Representing the collective interests of the Belgian diamond and diamond industry

The diamond pipeline of the industry may look like a short and fascinating journey, but the reality is far from it. The process begins with mining, then diamond trade, diamond production, insertion into jewelry and, finally, retail. In this new series of articles, the whole process of the diamond pipeline will be presented from beginning to end, with facts and statistics on the issues with which it is linked.

Diamond centers are created where diamonds trade, where they are cut and polished and sometimes inserted into jewelry. They are also located in distribution centers in consumer markets (or consumer markets). They are the middle part of the diamond pipeline.

When discussing diamond centers, the first center that comes to mind is Antwerp, Belgium, and this is justified. It is one of the oldest diamond centers, it has a rich history, which in various ways speaks about the history of changes in the global economy over the past five centuries.

From India to Antwerp

The history of the Antwerp diamond industry begins in the early 1500s, when diamonds coming from India were first delivered to the city of Bruges and then to Antwerp, where they were cut and polished and inserted into jewelry for the nobility and wealthy merchants.

An important turning point in the field of diamond cutting was the fact that in 1456 Lodewik van Berken invented a scaif, a polishing wheel using a mixture of oil and diamond dust. For the first time it became possible to polish all sides of the diamond symmetrically at angles that allowed to reflect light as never before. Skyf revolutionized the polishing of diamonds. This led to an increase in the popularity of diamonds, and Antwerp strengthened its position as a global diamond center.

Competition with Amsterdam

The first phase of leadership ended when, in 1585, the Spaniards conquered Antwerp. Most of the jewelers from this city rushed to Amsterdam, which led to the cessation of polished diamonds in Antwerp, according to AllAboutGemstones.com.

And only a hundred years later, when the Thirty Years' War ended in 1648, the Jew-cutters began to return to Antwerp. But Amsterdam retained its dominant role in the diamond industry for another hundred years as a result of constant pressure from the Spanish Inquisition. At that time, Amsterdam supplied low quality diamonds from Antwerp to Antwerp, which led the Antwerp diamond manufacturers to devise new ways to maximize the cost of their diamonds.

Return of Antwerp

After the end of the Napoleonic wars in 1815, Antwerp became part of the Netherlands, and the Jewish community received equal rights. The Jews returned to Antwerp in full force and again rebuilt their diamond business. In this situation, in 1863 Antwerp diamantaires opened their first official diamond exchange (Bourses).

The discovery of diamonds at the Kimberley field in South Africa in 1871 gave an additional impetus to the development of Antwerp. And again, after 300 years, Antwerp became the world's leading diamond center. At the beginning of the 20th century, King Leopold II decided to annex the Congo, and diamonds were among the goods exported from this African territory to Belgium. In 1914, during the First World War, the outer and inner rings of fortification around the city were destroyed, and the German army entered the city, occupying it until its liberation in 1918.

Thanks to the attention that was paid to the city in connection with the hosting of the Olympic Games in 1920 and the World Expo in 1930, the diamond and diamond industry of Antwerp has blossomed again.

After the First World War, diamond mining in the Congo led to an increase in exports to Belgium, providing Antwerp with an important source of diamonds. Then, like many countries, in the 1930s, Belgium suffered from the American Great Depression. As depression deepens, demand for diamonds and other luxury goods has plummeted. During this period Antwerp reduced production by 50%, reduced working hours and about 25,000 jobs.

The Second World War

The outbreak of World War II again caused a sharp decline in demand for diamonds in the world. When Germany occupied Belgium and then the Netherlands, Jews engaged in diamond trade were arrested, interned, and many were killed by the Nazi regime. Survivors went to Tel Aviv and New York and created new diamond centers in those cities. Of the 35,000 Jews originally residing in Antwerp, less than 5,000 survived the war.

After the war, diamond-diamond activity in the city revived. Diamond-producing companies and banks settled in Antwerp. Resurrected from the ashes of World War II, Antwerp regained its status as the diamond capital of Europe. Since then, until the mid-1970s and early 1980s, it was the world's leading diamond center. Most of the world's diamonds were sent here and were cut and polished here. To support him, banks were created, and diamonds were sent all over the world.

Protection of Belgian diamonds

In 1973, on the initiative of the Belgian government and representatives of the diamond and diamond industry, Hoge Raad voor Diamant (HRD), or the Diamond High Council (Diamond High Council) was established. His mission was to protect and stimulate the development of the diamond and diamond sector in Belgium. Among other things, he also has a commercial branch for issuing certificates. In 2007, the original Supreme Diamond Council was restructured and split into two different organizations.

The first organization, the Antwerp World Diamond Center (AWDC), is a private foundation responsible for representing the collective interests of the Belgian diamond and diamond industry both nationally and internationally, as well as promoting Antwerp as the world capital of the diamond- Diamond industry. The second organization, HRD Antwerp, is a completely independent commercial division of AWDC and has six branches: the Diamond Lab, the Precious Stones Lab, the Research branch, the Education branch, the Graduates Club ) And the Equipment Branch.

Currently, there are 1,700 diamond-diamond companies registered in Belgium and over 4,500 dealers providing livelihood for more than 10,000 people. There are 45 large diamond-diamond companies (over $ 500 million annually), 100 medium-sized companies ($ 500- $ 150 million) and 1,400 small companies. They work on four diamond exchanges: Diamant Kring, Diamant Beurs, Diamant Club and Beurs voor vrije Diamanthandel.

As a result of all these events taking place over several centuries, Antwerp diamond producers were forced to constantly develop their methods of producing diamonds. Beginning in the mid-17th century, when Antwerp cutters were forced to produce precious stones from small diamonds of low quality given to them by Amsterdam diamond traders, they improved their craftsmanship, enabling them to cut and polish larger stones. Working with small diamonds "mele" to stones of medium size, they increased the experience necessary for the production of precious stones of very large size and high quality. Antwerp was forced to abandon the production of small and medium-sized diamonds due to competition with other centers, Who were able to do so at lower labor costs. The ability to quickly acquire new skills and high technology supported Antwerp in this transitional period.

http://www.ehudlaniado.com/home/index.php/news/entry/antwerp-and-diamonds-a-rocky-love-story

Providing goods in long-term credit literally kills the diamond industry

Sevantibhai Shah, a faithful supporter of the diamond industry and chairman of the world's leading diamond company Venus Jewels, advised diamond manufacturers to get rid of the system of transfer of goods on credit for a long time and to accept the transaction for settlement by money With the goal of wresting the Indian diamond and diamond industry from the clutches of the current recession.

Shah spoke at a meeting of an interactive thematic section organized by the Southern Gujarat Chamber of Commerce and Industry (SGCCI) in early August on "How to overcome the recession in the diamond" Industry).

Shah said that diamantaires producing large stones in Surat, in the past five or six years, were doing business using cash in their calculations. None of the companies currently have any problems, including his own company, Venus Jewels. Buyers of large stones from abroad willingly pay with money.

On the other hand, about 95 percent of diamond manufacturers and dealers provide goods to customers with a grace period of 90-190 days. In such circumstances, there is a 100 percent chance that buyers will not fulfill their payment obligations. For this reason, in the last year and a half the industry has faced a number of unfulfilled obligations.

"Providing goods in long-term credit literally kills the diamond industry. I urge the diamantaires to unanimously accept the monetary settlement system for the sake of prosperity. None of the diamond mining companies offers products on credit to their customers. Diamantaires need to learn from the business model of diamond mining companies, "Shah said.

Shah noted that diamond mining companies such as De Beers, ALROSA, Rio Tinto and others took active measures to counter the crisis in the Indian diamond industry. They (diamond mining companies) provided an opportunity for their Indian clients to postpone about 75 percent of the diamonds on the sites. This increased the confidence of diamantaires.

"The Chinese market is very weak, but we rely heavily on the United States market, which is still dynamic. Good times are just around the corner, and I hope that the upcoming Christmas season will bring the industry back to its path, "Shah added.

http://timesofindia.indiatimes.com/city/surat/Adopt-cash-system-to-curb-recession-in-diamond-industry-SP-Shah/articleshow/48485380.cms

This is a zero-sum game in which the profit of one party is formed at the expense of the other party

I often think about how consumers - whether they live in New York, Hong Kong, Shanghai or elsewhere - make decisions. Obviously, they determine the price for both diamonds and diamonds (indirectly). It is the consumer who decides whether it is possible to offer him a diamond at some price and whether he needs him at all. Each supply chain is assumed to operate in accordance with this assumption. When a consumer decides that he wants or can pay a sticker price for a particular diamond, he thereby sets the price for this diamond. This, in turn, determines the price of the diamond (from which this diamond was made). The difference between these two prices is the gross profit of the supply chain: diamond mining companies, cutters,

In my previous articles, I argued that, in the light of the current crisis, the diamond and diamond sector will never return to its previous structure. Even if we can solve existing problems in the foreseeable future (for example, the issues of high diamond prices, profit margins, stocks, marketing, etc.), these will be only temporary solutions. From my point of view, these same problems will appear again later. All this allows me to conclude that there is a need for a deep, fundamental change in the industry. Only a significant change will stabilize the trade in diamonds and diamonds and make it profitable. This should be a change that benefits all participants of the industry, and a change that primarily focuses on the consumer.

Complex circumstances

But before I move on to what changes are required, we need to consider the circumstances that led the industry into the current situation.

Fragmentation . "Pie" of the diamond sector is divided between a huge number of companies. The small share that each company receives, if it receives it, reduces the profit of the company, hinders the accumulation of capital, makes it difficult to preserve the value of diamonds and undermines the company's ability to effectively trade this luxury product, as it was in the past (see reference). Many of the players in the diamond sector rely on "cheap labor" and seek to compete with each other in order to sell at any price, including making deals without any return on investment (see reference) or even at a loss to themselves, Just to keep the business and maintain its vitality. In this situation, prudent diamond companies would translate their profits into investments in other sectors.

Oligopolistic regime of suppliers of rough diamonds. This situation leads to contradictory methods of work, which completely lead to defeat in the most important struggle: the struggle for the consumer. Such methods of work include: temporary improvement in the coloring of diamonds, including non-documented synthetic diamonds; The use of uncertainty between the estimated demand and the volume of final transactions; Lack of transparency and misleading consumers using the "4 C" characteristics (color, cut, weight, cleanliness), etc.

These methods of work destroy profitability, damage the reputation of the industry, harm the consumer and force financial institutions that could contribute to the growth of the industry, take their business to other areas. These problems are exacerbated by the constant struggle for market share, which makes buying diamonds at any price.

All of the above can be seen on the chart below, prepared by the consulting firm Mercury Diamonds, and he speaks for himself.

The blue line, reflecting the price of diamonds, is almost always above the red line denoting the price of diamonds. All the rest is clear.

The movement of prices for diamonds weighing 0.01 - 2.49 carats and prices for diamonds weighing 0.01 - 0.99 carats

Synthetic diamonds: a hidden advantage

So far we have dealt with the structural aspects of the diamond industry and their impact on the current situation. But there is another aspect: how consumers perceive the value of diamonds, that is, marketing. The industry should wake up and search "non-stereotyped", because the hope for the fantastic slogan of De Beers "The diamond is forever" does not work any more. Industries need to understand what everything is going to. The rapid rise of synthetic (grown in the laboratory) diamonds poses a significant threat to the demand for natural diamonds, and this growth is intensifying.

But this does not necessarily represent a threat to the industry. Conversely, the growth of synthetic diamonds can open a new era for the industry if we manage to work on it and turn it from weakness to strength. But how to do that? It is necessary to realize that we are dealing not only with a luxury and excellent product, but also with a very unique product belonging to a group of products for which the main feature is the "economy of rarity".

What is the "economy of rarity" and how are we associated with it? First, I would like to clarify the terms "scarcity" and "rarity", which some appear in the context of the "rarity economy" and sometimes confusion occurs. Deficit refers to the lack of something that can be filled at the cost of expense or with time, but, ultimately, will be replenished. Unlike the deficit, rarity refers to a commodity that is not often found in nature. These products are available in limited quantities in nature, and their resources can not be reproduced. In other words, the more they are produced, the more their shortage becomes, which can not be filled. This is a zero-sum game in which the profit of one party is formed at the expense of the other party, so that the amount of profit and loss of both sides is zero.

To return to our industry, it is necessary to consider that documented synthetic diamonds belong to a scarce economy, as they can be mass produced, and the capacity of enterprises is not limited. The more these laboratories become and the more complex means of production develop, the lower their price falls. This is not an unlimited resource, but rather an industry.

Conversely, natural diamonds can be considered and are considered a rarity - a product that can be extracted only to a limited extent, and the availability of which is reduced over the years, despite the development of new methods of exploration and large investments. Other factors also affect the rarity and economic value of natural diamonds. These include tightening the regulatory requirements of the Kimberley Process Certification Scheme, state assessment, customs clearance, the short term of raw material conversion to diamonds, and careful documentation of the final product. Natural diamonds are subjected to very strong regulation in order to maintain quality and provide the customer with a system of multiple levels of security when buying these stones.

Diamonds, like fine works of art, rare cars and fine wines, will always have a stable demand curve. Collectors, investors and market participants will always look for special prestigious products - these exclusive, rare precious stones that are not considered a commodity. This situation increases the demand for this product and, therefore, usually should lead eventually to an increase in prices for it and increase its value.

http://www.ehudlaniado.com/home/index.php/news/entry/key-changes-offer-bright-future-for-diamond-industry

Expect that De Beers price cuts will affect other suppliers

De Beers sightholders' reaction to price reductions during the recent site was mixed. The cost of the site was estimated at $ 250 million excluding the offer of additional goods. The company lowered prices for its rough diamonds by an average of 8-10%, which stimulated demand for additional supplies during the week. At the time of publication, sightholders were waiting for a response to their requests.

"People, having learned the prices, began to ask for additional supplies, and this gave De Beers the opportunity to sell raw materials that could bring it a few hundred million dollars more," said one of the Antwerp sightholders of the company. "I just do not know if De Beers wants this."

Another sightholder believes that De Beers made it clear that it intends to limit the supply of raw materials during the remainder of the year in order to maintain a new level of prices. Rapaport News agency talked about this with several sightholders.

Paul Rowley, head of De Beers Global Services to Sightholders, told Rapaport News that the company is pursuing a supply-constraining strategy, since there has been a surplus of stocks in the market since 2014. He declined to comment on the prices on the site, but noted that De Beers gradually reduced prices in 2015, and its price index in the first half of the year fell by 8%.

Not enough

In the meantime, sightholders noted that they do not expect the company to lower prices again this year - even though, in their senses, the current price cut was not enough.

"Sightholders were pleased to reduce prices, but in many categories of goods it was not enough," said one of the market observers. "The profits are not yet, so although they are glad that De Beers has finally begun to do something, in the short term it will not help them."

However, the idea expressed by the sightholders is that in the coming months De Beers will focus more on limiting supplies than on lowering prices.

Although the increase in profit ratios may have encouraged sightholders to buy more rough diamonds, one Surkhat sightholder noted that diamond processing companies are not yet ready to increase diamond output, which is currently estimated to be approximately 40-50% of the productivity of enterprises.

Some expressed fears that diamond processing companies would buy diamonds at new prices, even in the situation of insufficient demand for diamonds. "The price of some boxes fell by 10-20%, so people asked for more goods - although I do not see the benefits," said one of the sightholders. "We all know how inflated the price of these goods was from the very beginning, and so far we do not see a breakthrough with the diamond manufacturers."

Perhaps, the prices for diamonds will decrease even more after correction of prices for rough diamonds, which, in the final analysis, will reduce the effect of this correction. "We will call this an adjustment, not a decline," one of the sightholders asks. "We should not talk too much about it, because it will affect the prices of diamonds and the mood in the market."

Effect of diamonds

Another sightholder agrees, noting that, according to his clients, they read on the Bloomberg news that rough diamond prices fell by 9%, and now they are waiting for diamond prices to follow suit. "Of course, this does not work that way, because the market is inefficient," he explains. "But that does not help me when I sell my diamonds or when the retailer sells their jewelry."

And yet the mood on the site improved compared to the previous month, as sightholders saw in the price adjustment the opportunity to increase their margin in the production of new diamonds. They also expect that De Beers price cuts will affect other suppliers, in particular ALROSA, which retained its previous prices in August.

The Russian company limited the volume of its offer to the August sale, which took place a week before the De Beers website, allowing customers to abandon purchases in full. Clients of ALROSA Alliance told Rapaport News that the prices at the auctions were relatively stable, but now they expect a similar decline, as in De Beers, in September.

Resigned to low demand

Unlike De Beers, which has reduced its production plan for the year in accordance with its weak sales, ALROSA still retains production targets. Clients say that the company has the opportunity to sell surplus stones to Gokhran. Representatives of ALROSA did not answer Rapaport's question about whether the company is considering such an opportunity. Analysts of VTB Capital expect that due to weak sales in recent months, the Russian company will reduce the target sales volume for 2015 by approximately 2 million carats of diamonds. Publication of ALROSA results for the second quarter is scheduled for Friday.

For sightholders, a reduction in supply can mean a shift in attention from demand prices, as they also agree that rough diamond shipments will remain low throughout the rest of the year.

http://www.diamonds.net/News/NewsItem.aspx?ArticleID=53224&ArticleTitle=Sightholders+React+to+Price+Cuts+at+%2524250M+Sight

Investment demand for gold and diamonds, as people transfer their funds to solid safe haven assets

Do not be surprised if diamantaires suddenly start talking about Zhu Xiaochuan and Janet Yellen. The actions of these two people, who are respectively the leaders of the People's Bank of China and the US Federal Reserve, can create additional pressure on the demand for diamonds and the price of polished diamonds in general.

Simply put, the sudden depreciation of the Chinese yuan and the threateningly sharp increase in interest rates in the US could not have come at a more inopportune time for the diamond market.

Last week, the People's Bank of China, headed by Zhu Xiaochuan, allowed the RMB to drop by almost 3.5 percent, so this currency is currently trading around CNY 6.4 to the US dollar. At first glance, Beijing sought to give the country's economy much-needed momentum, since a cheaper yuan should stimulate exports, making Chinese goods cheaper in foreign markets, especially in the US.

In the diamond industry, the cheaper yuan has had a different effect, as unlike other goods, China is a major consumer of diamonds.

The depreciated yuan makes imports of diamonds to China more expensive for buyers who convert their currency to buy goods in US dollars or sell diamonds in the local market for yuan at the dollar rate. Michael Huang, managing director of the Diamond Index Group, a supplier of expensive diamonds and diamond jewelry in China, told Rapaport News that dealers and wholesalers have already raised prices by almost 5 percent to compensate for their currency losses. Retailers have not adjusted their prices yet, but they are going to do it in the coming weeks, he said.

As a result, Chinese buyers of diamonds that have been cautious during 2015 may begin to seek large discounts to compensate for the weakened currency, Huang said. The mood of buyers at the Hong Kong Jewelery Fair coming in September will be a good barometer of demand from China.

Opposite opinion

Efraim Zion, the managing director of the Hong Kong-based company Dehres Limited, which specializes in large gemstones and diamonds of fantasy shape and color, already now expects little about the exhibition. But he denies that the yuan at the current levels will have a large negative impact on consumption.

"It can affect the market, but only if the yuan will go down to CNY 6.70 or 6.90 - then it will have a real impact," he said. Instead, he notes greater market pressures, such as a general slowdown in China's economic growth and tougher measures to combat corruption and wastefulness.

Undoubtedly, it is expected that the weakened yuan will cause a further decline in consumer demand. In particular, many Chinese tourists traveling abroad to buy luxury goods will now have fewer dollars to buy in stores such as Tiffany, LVMH and Cartier.

In China itself, a new level of the yuan, perhaps, will also reduce the demand for gold jewelry in response to the decline in gold prices in dollars (see chart). Chinese consumers usually rushed after gold, when prices fell. So it was in April 2013, when a sharp drop in gold prices caused a sharp increase in sales of jewelry in China and Hong Kong. Although a weaker gold rush was observed in July of this year, when gold prices sank by 6 percent during this month, consumers were probably more cautious about the market after the ensuing fall of the yuan.

In search of a safer haven

In any case, not everything is so bad in the industry. China's currency and stock market volatility, along with its bursting soap bubble associated with real estate, should increase investment demand for gold and diamonds, as people transfer their funds to solid safe haven assets. This can become even more important, as the Chinese economy is experiencing prolonged growth illness as it moves from an infrastructure-oriented and export-oriented model to an economy driven by consumption.  

But now people calculate their losses. A lot of money was sent to the stock markets during the boom in the last few years. Most of this money was lost in the last two months.

Juan sees a ray of hope among the clouds that hang over the diamond industry. "People in the short term will be upset because they do not have the money to spend," he explained. "But in the long run, recent declines have shown that stock markets and other investments are volatile. They need assets that demonstrate fair value and are sustainable, and diamonds are so. Therefore, I believe that in the long run people will return to diamonds. "

Zion agrees that at the moment consumers do not think about diamonds. He would like to see that the government is taking measures to restore confidence, for example, continues to lower interest rates further - well below the current record low of 4.85 percent.

Observers believe that the recent weakening of the currency was an attempt by the authorities to reduce the supply of money as it directs its economic transition along with a change in the dynamics of global development. Analysts at VTB Capital explain that China's monetary policy potentially follows US policy, as it has a "creeping" peg to the dollar.

http://www.diamonds.net/News/NewsItem.aspx?ArticleID=53181&ArticleTitle=%2bIs%2bDiamond%2bDemand%2bDetermined%2bin%2bBeijing%2band%2bWashington%253f

The establishment of the Diamond Producers Association

Because of all this noise and the cod around you start to think that the walls of Jericho can just about collapse.

I received several copies - all with amiable signatures - of an article written by Chaim Even Zohar, entitled "Love and Hate in the Rough Supply Side."

Then I received a copy of the letter sent by De Beers to my sightholders, which speaks of "the flexibility of the allocation of volumes", "the flexibility of real-time demand" and the "flexibility of redistribution."

Then, to top it all off, the news of the establishment of the Diamond Producers Association, which includes De Beers, ALROSA, Rio, Dominion, Petra, Lucara and Gem.

It turns out that something is happening that can hardly be a complete surprise after the disastrous last site of the company De Beers, at which at least 70% of the site was postponed.

"Postponed" actually means, as far as I understand, "refused"; As well as "flexibility" now for the sightholders of De Beers means that the company will do everything it can to get any sales volumes.

The long-awaited wholesale delays or refusals of the goods on the last site is like summarizing the last feature on the sand, but I'm not at all sure where exactly this feature was drawn, nor is it about real problems about all this lively chatter.

Zohar's article is entirely a lengthy critical speech to the diamond producers, in particular, regarding De Beers.

The fact that De Beers was the main target is hardly surprising, given its dominant role in what is accurately called the "oligopolistic production structure where one sets the price."

Although "neat", but this somewhat contradicts the fact that at least three of the members of this new Association of Producers - Petra, Lucara and Gem - sell all or large quantities of raw materials on tenders, thereby providing price flexibility.

But, without sinking to petty quibbles, it should be said that the irritation of the middle part of the diamond pipeline is directed at De Beers as the enemy of the people number one.

Zohar singles out De Beers and suggests that she learn something from ALROSA and, quite simply, adhere to the sphere of activity of the diamond mining company, rather than digging into the world of Forevermark or retail, which, he believes, is distracting and actually in conflict with The interests of its customers - buyers of rough diamonds.

I will not object to any of the statements, but I do not consider this a fundamental issue.

And again, the Zohar reports that "some producers openly expressed" disdain "... regarding sightholders who continue to buy diamonds, knowing that they are doing it at a loss."

I'm fairly sure that this is so, and has held the same view for a long time.

It seems that a loud call was made to return to the carefree times of Oppenheimer, Ralfe and Penny, and this, in my opinion, is the essence of the problems in which the industry is mired.

It was these three musketeers of incompetence, Oppenheimer, Ralph and Penny, who gave a terrible example to those who followed them. Not everything that they, the new leaders did, was bad, but not everything was good, to put it mildly.

http://www.polishedprices.com/go/market-news/comment~6312

KP generally regulated the production of diamonds

( Business Standard ) - International experts from India and Dubai, the hot spots of the world trade in diamonds and diamonds, called for limiting what they call a Western critique of working conditions in diamond mines in Africa, which account for about 60 percent of the world's supply.

Such criticism, they say, is completely inappropriate, because most of the African mining and trade has already been clean a few years ago, and conflict diamonds, even in recognition of the Kimberly Process (KP), consisting of 81 member countries, are less than 0 , 5 percent of the annual volume of trade, which reached $ 1.2 billion.

"In 2013, diamonds were the most well-controlled commodity in the world. Over 99.5 percent of diamonds produced in the world fall under the certification regime. The Central African Republic, Guinea and Venezuela do not represent even 0.5 percent of the world's output. In fact, this is probably about less than 0.2 percent (world production, which can be considered "blood diamonds"), "said Peter Meeus, chairman of the Dubai Diamond Exchange, at the time Last year's conference dedicated to the centenary of the Angolan Diamond Centenary Conference.

The decision by the European Union to lift sanctions from Zimbabwe after the July elections last year was another milestone on the road to world recognition of working conditions in African diamond mines.

"The use of the expression" blood diamonds "has become too common. This is how to smear all with one tar. Even now, KP proves by its actions that the method used by it is the most effective way to avoid using diamonds to finance any form of civil war. Less than a month after the problem in the Central African Republic arose, the KP took steps to ensure that the Central African Republic could not illegally export its diamonds, "Meeeus said.

"KP generally regulated the production of diamonds. Can this be said about the production of any other minerals? The Kimberley Process is better than any diplomatic initiative undertaken so far,

There are many people who agree with Meeus. Some of them are from India, the world power in the field of diamonds, and Dubai, the developing center of world trade in tapeworms and the commercial capital of the United Arab Emirates (UAE). These two countries together with China form the New Silk Road, considered the main center of world trade in diamonds.

It is interesting to note that India and China now account for 24 percent of the world market for diamonds. De Beers, a global diamond mining giant, has already forecast that by 2020, the two countries will surpass the United States, the world's largest consumer, accounting for 40 percent of the market.

"With the exception of one or two problem countries, mining in Africa is clean. At the level of 15 percent, currently conflict diamonds account for less than 0.5 percent of total trade. Yet many consider it fashionable to distribute images of child soldiers and workers driven to poverty on African diamond mines. It's time to look at the real situation, "said Sanjay Kothari, the head of the Gems and Jewelry Export Promotion Council (GJEPC), a government organization based in Mumbai and working closely with the world's Organizations dealing with diamonds


http://www.business-standard.com/article/news-ians/blood-diamonds-africa-has-cleaned-up-its-act-comment-special-to-ians-114020900351_1.html

A sharp drop in diamond prices does not benefit either the mining company or the cutters

Representatives of the diamond business of India are preparing proposals to expand direct purchases of diamonds from the Russian company ALROSA.

Russian-Indian cooperation in the diamond sector received a significant boost after the meeting between Indian Prime Minister Narendra Modi and Russian President Vladimir Putin in December last year. Then ALROSA signed 12 direct contracts for the supply of diamonds to Indian companies. The next meeting between the president and the prime minister can be held in Astrakhan this fall, and the Russian side is expected to present new concrete proposals to expand the diamond trade between the two countries.
A new impetus to the cooperation of India and Russia is attached to the current crisis in the diamond market. In the opinion of industry participants, The prolonged fall in diamond prices is largely the result of speculative operations. Direct supplies of rough diamonds to lapidary and jewelry companies in India could be a good defense against market fluctuations. Here, Russia and India have a common interest: a sharp drop in diamond prices does not benefit either the mining company or the cutters who are engaged in production, rather than the resale of raw materials. Stable prices guarantee stable work and a stable social environment.

Preparing for the future summit, Indian industry representatives are seriously discussing the possibility of introducing a formula for a fair price for rough diamonds, to which ALROSA and Indian lapidary companies would be tied, as well as providing state guarantees for the purchase of Russian diamonds for the largest lapidary firms.

http://rough-polished.com/ru/expertise/98928.html

Tiffany and Co. And Signet Corporation are two examples of success in our industry

Neil Reiff, a veteran jeweler from Philadelphia, Pennsylvania, head of ND Reiff Company Ltd., last month published the following comment on LinkedIn under the heading "Insanity of the Diamond Industry" , In which he raises a number of serious problems and touches upon issues related to our industry. The article was reprinted by Rapaport with permission from Rafe.

It has been repeatedly said that the cost of raw diamonds is too high, and this leads to a lack of profit in the diamond industry. As a person who has dedicated his entire life to this industry, I believe that it is prices in the retail trade of diamonds that are too low.

Diamonds are not an "elastic product", the demand for which increases with an increase in supply or a decrease in the price. Diamonds are not a one-time or consumable product, which must be purchased continuously. Purchase of a diamond for many people is an event that takes place once in a lifetime. The price reduction will not stimulate the increase in sales of diamonds. At best, reducing the price will simply save money for the consumer or increase the weight of his purchase in carats.

As a former student studying business in a prestigious university, I was taught that the purpose of a business enterprise is to create profit. Profit is an essential element of the success of any business structure, since without the profit and the positive cash flow that it creates, the business model is unstable. Profit is the excess of income over expenses, which include the cost of goods sold and many other costs incurred in the course of the business enterprise.

Gross profit is income over and above the cost of the goods sold. It is from this excess of income after deduction of the cost of goods sold and the resulting profit is formed. As many far-sighted businessmen have said, gross profit is the key to determining how healthy the financial condition and future of any business is. With a few exceptions (for example, Amazon.com), revenue growth will not talk about anything unless the business model creates positive cash flows. Such a business will become unstable over time.

Recently I had a business meeting, which led me to these arguments. Here is how it was.

A wholesale buyer tried to sell a 3 carat diamond to a long-time valued retail buyer, with whom he had established professional and trusting relationships. He offered a fair retail price to a client who was excited about the prospect of getting a perfect new diamond for his wife, with whom he had been together for many years. The wholesale buyer / retailer was surprised when his customer called him and said that he can buy the same diamond cheaper on the Internet.  

I can not say how much cheaper, because I do not know the retail price that my customer spoke about. I only know that one online seller has set a price of $ 24,996.00 for the same diamond that I have, and I sell it at a wholesale price of $ 24,575.00! This means a gross profit of $ 421.00 on a diamond worth $ 25,000.00 - a gross profit of less than 1.7 percent!

On this we with the customer both said: "This is insane!" .. What's the point? " This makes no sense, and you should not sell anything at a profit rate of 1.7% compared to the cost price. No matter how effective a person can do business. Regardless of how much a person can receive income.

In this story there are many consequences. Perhaps the customer will now hesitate to buy a diamond for his wife, because the perceived value of the diamond is undermined, as is the confidence he felt for the seller. He probably will just get out of the deal, because he has a bad sludge from all this, and for him it's best to just give up buying.

Or maybe he'll just buy it for $ 24,996.00. In this case, the buyer will purchase a valuable diamond for a price of 1.7% above the wholesale value! In this case, the industry will lose. No one will get a profit, as 1.7% can not be considered a profit. More importantly, there were no additional sales. Ultimately, thousands of dollars were lost - in the form of profits and value for the industry and value for consumers - because the value of diamonds estimated at billions of dollars, perceived by society and industry, was greatly belittled.

As for the question of the profitability of the industry and the impact of "high" diamond prices, the above story shows that there are players in our industry who are striving to nullify the profitability of the industry at any price level. When the price of diamonds falls and, consequently, the price of diamonds should fall, these industry participants nevertheless consider it necessary to make diamonds accessible to people at the same absurd and unstable levels of gross profit. Reduction of wholesale prices for diamonds will simply lead to a decrease in retail prices - in essence, this situation is hopeless.

Tiffany and Co. And Signet Corporation are two examples of success in our industry. Both companies sell diamonds and jewelry to consumers for billions of dollars. They understand that profit is essential for working enterprises. Both of these companies are extremely successful. Their earnings and gross profit continue to grow, despite the fact that others seem to believe that the only way to do business is to sell diamonds at a cost - well, maybe 1-2 percent higher!

Tiffany and Co. In 2014, the company registered an annual sales volume of $ 4,249,913,000, which is 5% higher than in the previous year. Tiffany achieved such a sales volume with a gross profit of 64.3 percent! The trading margin of Tiffany was 280 percent! If we put it in a broader context, Tiffany had a selling price of $ 28,000.00 at a cost of $ 10,000.00, and the above-mentioned Internet retailer would have a selling price of $ 10,170.00 for the same hypothetical product!

Signet Corporation, the parent company of Kay, Jared and Zales, reported in 2015 that it had an annual sales volume of $ 5,736.3 million for the last financial year. Signet's sales volume increased by 36% .1 Signet received such a figure of earnings with gross profit of 36.2% - the trade margin over the cost price was over 156 percent!

It is interesting to note that the Signet annual report, published in 2015, contains the following reference: "Our research constantly shows us that the main reason why people buy jewelry exactly where they buy is NOT the PRICE. . . But TRUST (written in capital letters to emphasize).

This is confirmed by what my friend once told me about why her family buys jewelry from Tiffany. As she explained, she knows that she receives a quality product and, although the price can be high, she receives the same price as others receive. Again, the issue of trust!

http://www.diamonds.net/News/NewsItem.aspx?ArticleID=53119&ArticleTitle=Op-Ed%253a%2bInsanity%2bof%2bthe%2bDiamond%2bIndustry

Retailers are increasingly saying: "Why should I flatter myself and tell your stories and sell your diamonds?

Mel Moss, an active member of the industry and president of Regal Imports Ltd., discusses the "perfect storm" - a catastrophic situation created by diamond mining companies that have filled the diamond pipeline with non-profitable projects at the bottom of the diamond pipeline, losing interest in consumers and minor Profits for all: "Diamond companies are trying to make a profit, but in the current conditions their profits do not leave a profit to their customers. Diamond cutters are faced with consumers who are not interested in paying more for diamonds if they are generally interested in buying diamonds. Retailers often compete with their own suppliers for the volume of diamond sales, and discounts provided for sales on the Internet, force retailers to put up with low profits. It's a vicious circle, In which retailers do not want to receive tiny profits for all the increasing sales of diamonds. Therefore, retailers either stop selling polished diamonds in favor of more profitable products, or require their suppliers to cut prices, and nowhere do we see anyone in the diamond pipeline who can make money selling diamonds. "

Expressing the collective frustration of retailers, Moss calls for greater cooperation in the industry: "Many retailers do not actually sell diamonds. They sell documents of the Gemological Institute of America (GIA) and compete only on the price issue. Diamond companies with their characteristic arrogance tell retailers not to sell at real prices. They recommend telling the story of a diamond, but retailers now simply do not "peck" at these tales of diamonds. Retailers are increasingly saying: "Why should I flatter myself and tell your stories and sell your diamonds when I can sell something easier and earn more money"? Apathy of retail leads to a decrease in the desire to have diamonds. Therefore, demand is falling, consumer interest is dying, and everyone is looking for easier solutions. But there are no easy ways,

He notes that "the old supply chain worked well in its time, when all participants of the diamond-diamond industry adhered exclusively to their place in the diamond pipeline. The old system provided profit at all important levels. " In second place to Chaim Even-Zohar's statement that De Beers' attempts to get down to work at the bottom of the diamond pipeline turned out to be unprofitable, Moss says that "in all these projects there is not only a loss of money, but they steal profits from retailers, forcing De Beers is not a team player in advertising diamonds as a luxury product. Each level of the diamond pipeline in its time supported the other by promoting a simple basic provision that diamonds are attractive. At present, merging of different levels causes a decrease in sales and a decrease in profits. "

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