The Gems and Jewellery Export Promotion Council (GJEPC) celebrated its 50th anniversary of its existence with a 2-day (19th & 20th Mar. 2017) International Diamond Conference 'Mines to Market' at Grand Hyatt in Mumbai. The highlight of the event was the special video of The Prime Minister of India Shri Narendra Modi during the Gala dinner on Day 1 where while congratulating the GJEPC on its 50thAnniversary and acknowledging its efforts to make India one of the largest diamond cutting and polishing hubs, he expressed his desire to make India as the world’s largest diamond trading hub. He said the industry has tremendous potential to grow and that the industry is the original example of Skill India. The Prime Minister also assured the African countries for skill development in gems and jewellery sector in their countries.
Speakers and representatives from mining companies, leading retail chains, banks, diamond manufacturers, and other prominent delegates from all across the world, global stakeholders of the diamond pipeline, too, made a beeline to be at the conference, which promised clarity on a wide range of issues before the global diamond industry that was to be discussed with exchange of opinions by experts.
The Conference was inaugurated by Chief Guest Hon’ble Shri Piyush Goyal, Minister of State for Power, Coal, New & Renewable Energy and Mines, Government of India. Praveenshankar Pandya welcomed the Minister, as well as the other dignitaries sharing the dais including Hon’ble Walter K. Chidakwa Minister of Mines and Mining Development, Republic of Zimbabwe; Paul Rowley, Executive Vice President Global Sightholder Sales, De Beers; Andrey Polyakov, Vice President, ALROSA; Stephane Fischler Antwerp World Diamond Centre (AWDC); and other dignitaries for a fruitful and though provoking two-day conference. He also expressed hope that the Indian government would support in the exploration of the diamond mines like Bunder and Chattisgarh that will help the industry to prosper and grow.
Addressing the audience, Shri Goyal expressed satisfaction at the growth rate of the Indian industry, more so as it impacted several lives in Africa, India and businesses all over the world. Assuring the government's support, he said that the industry and the Government should work together in partnership on the basis of trust. He went on to say that the industry has to transform itself in many ways. About the mining possibilities, Shri Goyal said that at present it is allowed to anyone to come and explore prospective diamond mines but mining licence will be allotted only after the results of the exploration. He urged the Indian diamantaires to get involved in the exploration process as well by hiring the best talent in the world. In an encouraging push, Shri Goyal added, “The time has come for India to lead the world and not to follow it,” and said that the industry should map out further growth for itself.
A rather emotional speech by Mr Walter K. Chidakwa Minister of Mines and Mining Development, the Republic of Zimbabwe on the need to alleviate poverty and to create opportunities for the poor children of his country seemed to touch the souls of those present in the hall. Mr Chiwada called upon the global industry, including India, to help his country use the potential available. He passionately requested India to help his country by providing technology and training and become diamond manufacturers, jewellery manufacturers, which will help in creating jobs, provide health care and education to the poor population of his country.
Speaking on the current situation of the Indian industry, Russell Mehta, Vice Chairman, GJEPC said that the diamond industry is the original “Make in India” industry, growing from polished diamond export of a meagre $17 mn in 1999 to $17 bn in 2016 representing 75% of the world market by value. He added that efforts were ongoing to keep synthetic segregated from the natural diamond pipeline; transforming the industry to a cashless, compliant and transparent diamond trade in line with the “Swachh Bharat” campaign of Shri Modi.
David Bouffard Vice President, Corporate Affairs Signet Jewelers Ltd explained the efforts his Company to ensure product integrity demanded by their customers. Stressing the need to track back the supply chain and ensure that it was “clean” all the way, Bouffard said that his company depends wholly on RJC certification.
Rohan Shah, legal luminary and specialist in international laws and compliances spoke on all the various laws globally that the diamond industry was subject to. While outlining the implications of all the laws, he stressed that the industry was now functioning in an era where full compliance was a necessary condition to conducting one’s business.
The Diamond Producers Association (DPA) plans to drive demand, especially among the millennials held the total attention of all present at the Conference, given that the slowdown in demand has hit the global diamond industry hard in recent times.
DPA CEO Jean-Marc Liberherr's announcement that preparations for the India-centric generic promotions to be launched in September this year, and that the research and field work which was being carried out by Ipsos had just begun.He added the creatives done by the agency Bartle, Bogart and Hegarty (BBH) will be unveiled at the IIJS this year, which brought good cheer and confidence to the industry members
Stating that the DPA campaign in the US had achieved a lot, even with a limited investment, Lieberherr said that ‘Real is Rare’ is not a DPA platform but one for the entire industry. He hoped that trade associations, individual companies and brands too would contribute to spreading this message. Confirming that DPA Board had approved an expanded budget for the 2017 promotions, he said that a campaign in the Chinese market would be launched in 2018.
Chaim Evan-Zohar, a veteran industry analyst and journalist, who was also the moderator of the conference, addressed many issues in his presentation, prolonged unprofitability in the midstream; unprecedented price and supply volatility; and synthetics making in-roads in retail stores; financial institutions exiting the industry; loss of trust in the industry by governments in some centres and many more. Pointing that he midstream was totally squeezed for profits he said that after zero profits in 2015, midstream earned $ 0.9 bn in 2016 and in 2017 the models forecast $ 0.2 bn profit.
While real rough prices have outperformed real polished prices in the last few years, he said jewellery demand had underperformed compared to Nominal World GDP and even the Inflation Index. Chaim urged the Indian diamond industry to negotiate a better deal as it was now a time for “India First”. He said that the diamond producers could not do anything with their output if it was not for India’s financial strengths, labour force, skills, infrastructure, marketing acumen and Government support.
Taking a cue, Paul Rowley, Executive Vice President Global Sightholder Sales, De Beers also appreciated India by saying that India is the heartbeat of the industry. In his presentation, he outlined several key factors like Strong Relationships; Access to Information; Robust and Transparent Finances; Operational Flexibility; Understanding You Own Strengths; and Confidence to operate in an uncertain world. Citing how De Beers nurtured relationships with Namibia and Botswana, he called upon companies to focus on a customer-centric approach. Advising on maintaining a transparent finance system, he said: “One must remember not to over-extend oneself.”
Speaking about synthetics in relation to natural diamonds, Andrey Polyakov, Vice President, ALROSA in his presentation “Defending the True Value of a Diamond”, said that the consumers’ individuality was the driving force of demand today. Pointing out to the immense beneficial impact that the diamond industry has had on economies and countries, Polyakov said, “Synthetics target the socially and environmentally conscious people by creating ‘virtual’ myths,” referring to the various ads put out by synthetic producers. Elaborating on the DPA promotions which emphasize that diamond is a miracle of nature, Polyakov called on the diamond industry to keep the 'Diamond Dream alive'.
Des Kilalea, Director, RBC Capital Markets, spoke about of the supply situation in the diamond industry and said there was no shortage of rough diamond in the near future. Showing that production was set to rise with a couple of new mines coming into production in the next five years and then decrease as old ones decline. Kilalea was also of the opinion that mining was profitable and that margins are strong but skewed within the pipeline.
In his address at the International Diamond Conference - Mines to Market – Martin Rapaport, Chairman, Rapaport Group, was understandably pro-USA in his stance while describing the Indian G&J industry's trade relationship with America. Pointing out that the USA is and will always be India’s most important market, Rapaport in his pro-stance towards the USA said that with Trump at the helm, American demand will grow significantly due to new economic policies. He, however, added that the US government will insist on a level playing field and that India will have to correct its trade practices.
Martin disapproved the fact that India’s import tax on loose polished diamonds and gems is 2.575 percent, whereas the U.S. charges nothing; and that India’s levy on diamond jewellery imports is 31.56 percent whereas America’s import tax was only 5.5 percent. He warned that President Trump will not accept unfair trade ties with large exporters like India and China.
Martin continued his tirade against the Indian industry and said that besides indulging in unscrupulous activities and stacking away black money, Indian industry indulged in malpractices, which eventually lead to funding terrorist activities. He advised the Indian industry to focus on transparency and responsible sourcing.
Questioning the Kimberley Process practices, he wondered how and why rough diamonds leaving UAE are marketed at a significantly higher value than when they enter the country. Even here, Martin accused India of being the reason for the net rough exports from UAE, accusing India of benefitting in all ways.
On the topic of survival in the industry with no growth, Sanjay Kothari, MD, KGK stressed on the need to 'change' according to the global markets and be strong and 'fight' to grow and prosper. Ghanshyam Dholakia, MD, HK Diamonds, in his inimitable style was very positive in his attitude, stressing on the need for diamantaires to focus on the core business and not divert funds on to other industries if they want to succeed.
Linus Koh of the Singapore Diamond Exchange explained how the concept of the exchange was opening out new possibilities in the realm of transparency and easier accessibility to finance and emphasized that the industry should realise that diamonds need to be also promoted as a safe and attractive investment. The three bankers Biju Patnaik of IndusInd, P.N. Prasad of SBI and Kurt Looyens of ABN AMRO, addressed issues related to the bankability of the industry and the amount of finance available given that some of the older banks have left the sector.
Praveenshankar Pandya and Chaim Evan-Zohar discussed how there is too much or too little finance; why small manufacturers find it difficult to secure credit; transaction costs especially because of the ECGC requirement by the public-sector banks, etc.
Finally, the question of Certification gained importance as cases of illegal mixing of natural and synthetic diamonds made the news in recent times. The panellists, including Tom Moses of GIA, Ans Anthonis of HRD and Debbie Azar and Mark Gershburg of GSI, made brief presentations on their labs, on grading and testing machines and certification.
Chaim Evan-Zohar summed up the 2 -day conference pointing out that a key takeaway was the Indian industry had an excellent relationship with the government and this support would help it to address current challenges.
Aruna Gaitonde, Editor-in-Chief of the Asian Bureau, Rough & Polished
