 15 years.

The report’s findings include:

People

DPA Members offer high-paying jobs, excellent job training and a safe work environment. DPA Members employ people from local communities and provide high-quality employment opportunities that often become long-term careers.

Key Findings:

Salaries and wages paid by DPA Members created US$3.9 billion in direct and indirect benefits.
DPA Members employ 77,000 people in their operations worldwide — comparable to Fortune 500 companies such as The Coca-Cola Company, Hewlett Packard Enterprise, Alphabet, Nordstrom and Nike Inc.
DPA Members’ employees and contractors are highly trained; the average DPA Member employee or contractor is paid 66 percent more than the national average salary and receives nearly five times the living wage in his/her country.

All Members have also made a commitment to zero harm in the workplace. The report shows that safety incidents at Member companies are a fraction of those observed in similar sectors. For example, on average there are 17x more lost time injuries in the construction industry than in DPA diamond mining.

Communities

Beyond employment, the diamond mining industry makes a vital contribution to the socioeconomic development of diamond-producing countries and communities that goes beyond employment. Members purchase the bulk of the goods and services needed for their operations from local businesses, creating a significant, lasting impact on local economies. Moreover, they pay a large share of their revenues to diamond-mining countries in the form of taxes, royalties and dividends. Entire countries, such as Botswana, have been transformed by diamond revenues over the past 50 years.

Key Findings:

60 percent of the total benefits from DPA Members are infused into local communities through sourcing of goods and services, taxes and royalties, social programs and infrastructure investment.
DPA Members infused US$6.8 billion in benefits into local communities through the purchase of local goods and services.
Local communities receive US$3.9 billion in positive benefits through employment and social programs (US$292 million), such as health and education.
DPA Members provided US$3 billion in tax revenue, royalties and dividends which, in turn, fund local infrastructure and other civic improvements.
Modern diamond mining is a long-term investment, and Members actively build long-term partnerships with the communities in which they work.

Environment

DPA and its Members recognize that environmental stewardship is one of the main obligations of the diamond mining industry, and every DPA Member works in close collaboration with local governments and communities to control their environmental impact. Today, controlling and continuing to reduce its environmental footprint is a clear priority for diamond mining companies. DPA Member companies are tackling this challenge through a range of initiatives, including increased access to renewable energies, energy reduction initiatives and carbon capture research programs.

Key Findings:

The largest source of DPA Members’ environmental footprint is its CO2e emissions: 160 kg of CO2e per polished carat.
The estimated CO2e associated with energy use in laboratory-created diamond production is nearly three times greater than diamonds produced by DPA members in 2016.
DPA Members collectively protected more than 260,000 hectares (1,000 square miles) of natural land in Russia, Botswana, South Africa, Tanzania, Australia and Canada — three times the land they use for mining globally.
The environmental cost of producing a diamond is 37 percent of a single one-way airline ticket from New York City to Los Angeles.
DPA Members currently implement long-term biodiversity conservation programs.

Each DPA Member produces sustainability reports, available on DPA’s website, to measure and analyze initiatives and progress.

Commitments

The DPA has organized active collaboration and sharing of best practices amongst the Member companies around two absolute priority areas: energy conservation and CO2e emissions, and employee health and safety. Moving forward, DPA will report on ongoing sustainability progress to share individual and collective progress made by DPA Members toward these objectives and, in general, toward achieving the UN’s Sustainable Development Goals.

Building on the Trucost report, DPA is launching its Total Clarity platform, designed as a transparent and reliable source of information on the socioeconomic and environmental impact of the diamond industry.

Despite the positive steps it represents for transparency in the diamond industry, the Trucost analysis does not cover diamond mining done in West African countries such as Angola, Côte d'Ivoire, Guinea, Guinea Bissau, Liberia and Sierra Leone — where the products of the diamond trade earned the term “blood diamonds” or “conflict diamonds,” due to their use in financing wars and war crimes.