Producers and diamantaires detail the state of the industry at Israel's
Rough Diamond Conference
The changing dynamics of the diamond industry set the stage for discussion
at the International Rough Diamond Conference, held June 23-24 in Tel Aviv
and Ramat Gan, Israel.
Distribution and demand were the major focuses.
While De Beers used to control virtually the entire diamond distribution
pipeline, some new producers have shaken up the market by considering selling
their diamonds in other ways. Even some long-time members of the De Beers
network are leaving or demanding the right to market some of their production
on their own. Meanwhile, other long-time and new producers have pledged
allegiance to De Beers in hopes of market stability.
In fact, stability is one factor that everyone agreed on at the conference.
For its part, De Beers is already shoring up prices by limiting supplies
in certain diamond categories.
In the long-term, however, questions remain. Will other producers be
able to curtail supply in synchronization with De Beers? Will they be able
to navigate the delicate balance of limited supply and shareholder pressure
The answers lie in the "demand" side of the diamond market
equation. Consumer demand for diamonds (or lack of it) fuels the market.
And while diamond jewelry sales are strong in the U.S., they've suffered
in Japan and Asia, two very big markets. The very essence of diamonds as
a store of value is at stake.
The following quotes are excerpts from speeches by De Beers executives,
other major producers and Israeli diamantaires at the conference. Read them
for a look into the tone and mood that exists in the larger diamond market
President of De Beers' Central Selling Organisation
"No other material [diamond] enjoys the protection against price
volatility which is provided by the CSO a very important consideration
for developing countries whose economies are often critically dependent
on a predictable income from this natural resource. It also protects the
market from hazards of oversupply a key one being the thought in the
consumer's mind that he might be able to buy a diamond more cheaply tomorrow
than today. That protection, based on the CSO's unique willingness and financial
ability to hold stock, is as important to diamond manufacturers as it is
Director of De Beers' Consumer Marketing Division
"The world is littered with cultural icons which are no longer.
Thirty years ago when I was growing up in Boston, my mother would not go
out on Friday night without her mink coat; my father with his Brooks Brother's
suit would unquestioningly buy a new Cadillac every three years ... Now,
to differing degrees, some of these products have lost their ability to
be cultural symbols. Consumer marketing must ensure this does not happen
to diamonds at a time when the competition from other luxury goods has never
been more fierce and the consumer choice more varied."
Part owner of Catoca Diamond Mining Co., Angola, and CEO of LLD Ltd., Israel
"The world is changing fast and so is the diamond industry. We are
looking with some trepidation, but also with anticipation to new Canadian
production and some other mines that may soon come on stream. The fact that
so many present and future miners are here today [at the conference] may
well represent a turning point in relations between manufacturers and miners.
It is important for miners to know the diamond manufacturing industry, to
understand the problems of profitability, of marketing and of consumer markets.
All the factors involved in the diamond pipeline deserve to expect a decent
return for their work, on their investment and on the risks they are taking.
Two key factors will ensure our future: stability and profitability."
R. John Robinson
Chief executive, managing director of Ashton Mining Ltd. (Mines in Australia,
Canada, West and South Africa, Finland)
"The global scope of diamond exploration has dramatically expanded
in recent years ... illustrated by the increase in the number of companies
exploring predominantly for diamonds. The number has grown from 23 before
1992 to 74 at the beginning of 1998 ... A protracted weakness in the general
mineral commodities market, particularly in the gold sector, has probably
contributed to the increase in diamond exploration. Although suffering from
its own difficulties, the diamond business is perceived by some as the only
game in town."
Chief executive of ALROSA (Almazy Rossii-Sakha), Russia
"Over the past two years, intensive negotiations have been conducted
during which Russia has determined its strategy will be that of continued
cooperation with De Beers ... As a result, the relationship of the Russian
diamond industry with other diamond producers has been developing steadily
over the past few years, and this is expected to continue."
Permanent secretary of the Ministry of Minerals, Energy and Water Affairs,
"In determining its role in the diamond industry, the first thing
Botswana would like to see is stability in the market ... Like everyone
in the industry, we get concerned about the prices our diamonds fetch, especially
when our revenues are further reduced because we cannot sell all that we
produce. I believe Botswana is playing its part, and I believe it's playing
it well ... but there are others in both producing and manufacturing who
are riding on the system but not supporting it."
The Israeli Manufacturers
General manager, Israel Diamond Manufacturers Association Ltd.
"Since the 1990s, the Israel diamond industry, just like the world
diamond industry, has suffered a prolonged crisis of profitability. In light
of the high labor and manufacturing costs, the Israel diamond industry has
changed to manufacturing medium-sized and large diamonds. The crisis is
not over. It is now predicted that in 1998, for the first time since 1991,
there will be a decline in exports from Israel."
Chairman of the Israel Diamond Institute and president of Moshe Schnitzer
"The diamond business has cycles just like any other industry. And
after each temporary period of recession, the diamond business has come
out stronger and healthier, ready to book even greater success. But there
is one precondition which is essential to this success. The diamond market
can flourish only if it enjoys stability in the supplies of rough. Stability
by Robert Weldon, G.G.
For more on events and topics discussed at the Israel Rough Diamond
Conference, please see "World Diamond Producers Convene in Israel,"
Professional Jeweler,August 1998, p. 142.
Copyright © 1998 by Bond Communications.