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| October 1998
Diamonds:News 28th World Diamond Congress in ThailandFacing the millennium, the diamond industry deals with disclosure and diamond branding and takes the measure of its new players Laser drilling took center stage this summer in Bangkok, Thailand, the colorful backdrop for the 28th World Diamond Congress organized by the World Federation of Diamond Bourses. In a significant development, delegates voted unanimously to require federation members to disclose in writing any laser-drilled diamonds they handle beginning in 1999. Other topics of discussion ranged from De Beers' controversial decision to test-market branded diamonds to the rising stature of the diamond industries in China and India, both of which seek membership in WFDB. Drilling to the Core of the Problem The issue of requiring disclosure of laser drilling was debated at previous World Diamond Congresses but always met with resistance from the International Diamond and Manufacturers Association. This year, however, IDMA's Jacques Roisen, of Michal Ferman, Roisen & Ferman Inc., suggested the association would go a long with the idea as long as a "reasonable size limit" was established for diamonds requiring disclosure. "In the manufacturing community, it is impossible to guarantee that stones under a certain size limit are not drilled," he said. Others who generally opposed full disclosure pointed to the inconvenience it would pose for manufacturers who own stocks of laser-drilled diamonds or who manufacture jewels containing multiple small diamonds. Eli Izhakoff of J. Izhakoff & Sons Inc. outgoing WFDB president, sounded a cautionary note. "If we do it only halfway [requiring disclosure only for larger diamonds], better not do it at all," he said. "Full disclosure across the board may be inconvenient, but it is the right thing to do." Eli Haas, of ENH International Inc., president of the Diamond Dealers Club of New York City, agreed: "We need to show consumers we are an honest and honorable trade, and we came down firmly on the side of disclosure." Haas drafted the disclosure resolution that delegates passed on the last day of the congress. It reads: "Although laser drilling is an acceptable, permanent process utilized in the cutting and polishing of diamonds, and does not infuse a foreign substance into a diamond or otherwise affect its integrity, it is nevertheless required that this process be disclosed in writing when diamonds are offered for sale. This resolution goes into effect Jan. 1, 1999." The timing gives dealers and manufacturers with laser-drilled diamonds time to adjust to the new rule. De Beers Branding Program However, diamantaires and diamond manufacturers voiced vehement opposition, saying it looks like an attempt by De Beers to extend its monopoly into the polished diamond market. Haas criticized the idea, repeatedly calling it a "scheme." "Branding is exclusionary because it will be available only to a small number of people and will effectively disenfranchise large segments of the diamond market," he said. "The concept threatens our very survival." Harry Garnett, a spokesman for De Beers, tried to diffuse the concerns. "This is not an effort to gain a stranglehold on the polished market," he said. "We are in Week 1 of a very small operation. We stress that in testing the concept of branding, we want to see if branding is important for consumer confidence. We want to know if it adds value to the process of selling diamonds. We understand the damage it could do to the industry though." No resolution was reached, but both sides agreed discussions on De Beers' branding should continue behind closed doors. De Beers said it will stay in close consultation with the trade on the progress of the experiment. New Players Emerge The presence of China and India underscored long-term growth possibilities, even in a depressed world economy, and the increasingly global nature of the diamond business. China, with its population of 1.2 billion, could play a huge role in the future. In terms of diamond consumption, China has jumped from $290 million in sales in 1995 to $450 million in 1997. Delegates from China have visited Israel and other trading centers and are constructing the diamond infrastructure policies, rules and trading practices to coincide with world standards. In India, the same process is well under way. In fact, India already processes the bulk (in quantity) of the world's cut diamonds. Conversely, the collapse of several Asian economies and the ripple effect in the diamond business dominated business discussions. Delegates had the opportunity to witness the Thai diamond industry's quandary firsthand. The Thai Diamond Manufacturer's Association and the Bangkok Diamonds & Precious Stones Exchange cohosted the congress and repeatedly invited the guests to tour the Thai industry and to conduct business while in the country. A Thai inter-bourse sales event and an opportunity to buy diamonds that belonged to Thailand's "formerly wealthy" were organized also. (Diamond buying opportunities and challenges have readily developed as a result of Thailand's economic downturn.) In political happenings, Eli Izhakoff stepped down as president of the WFDB, but was elected as lifetime honorary president. Itzhak Forem of Israel was named acting president, and Eli Haas of the Diamond Dealers Club of New York City was named vice president. The 1999 WFDB President's Meeting will be held in Moscow; the next World Diamond Congress will be held in Antwerp in 2000.
– by Robert Weldon, G.G.
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