Two of the world’s largest diamonds mining firms, Alrosa and De Beers are jointly testing a diamond blockchain tracking system for tracing the origin of the valuable commodity. The announcement comes on the heels of the launch of other similar blockchain-based solutions for supply chain management all over the world, which seek to bring transparency, traceability, and accountability to a business sector that has been historically opaque. Alrosa will be joining De Beers’ blockchain diamond tracking platform dubbed “Tracr”. Mining Weekly, a mining industry news channel reported the joint pilot between the two industry giants.
Being the world’s largest raw diamond producer in terms of carat, Alrosa handles a considerable customer traffic. The Russian mining giant accounts for over 25% of the global diamond (carat) production and has been reported to have experienced a 12% sales boost of rough diamonds in Q3 2018. Together with De Beers, they jointly control about half of the world’s rough diamond market. Efficient supply chain management of their assets is paramount as both companies continue to grow and expand their business. Tracr is expected to help out with these business objectives by improving supply chain transparency, enabling traceability of assets and building trust with customers.
Tracr Blockchain Diamond Tracking Platform
Tracking the origin of diamonds has been a problem for diamond producing companies. Growing ethical concerns about how these precious stones originate prompted the UN to draft up the Kimberly Process, mandating diamond producing countries to provide a declaration for each stone. Despite getting 75 countries to adhere to the import/export demands requirements, the resolution failed to adequately cover the so-called “blood diamonds” that are associated with severe human right violations with their sales proceeds used to fund wars.
Perhaps blockchain could be a supplementary solution to the provenance issue in the diamond industry. The Tracr solution works by creating a digital certificate for each diamond; the integration of this certificate helps in the recording of important transactions and attributes. This data is then stored on the immutable blockchain ledger, allowing buyers to verify the diamond’s authenticity and adherence to proper standards of production.
Tracr’s Proof of Origin protocol (POO) will help put an end to knowledge gaps, missing details or uncertainty related to the origin of diamonds; these process enhancements will improve trust with customers and allow them to make confident purchases, free of doubt. Speaking on the merits of blockchain integration, Alrosa CEO, Sergey Ivanov stated that “traceability is the key to further development of our market.”
Ivanov further explained that:
“It helps to ensure consumer confidence and fill information gaps, enabling people to enjoy the product without any doubts about ethical issues or undisclosed synthetics. Alrosa is glad to participate in testing Tracr, along with other market solutions. We believe tracing requires industry cooperation and complementation for the sake of a common goal.”
Tracr is Growing
It has been reported that the Tracr blockchain diamond initiative was designed to serve in complementary capacity with preexisting regulatory rules and programs like the aforementioned Kimberly Process Certification Scheme and the Responsible Jewellery Council Code of Practices, which governs the industry and serve to improve trust and confidence in diamond’s origin and quality.
Back in May, De Beers also announced the first successful implementation of the Tracr’s blockchain solution which was used to track 100-high-value diamonds. Tracr’s success quickly attracted the world’s largest diamond retailer, Signet Jewelers, who joined the initiative. De Beers developed the Tracr platform in conjunction with several industry leaders including Venus Jewel, Diarough, Rosy Blue NV, Diacore and KGK Group. A complete version of the initiative is expected to roll out later this year; however, no announcement of an official launch date has been announced yet.
Prior to joining Tracr, Alrosa had also carried out some blockchain experimentation of its own; the company announced a partnership with KG Diamonds. The companies are working with blockchain startup D1 Mint to tokenize diamonds. This project aims to build on the success of cryptocurrencies and similar digital assets by tokenizing diamonds and creating a new digital asset class which will increase the appeal for diamonds, and push consumer demand.