Stephane Fischler, President of the Antwerp World Diamond Centre (AWDC), in an exclusive interview to Rough & Polished spoke about the situation in the world diamond market and the priorities of the AWDC.
How do you assess the general situation in the diamond market?
We do not yet have the figures for Q1 of 2013, but for 2012 as a whole Antwerp has again managed to retain its leading position as a trading center. Despite the economic and financial situation that have challenged various sectors of the world economy, Antwerp performed remarkably well in 2012.
While 2011 was a record year for the Antwerp diamond sector, our import and export numbers were only slightly lower than in the previous year. Obviously the economic reality we all face will remain a concern this year.
There are several main challenges: the absence of generic marketing without doubt weighs negatively on our industry's performance; the volatility of the rough market, which we thought would be less of an issue at the beginning of this year, seems to emerge again. The transparency and speed with which information travels is still not grasped properly by a large number of companies; and the risk assessment of the industry by the financial institutions.
Having said that, the diamond industry has been remarkably resilient compared to others. The world economic outlook has still not gained enough traction for us to be able to relax. We are still at the mercy of short-term but potentially destabilizing events. However, current diamond demand worldwide, and especially in countries such as China and India, remains positive. The United States, still the main consumer market for diamonds, contrary to those who not long ago started to discount it, remains remarkably resilient and is slowly gaining strength. The medium-term supply side picture looks positive.
What impact on logistics and the market as a whole can the DTC's move to Gaborone bring about?
The logistical challenge is indeed not to be underestimated. However, returning from a recent short visit to Botswana I believe this issue is fully grasped by both the government and De Beers. It has to be said that Botswana has made remarkable progress in some areas.
In general, I do not see any negative impact on the overall market as such.
What are the advantages of the Antwerp diamond market compared to that of Dubai?
When we look at Antwerp's trading statistics, the picture is very clear. In rough goods, we see that 8 out 10 of all mined diamonds pass through Antwerp. Out of total annual world rough sales of approximately $14.2 billion, Antwerp imports rough diamonds with a value of $11.2 billion. And the total value of all diamonds traded in Antwerp annually is no less than $ 45.3 billion. These are very powerful figures that illustrate the enduring strength of the Antwerp diamond market.
Antwerp is and remains the industry's preferred rough trading hub, and the reason for that is simple: Antwerp has the critical mass necessary to absorb production without negatively influencing the market. Thanks to this critical mass - through the presence of more than 1,850 local companies, unmatched manufacturing skills for the most precious diamonds, coupled with the ever-growing number of foreign buyers, particularly from the Far-East, we can guarantee the best market price. We are the market and partner of choice, for both the rough and polished trade.
At the core of Antwerp's unique trade infrastructure lies the Diamond Office, our in-house customs office that streamlines the vast flow of diamonds in and out of Antwerp. Through a sophisticated system of procedures and controls, Antwerp is continuously focused on maintaining internationally recognized high levels of compliance and transparency relating to AML, KP, and CSR.
On top of the procedures that are customary in our business, Antwerp is subject to an additional compliance layer as a result of EU legislation and regulations.
Although seriously challenged by an absence of a level playing field, we nevertheless believe this is the right choice.
When we see the presence and support of the major rough producers and the industry's bankers, I believe the case for Antwerp is very convincing.
What steps is AWDC taking to strengthen the position of Antwerp?
In February 2012, the Antwerp diamond sector presented its Antwerp Diamond Masterplan - Diamonds Love Antwerp 2020. Based on leadership, innovation and transparency, the plan is a blueprint aimed at consolidating and further strengthening Antwerp's leading position in the global industry.
It is a strategy for growth, aimed at expanding Antwerp's reach in both rough and polished diamond trading. One of the key projects to actively increase Antwerp’s reach is to bring even more rough goods to Antwerp.
We are actively re-affirming long-term alliances with rough producers, Russia in particular, as well as Canada and African countries. AWDC also actively focuses on increasing its global business network, specifically in supporting small and medium-sized producers in the southern African region. This is done, for example, through the establishment of the Antwerp Diamond Tender Facility, a joint initiative of the Antwerpsche Diamantkring, the world’s only dedicated rough diamond bourse, and the AWDC. This is an independent, fully-fledged, Triple A facility that enables companies to tender their goods in the heart of the Antwerp diamond district.
Mining companies of all sizes, both large miners and junior miners, are invited to use this highly secure, state-of –the-art facility to hold their tenders.
And we are seeing a steady increase in the number of both established and new mining companies who are choosing Antwerp to bring their goods to market through tender or direct sales.
Another major initiative, and one that has been highly successful, is the Antwerp Diamond Trade Fair organized by the Diamond Bourse and Diamond Club, and supported by the AWDC, which this year held its fourth edition. In just three years, it has become one of the global industry's major trade shows.
Over the past years, Antwerp continued the yearlong success of the Antwerp Diamond Pavilions on trade fairs across the globe, in Hong Kong, Las Vegas, Mumbai and Vicenza. In our industry trade fairs are still the cornerstone for polished diamond trade. That is why AWDC focuses on further developing the highly successful Antwerp Diamond Pavilions. By doing so we succeed in creating the highest possible participation of our Antwerp diamond companies, collectively promoting diamonds from Antwerp.
In addition, AWDC has directed much effort towards further deepening the excellent trade relationships Antwerp enjoys with China. These efforts will form the basis for new initiatives to be developed and executed over the course of 2013.
Underpinning Antwerp's strengths is a wealth of experience, know-how and craftsmanship. Therefore, one of the pillars of the Masterplan is to continue to develop those assets and position Antwerp even more as the prime centre of knowledge and excellence within the industry. In 2012, in cooperation with Bain & Company, AWDC published two studies about the diamond industry. In "Lifting the Veil of Mystery", we were able to provide unprecedented insight into the complex dynamics of our industry. The second report, “Portrait of Growth", delivers an in-depth analysis of the underlying processes of consumer demand. Both reports were extremely well received and extensively quoted by the international financial community.
Furthermore, a key part of our activities is the provision of tailor-made, facilitating services that can boost the competitive strengths of Antwerp. With the creation of our Anti-Money Laundering & Compliance help desk and the online guide Doing Business in Antwerp, we have created two powerful tools that facilitate trade significantly.
Although it is a serious competitive challenge, we regard another essential component of our work as promoting Antwerp's exceptional status as a role model for ethical and transparent diamond business. Both in the field of Corporate Social Responsibility and in compliance, Antwerp endeavors to translate its commitment to a sustainable diamond business into tangible projects.
As the world's first and foremost diamond-trading hub, providing a secure trading environment remains a key objective in ensuring the future of Antwerp.
Finally, through this growth strategy, the Antwerp Diamond Masterplan aspires to maintain and even steadily increase employment, stemming directly and indirectly from the initiatives it promotes.
More than anything, the Masterplan is an expression of Antwerp's firm intention to go beyond mere theory, setting itself ambitious deadlines to achieve its goals.
Have no doubt, we are very determined to firmly retain and expand our leadership position while cooperating with other centers to strengthen the unique proposition of diamonds.
Alex Shishlo, Editor in Chief of the European Bureau, Rough&Polished
