Richard Wake-Walker, the former director of the Moscow office of De Beers, now heading WWW Diamond Consultants which is providing advisory services to diamond mining and exploration companies as well as government agencies of diamond producing countries including Russia’s Gokhran, gave this interview to Rough&Polished.
Has the first phase of the global economic crisis brought forth a new philosophy of diamond business?
The diamond industry has survived remarkably well following the crash of 2008 and 2009. Prices fell significantly, as you would expect, but the resurgence of prices, especially in rough diamonds, from April 2009 onwards took everyone by surprise. The policy of the Russian State played an extremely important role in this: by not selling at all for at least six months, the world's second biggest producer demonstrated its responsibility and its desire to protect its pricing structure, as well as that of the market. The market does not see that there are too many diamonds being mined and sold at the moment. Even if there is a Phase Two of the crisis, I believe that the diamond industry is in an excellent position to weather the storm.
What is your opinion about the International Diamond Board (IDB) including ALROSA, Rio Tinto, BHP Billiton and De Beers?
In my mind this was never going to work. Each of the companies has its own philosophy regarding marketing. De Beers in particular has never been able to work closely with other producers in a creative and responsible way.
The fact is that, at this stage, IDB has not taken off. While enthusiastic at first, ALROSA, as the second-largest diamond miner in the world, now appears not to be interested in the idea. Yet it must be accommodated due to its importance. How do you believe the idea can be revived? It is difficult. All these companies have different priorities and other problems to consider.
Do you think India and China will be able to increase their diamond jewelry consumption in any significant way in the coming five years or so?
It is well known that India and China are growing fast as consumers of diamond jewellery. These countries, as well as the Middle East and South East Asia will undoubtedly be the engine of growth in the next few years. However, India (which is a bigger consumer than China) has an enormously long way to go before it catches up with the USA which still accounts for more than 35 per cent of all diamond jewellery sold.
Has diamond jewelry marketing in the United States changed in light of its sluggish economic growth?
No, not really. Many diamond companies are looking much more seriously at the Far East for the reasons I have just given. One company I know in Antwerp three years ago used to sell 70 per cent of its polished to the States, and 30 per cent to the Far East. Due to its marketing efforts, it has now switched completely round, so that now it is 70 per cent to the Far East and 30 per cent to America. Many other companies must have developed the same marketing strategy.
Do you see any new ways of marketing or new segments in the diamond market?
Diamond companies should always be doing this. Despite the efforts, now discredited, of the so-called Supplier of Choice strategy, diamond jewellery marketing always appears unimaginative compared to other luxury products.
What do you think about ‘black diamond’ jewelry (and its fakes) which is very popular in Russia at the moment?
Black diamonds are very cheap to produce and I would not think it is necessary to create "fakes". They are polished from boart (the lowest and cheapest category of rough diamond) and industrial qualities. An intensely black diamond is more rare. There is a factory in Cape Town which specializes in polishing these stones. When skillfully set in jewellery next to white diamonds, it can create a very beautiful finished article of jewellery. Onyx, jet, and black sapphires may be sometimes used as a substitute for black diamonds, and it may be these that are sometimes found on the Russian market, being sold as diamonds when they are not.
What can you say about the resignation of Gareth Penny, Managing Director of De Beers? Who may be the new CEO of De Beers?
The resignation had been expected for some time and was no surprise. It always looks better if you leave a company after good financial results. That was not a problem, as in 2008-2009, De Beers' figures were so very bad, any comparison was bound to be favourable. When Penny took over from Ralfe as CEO of the company, De Beers was already in a steep decline. Only time will tell if that decline has been halted, but I doubt it.
Who will take over? The company should bring in an outsider, who can bring a really fresh approach to their declining and tired business.
Vladimir Teslenko for Rough&Polished
