Ari Epstein, CEO of the Antwerp World Diamond Centre (AWDC) in his interview to Rough&Polished commented on the transition of De Beers to forward rough supply contracts, dwelled on the problems of generic marketing and financing the diamond industry, as well as described the current situation in the diamond market.
Recently, De Beers announced transition to rough forward contracts within the frames of their auction platform. Do you think this may eventually lead to a fundamental change in the distribution of rough diamonds?
What is interesting here is that this announcement coincides with the decision of Dominion to abandon most of their tender sales to long-term supply contracts. It still remains to be seen what will be the most efficient sales method for rough diamond. We believe the most sustainable method is really what matters.
The company also said it would move its auction sales to Singapore, however leaving intact their similar operations in the markets of Antwerp and Tel Aviv. May it happen that the balance of rough sales will be more tilted towards the emerging markets of Asia?
The reason for the movement towards Singapore is really more of a corporate nature than anything else. The main markets remain where they are. Especially Antwerp.
One of the major challenges mentioned by Stephane Fischler, President of the Antwerp World Diamond Centre, in a recent interview to Rough&Polished, was the absence of generic marketing. What is being done by the AWDC to make up for its absence taking into account that diamonds and diamond jewelry are sometimes losing ground to other luxury goods?
We have taken the initiative to launch an in-depth information campaign that offers insights in the dynamics of our industry to financial institutions, financial press and the general public. In partnering with Bain &Co we believe we have managed to create the necessary transparency required to raise the awareness and confidence toward our industry. Nevertheless, generic consumer campaigns remain a critical requirement and we will continue to talk to our colleagues around the world on the best way to kick-start such campaigns.
The banks used to work with the diamond industry appear now to be cautious in terms of lending to diamantaires due to higher risks in the current economic environment. Do you see the ways to mend the situation or find other ways to finance the diamond industry?
Transparency is an absolute must. Financial institutions, especially within the new paradigm of the Basel norms, must be accommodated in their risk assessments. Better and more objective available data is critical. Here again, our collaboration with Bain & Co and the resulting reports are very important tools.
As far as alternative financing is concerned, we are seeing the emergence, albeit still in small numbers, of companies that have found part or the whole of their credit requirement with private investors, the so-called "friends and family". This is a very interesting development. Going for a listing is still very much reserved for the very large players and the issuing of corporate bonds still very challenging and rare.
How do you assess the situation on the world diamond market? What are the main trends?
We are witnessing the results of some very aggressive pricing by mining companies since a couple years. It seems they have finally realized the short-term and destructive nature of their policy. In fact it has influenced the current risk-profile of the industry by the banks. Consolidation will proceed further. All in all, if the industry can re-shape itself around a sustainable model, the outlook looks very positive.
Are you satisfied by the supply and demand of rough and polished good globally and in Antwerp, in particular?
I can tell you that so far, contrary to some reports, our numbers are very strong. Obviously, this doesn't mean we are complacent. We are of course pursuing our marketing drive to create more opportunities for Antwerp and its diamantaires.
What do you think about the expected sale of state-owned shares in ALROSA?
Without expressing any opinion on the rationale behind the decision by the two main shareholders, the Russian and Yakutian government, I believe it is a very positive development. It will strengthen Alrosa as a company through a vote of confidence by new investors.
Alex Shishlo, Editor in Chief of the European Bureau, Rough&Polished
