The 32nd session of The World Diamond Congress was held from June 26 to 29, 2006 in Israeli cosmopolitan city of Tel Aviv.
The World Congress opened with a joint session of the World Federation of Diamond Bourses (WFDB) and the International Diamond Manufacturers Association (IDMA). Guest of honor at the event was Minister of Industry, Trade and Labor Eli Yishai.
On the dais were Flemish Minister for Economy, Science & Foreign Trade Fientje Moerman, outgoing WFDB President Shmuel Schnitzer, IDMA President Jeffrey Fischer, WFDB Vice-President Ernest Blom, IDMA Vice-President Stephan Fischler, World Diamond Congress Chairman and CEO Eli Izhakoff, WFDB Treasurer-General Dieter Hahn, Israel Diamond Exchange President Avi Paz, Israel Diamond Manufacturers Association President Moti Ganz and Chairman of the Congress Organizing Committee Yair Sahar.
The event was moderated by Israel Diamond Institute Managing Director Efraim Raviv. Yair Sahar greeted the participants and said that because of the major changes in the world diamond industry; this Congress is different than its predecessors. “This is the first Congress to bring together all of the players in the world diamond industry – including diamond producers, bankers and jewellers. This is a historic change.”
Delegates and representatives from all the 26 bourses around the world affiliated to the WFDB attended the Congress. India’s Bharat Diamond Bourse was represented by a delegation comprising Anoop Mehta, Mehul N. Shah and Harshit Kothari. In the Jointly held IDMA conference, India was represented by Vasant Mehta and Nirmal Kumar Barmecha. Myself (Alok Kala) and Gunjan Jain were official representatives of the trade press.
Minister Yishai emphasized the importance of the Israeli diamond industry in the nation’s economy.
Clean Diamonds Guaranteed :
“Economic profitability must go hand in hand with respect for the environment and due regard for the people working within or alongside the company in question and for the community at large. Such as approach generates long-term gains for businesses and for society. I warmly applaud the efforts of the WFDB to promote the importance of ethical business in the diamond trade,” said Flemish Minister Fientje Moerman adding that initiative to launch the WFDB Quality Mark and the stringent Code of Practices will guarantee to the consumer that he or she has purchased a diamond that is free of conflict, child labor, environmental harm and money laundering.
IDMA President Jeffrey Fischer posed several questions for the industry. “Why do some object to beneficiation? Why do we fight against each other, rather than unite and wage a battle together?” he asked. IsDMA President Moti Ganz said that six months ago the association celebrated its 60th anniversary in the same hall. “We are realizing the dreams of the founders, reaching exports of over $10 billion in polished and rough diamonds,” he said. Ganz also added that Israel has become an important trading centre for rough diamonds, and that rough exports from Israel have tripled in the past five years.
IDE President Avi Paz said that the world economy undergoes frequent changes, which force the industry to be flexible. These changes require strong ethical practices – from the mine to the shops. “We need to help the world to be a better place. I view the work of the DTC in strengthening the diamond very positively. I call on all of the other producing companies to follow the DTC’s model – which has contributed to the profitability of the global diamond industry,” he said.
Membership for Moscow Bourse :
The World Federation of Diamond Bourses accepted the Moscow Diamond Bourse into its ranks, during a meeting of the WFDB General Assembly. The decision was unanimously approved. The Moscow Diamond Bourse, which is privately owned, is the second Russian bourse to be accepted into the WFDB, joining the Diamond Chamber of Russia, which is owned by Alrosa and is also located in Moscow. The Moscow Diamond Bourse currently numbers 36 members, and its President is Lev Polyakov. It trades mainly in smaller goods and works largely with medium and small sized clients. Upon being accepted into the WFDB President Polyakov said that the new exchange would help develop the diamond and jewellery sector in Russia and the region.
A reception for all the diamantaires and industry leaders from over 30 countries was sponsored by Aber Diamond Corporation and Harry Winston at the Tel Aviv Hilton Hotel at the World Diamond Congress opening cocktail reception. The reception was opened by Yair Sahar, Chairman of the Congress Organizing Committee, who said that the deliberations of this Congress would have a critical impact on the world diamond industry.
Legal Action Against Violations :
The global gathering was informed that the Mark would help assure consumers that diamonds sold by WFDB members are free of conflict origins, free of treatments, and cut in facilities that adhere to internationally recognized wage and safety standards. The WFDB has legal power to pull up members who violate these codes. Instituted in 1947, the WFDB provides an internationally recognized legal framework for the diamond trade, on the basis of which it can impose sanctions such as fines and expulsion. The Federation will first educate its members on the requirements for using the brand mark; eventually, it plans to launch a consumer campaign. Initial funding will come from increases in each member bourse’s assessment to fund WFDB activities.
Synthetic Certification Accepted :
The assembly also accepted the certification of synthetic diamonds under “stringent conditions” in response to the Gemological Institute of America’s announcement that it plans to grade gem-quality synthetic diamonds in its lab.
WFDB New Appointments
The WFDBs General Assembly unanimously elected Ernest Blom, Chairman of the Diamond Club of South Africa, as its next President. The elections took place during the first working session of the World Diamond Congress in Tel Aviv on June 27, 2006. Blom, who was previously WFDB Vice-President, replaces Shmuel Schnitzer, who stepped down after two successive terms. The general assembly honored outgoing president Schnitzer by bestowing upon him the honorary life presidentship of the WFDB.
Blom Points to Many Challenges :
Blom said that he was thankful for the achievements of the WFDB to date, and that he would be looking to expand the organization’s horizons. He added that the world diamond industry is facing many challenges, and that by working together the organization can bring beneficial returns to all members.
Maintaining Faith :
The project to which Blom specifically referred is the WFDB Mark. Earlier, the General Assembly was provided with a detailed report, which described the preparatory work that has been done on the project, and noted that the necessary components are in place and the WFDB Mark is ready to go.
Israel Diamond Exchange President Avi Paz was unanimously elected as WFDB Vice-President. Michael Vaughan, secretary-general, and Dieter Hahn, treasurer-general, were re-elected. Three additional members of the executive board were also elected: David Marcus of the Diamond Club West Coast; Freddy Hager, President of the London Diamond Bourse & Club, and Sergei Oulin, Chairman, Diamond Chamber of Russia.
Industry Matters on Anvil
The second day of the World Diamond Congress offered attendees a full schedule of events, for addressing major issues of concern in the diamond industry: synthetics, profitability and Conflict Diamonds.
First, the World Federation of Diamond Bourses ratified a resolution on the certification of synthetic diamonds.
Liberalization in Russia :
ALROSA President A.O. Nichiporuk also addressed the World Diamond Congress. He disclosed that the ALROSA Company, is undergoing now a series of significant changes. Its equity structure is changed to enlarge the Federal Government share. The Government is to obtain the controlling interest (50% + 1 share). The capitalization of the company is to go up, as its production facilities, that were formerly rented from the Republic of Yakutia, have become company property, and its financial resources are to grow as well.
While previously such attention of the state meant constraints for the diamond business, now it takes active measures to liberalize the industry. This has opened the door for ALROSA to the world market and relieved restrictions imposed by state secret laws. At present, with the view of WTO entrance we expect diamond export quotas and customs duties to be abolished. Thus, artificial barriers between the Russian and international markets will be removed.
Last year, ALROSA launched its own independent sales strategy. It provides for establishing a stable customer structure and opening sales offices in major diamond centres. We have already opened our subsidiaries in Antwerp, Hong Kong, Dubai and Geneva. We have started this work in Israel and the USA.
ALROSA is now establishing a monitoring centre for synthetic and treated diamond technologies and identification methods, in co-operation with a number of Russian academic institutions.
Regulation of Market Supply Needed :
The current situation in the diamond market is far from being simple. Some producers have accumulated redundant polished stocks while exhausting bank credit lines. Demand for rough diamonds has slightly lowered.
In a situation when polished sales fall behind rough purchases, lots get discounted thus causing general market uncertainty.
Probably, what we need is a regulation of market supply with a flexible price.
Multiple Crunch :
In a joint session of the Congress which took place later in the day, Lev Leviev, the largest private diamond producer, addressed the lack of profitability in the industry and questioned why the middle sector is always hit hardest. “Why are diamond producing companies increasing the prices of rough diamonds and why does today’s diamantaire suddenly have to market his diamonds? I don’t know a single manufacturer today who earns money,” said Leviev.
Leviev also underlined the difficulties of diamond manufacturers. When selling goods to large chain retailers, they order on consignment and pay only once they are sold. The process can take as long as one year before manufacturers receive payment, if at all. The goods demanded by retailers are specific and when they are not sold, large retailers often return different goods to the manufacturer.
No Expansion, Stagnation :
The diamond industry is not expanding and diamantaires are not making profit, Leviev said. He recommended that manufacturers cut and polish their diamonds in a country where rough diamonds can be obtained easily. Additionally, Leviev urged producing companies to provide credit to manufacturers and categorize the goods for manufacturers so that buyers can build their own independent markets.
The impact of the upcoming Warner Bros. film “The Blood Diamond” drew strong reaction from the audience. Eli Izhakoff, President of the World Diamond Council addressed the issue of Conflict Diamonds and the upcoming movie. Izhakoff reassured attendees that the WFDB performed ‘very well’ with regard to filtering out Conflict Diamonds in a three-year review undertaken the ad hoc committee of the government of Canada.
Combating the ‘Conflict Stigma’ :
Izhakoff maintained that the industry should not direct its fight towards the film, but rather to ensure that the industry educates retailers, consumers, and the media about industry measures in place to keep diamonds conflict free.
“We lowered the per centages of Conflict Diamonds in the world trade to less than one per cent,” he said. Izhakoff suggested an educational program geared to retailers so that when a consumer asks if they are buying a clean diamond, the retailer can provide a document that says the diamond is 100 per cent conflict-free. Izhakoff unveiled the council’s soon-to-be launched website at Diamondfacts.org. The website was set up for the purpose of answering consumer and retailer questions regarding Conflict Diamonds.
Jonathan Pudney, of the World Diamond Council, added that the success of the Kimberley Process and its system of warranties, “while not perfect, has helped stem trade in Conflict Diamonds.”
“Consumers want to know the industry cares about this issue. They want to know that when they are purchasing a diamond they are not buying a Conflict Diamond,” Pudney said.
Consumers should be taught about the Kimberley Process and the continuing efforts of the diamond industry towards fighting Conflict Diamonds, Pudney added. He named four actions the Council is willing to undertake on the issue:
1) Outreach to the film industry,
2) Outreach to media with core message,
3) Creation of fact based website,
4) Development of educational materials for trade concerning Conflict Diamonds
Penny spoke of the need to celebrate diamond industry success stories including the fact that it employ approximately 10 million people world-wide, that Jewellers for Children recently raised $5 million to help the needy, and that diamonds generate more than $8 billion a year in revenue to Africa.
“The entire industry must be champions for the good that diamonds do and sell the diamond dream,” said Penny.
De Beers plans to spend $15 million during the upcoming six months in order to educate the public on diamonds, he added.
Gareth Penny’s Call for Unity :
In a Joint Session of WFDB and IDMA at the World Diamond Congress on June 28, De Beers Managing Director Gareth Penny presented the opportunities and dangers resulting from recent changes in the global industry.
Penny called on diamantaires to unite. “We need not compete against each other; we need to compete against other luxury items,” said Penny. “We must concentrate on selling the dream. Diamonds aren’t bought for their physical qualities, but for what they symbolize.”
Penny stressed that if their reputation and image are damaged there will be no reason to buy diamonds. The movie “The Blood Diamond” is a threat to the diamond’s image, he said, and its timing, which will coincide with the Christmas season, can have a significant detrimental impact on sales during this time.
Penny said that De Beers would invest $15 million in education and public relations efforts in the months ahead in order to make the public aware of the existence of the Kimberley Process and the contribution of the diamond industry to African economies. “The entire industry must stand behind the Kimberley Process and its implementation,” he said.
In relation to current difficulties in the industry, Penny said that after four very profitable years, the global market is now undergoing a “correction”. He said that the opportunities were great, and that new markets should be developed and expanded. However, he said, the industry must work together to meet the challenge to its image. “Let’s all unite and work together,” he said.
During the session Tom Moses, Senior Vice-President of the GIA, also spoke about the laboratory’s efforts to deal with the issue of consumer confidence. Zeev Leshem, CEO of Sarin, detailed the company’s activities and targets.
Eli Izhakoff, Chairman of the World Diamond Council, presented along with Jonathan Pudney of the DTC, the efforts undertaken for creating an educational campaign to educate retailers and consumers about industry efforts to combat Conflict Diamonds.
Responsibility … because it’s the duty of everyone in the pipeline – and not just the DTC – to ensure our industry continues to enjoy sustainable growth. Service … because this growth depends on understanding the needs of consumers and market players, by becoming ever more service-oriented.
I’ll describe what’s been done so far … and what remains to be done in the fields of marketing, maintaining consumer confidence, and of ethical behavior.
She said, “We all need to recognize our responsibilities, and the role we can each play in strengthening our industry’s growth and creating consumer demand for the product that sustains us all. Encouraging this growth involves a whole range of activities, and I am not simply talking about advertising and marketing. Vitally, I mean finding ways to differentiate diamond products and services and improving business standards.
We live in a world of competition, innovation, and partnership. And we all need partners to help grow and develop our industry. The bottom line is that while our core product – the diamond – is forever; our industry itself must certainly evolve.” She also spoke about the changes, the past and the future of the industry and what role the DTC would play.
From economic volatility to competition from other luxury goods, from synthetics to Conflict Diamonds, to pressures on industry pipeline, there are many challenges and threats to be reckoned with. For mid-stream cutters and polishers, there is the additional challenge of fragmentation in manufacturing, which arises from the requirements of producer countries to add value to locally-mined diamonds, a trend that will continue growing.
Make Diamonds the First Choice :
She added that, “In the minds of today’s consumers, diamonds vie for attention with luxury holidays, Prada handbags and other glamorous experiences. So we must ensure diamonds will always be the first choice. We need to invest more in “diamond equity” – the underlying emotional mystique that diamonds carry. Partly, that means preparing for the potential impact of synthetics. Consumers must feel that when they buy diamonds they are getting the real thing — naturally formed billions of years ago.”
She called upon the industry to act together in facing challenges; to be more consumer-oriented; and innovative.
Oppenheimer said that diamonds are one of the most important natural resources in Africa, and that they contribute to an improved standard of living in many African countries. “Beyond being a symbol of love they are beneficial to the local populations,” he added.
The De Beers Chairman said it was important not to become complacent because there were hardly any more armed conflicts in Africa. “The Kimberley Process is a huge accomplishment. However, I have no doubt that in the coming months there will be a great deal of criticism leveled against the industry – and we therefore need to insist on stringent enforcement of the Kimberley system.”
“We owe this to Africa – to which many of us owe our wealth,” Oppenheimer concluded.
The IDMA General Assembly unanimously re-elected Jeffrey Fischer for a second term as President. Also elected were Vice-Presidents- Eduard Denckens, Belgium; Moti Ganz, Israel; Maxim Schkadov, Russia; and Vasant Mehta, India. Stephane Fischler was re-confirmed as IDMA Secretary General and treasurer for a fifth term.
A very frank and informal discussion was conducted with Varda Shine, DTC’s Managing Director. The IDMA’s leadership suggested that the DTC remind its clients that meeting their financial obligations to the trade is an integral part of ‘best practice principles’. It was also decided that IDMA’s secretary general will contact all other producers to convey the same message.
During a session on laboratories, the GIA gave the first ever preview of the organization’s grading report for synthetic diamonds, which can be differentiated easily from reports issued for natural diamonds. Pointed discussions followed with the GIA, IGI, HRD, GCAL, and EGL about synthetics grading and nomenclature.
Also on the agenda was, establishing a process whereby a minimum standard would be set for diamond grading laboratories to be recognized as such by the trade. A committee was formed under the auspices of the International Diamond Council (IDC), which is charged with initiating a discussion with all the grading labs to define and harmonize such standards. IDMA reminded each lab of their commitment to maintaining consumer confidence.
During a presentation by Michael Rae, CEO of the Council for Responsible Jewellery Practices (CRJP), IDMA was invited to adopt a consultative role in helping the organization develop their policies and procedures, with a view of eventually joining as a full member. IDMA voted to participate in this capacity.
Industry analyst Chaim Even-Zohar led a discussion on anti-money laundering procedures, during which, ways to improve the practical implementation of AML practices throughout the industry were reviewed. The President also stressed IDMA’s commitment to the Kimberley Process and its system of warranties.
IDMA’s Ben Kinzler and Martin Rapaport presented a report on the Diamond Development Initiative (DDI), which aims to improve the lives of artisanal diggers. IDMA reiterated its commitment to the efforts of DDI and pledged its continued support and active participation in this ambitious, essential and humanitarian initiative. The Canadian Manufacturing Association (CDMA,) which had applied to become IDMA’s13th member organization, participated as an observer pending full membership at the next Congress.
The movie that will soon be on the screens will portray what lies beyond the scenes and sparkle of diamonds. What the media wants to show is reality and facts.
Diamonds are very precious... they are a symbol of engagement, creating the “foreverness” of the relationship through the eternal presence of a diamond. They say that Diamonds are a girl’s best friend. But, before you buy your beloved a diamond, do give a thought to this, please. Did you also know that the diamond trade indirectly pays for civil war in countries like Sierra Leone, Liberia, and Angola? These countries are at war all the time, their economies are in shambles, and this is what happens. The armies force people to work at below slave wages to extract the diamonds from the earth. These diamonds are then sold to shady middlemen...and several months and many countries later, the end customer has no clue as to the origin of the diamond!
DeBeers have come under pressure from their customers to certify their diamonds regarding their tracking and sourcing... but a whole lot is “laundered” so, while there’s no harm in buying a rock, it’s unto an individual’s personal integrity to verify its antecedents. How many of us want to contribute to funding a civil war? Do we even give a thought to the meaning of Conflict Diamonds or Blood Diamonds?
A Conflict Diamond (also called a Blood Diamond or a War Diamond) is a diamond mined in a war zone and sold, usually clandestinely, in order to finance an insurgent or invading army’s war efforts. Non-governmental organizations such as Global Witness have also alleged the use of these diamonds in financing the September 11, 2001 monstrous attacks on USA.
The issue of Conflict Diamonds has been a subject of speculation and movies have used it in their plots to bring out the reality before the masses. In the 2005 film, Lord of War, much of the plot centred around the sale of arms to Liberia, financed by Conflict Diamonds. A large part of the plot of the 2002 James Bond film Die Another Day revolved around smuggling of Conflict Diamonds. For many people, this was their first mainstream exposure to the term and the concept. The topic of conflict diamonds was also the subject of an episode of Law & Order, titled “Soldier of Fortune”. Blood diamonds were the main theme of the 2004 Australian /Nigerian film Death is a Diamond.
Rapper Kanye West touched upon the issue of Conflict Diamonds in a song titled “Diamonds from Sierra Leone”, found on his sophomore album “Late Registration”. Another rapper by the name of Lupe Fiasco has a song named “Conflict Diamonds”.
Rapper Talib Kweli hit on the issue of Conflict Diamonds in Sierra Leone in his song “Going Hard”, which is on his album “The Beautiful Struggle”. In the 2004 computer and video game Grand Theft Auto: San Andreas, set in 1992, advertisement of the Ammunition firearms store chain can be heard in ammunition stores, stating that buyers can purchase goods with Conflict Diamonds. The Malaysian author John Ling has released the short thriller, Diamant and a non-fiction essay to raise awareness of this issue.
The latest buzz is about the film - The Blood Diamond starring Leonardo DiCaprio scheduled for late 2006 release that is about a diamond smuggler in a conflict region. The movie has made the industry wake-up and take notice. The issue has been prevailing in the industry for a long time but the movie on Blood diamonds has alerted the diamond fraternity and they have risen from deep slumber of lethargy and fake ignorance to the true meaning of diamonds. We need 1980s to understand that there is much more to a diamond than the 4 Cs....Cut, Color, Clarity and Carat...also it either pays for someone’s education ...or their death! So make sure you don’t have blood on your hands!
“It has been said that war is the price of peace… Angola and Sierra Leone have already paid too much. Let them live a better life.” -Ambassador Juan Larrain, Chairman of the Monitoring Mechanism on sanctions against UNITA.
So now what can be done is the big question today. How can you trace the diamond back to its history and find out where it came from, how many hands has it passed through and if it was used to fund wars?
A well-structured ‘Certificate of Origin’ regime can be an effective way of ensuring that only legitimate diamonds — that is, those from government-controlled areas — reach the market. Additional controls by Member States and the diamond industry are needed to ensure that such a regime is effective. These measures might include the standardization of the certificate among diamond exporting countries, transparency, auditing and monitoring of the regime and new legislation against those who fail to comply.
The UN has been attempting to implement certification procedures to decrease the number of illicit diamonds on the world market for a long time. On July 19, 2000, the World Diamond Council adopted at Antwerp a resolution to strengthen the diamond industry’s ability to block sales of Conflict Diamonds. In 2002, the UN approved the Kimberley Process scheme aimed at preventing Conflict Diamonds entering the market. On July 29, 2003, US President George W. Bush signed executive order 13312, a furthering of earlier executive orders 13194 and 13213. Its preamble contains this statement:
“In response to the role played by the illicit trade in diamonds in fueling conflict and human rights violations in Sierra Leone, the President declared a national emergency in Executive Order 13194 and imposed restrictions on the importation of rough diamonds into the United States from Sierra Leone. It expanded the scope of that emergency in Executive Order 13213 and prohibited absolutely the importation of rough diamonds from Liberia. I further note that representatives of the United States and numerous other countries announced in the Interlaken Declaration of November 5, 2002, the launch of the Kimberley Process Certification Scheme (KPCS) for rough diamonds, under which Participants prohibit the importation of rough diamonds from, or the exportation of rough diamonds to, a non-Participant and require that shipments of rough diamonds from or to a Participant be controlled through the KPCS. The Clean Diamond Trade Act authorizes the President to take steps to implement the KPCS.”
The image of the industry that may be tarnished by the movie is what was discussed in detail at the Congress and how to combat the issue was the central theme.
Next Destinations :
The WFDB General Assembly confirmed Amsterdam as the location of its Presidents Meeting in 2007 and Shanghai as the site of the 33rd World Diamond Congress in 2008. Then Moscow will be the next venue in 2010.