The crisis in the diamond sector has bottomed out, and the industry is now set for renewed growth. This was only one of the messages that were aired by the heads of the industry at the Diamond Town Hall Meeting, organized by the Antwerp World Diamond Centre on June 3, which attracted some 500 diamond merchants and manufacturers who participated in a dialogue with the leaders of the industry. A few days after event, the industry has made a round-up of the most important issues discussed.
“The Diamond Town Hall Meeting was a first for the Antwerp World Diamond Centre (AWDC),” commented Freddy Hanard, the organization’s CEO. “The innovative concept was inspired by traditional town hall meetings where community leaders debate with their constituencies. Such meetings are widely held at times where the flow of ideas and information are of crucial importance. At this meeting, the Antwerp stakeholders were able to understand how De Beers envisions the industry managing through and emerging from the economic crisis and the opportunities that will result in the future”, said Hanard.
In a two-hour question-and-answer session, De Beers Managing Director Gareth Penny first gave a presentation on the state of the industry, during which he stressed that “diamond inventories have fallen to levels which have justified increasing the mining production of the De Beers mines after it had been reduced by some 90 percent in the first quarter of the year.”
Penny told the Antwerp audience that he sees signs of recovery. “The demand for De Beers rough diamonds is picking up”, he said. Apparently, applications for the next DTC sight were well above $700 million. Furthermore, in a clear reference to Botswana, “the De Beers production is increasing to keep pace with demand. Retail sales have also shown an improvement”, noted the head of the world’s largest diamond producer.
Penny presented the audience with a historical DTC rough price trend chart showing that after each of the last four major recessions in the United States in the 1970-2009 period, rough prices have steeply risen in the five years following the recession. With the future of rough prices thus quite certain, the question raised by the audience centered on timing – whether the industry destocking had reached the level to require now significantly new replenishment.
Flanked by DTC Managing Director Varda Shine and De Beers External Affairs and Marketing Director Stephen Lussier, Penny and the De Beers team then fielded questions no holds barred. Answering a question from the Town Hall moderator, trade journalist Chaim Even-Zohar, Penny was unwilling to disclose if the company will raise prices at its upcoming sight, but left sufficient hints for the audience to draw its own conclusions.
“We expect rough [prices] to be more in line with polished,” said Penny. “We are looking at it, continue to monitor the situation.” Essentially this is an issue of stocks and liquidity, he added. Polished diamonds have maintained their prices in the past five weeks.
The De Beers spokesman is convinced that retailers should have worked through their excess stocks and that the 2009 Christmas season will be better than that of 2008. “I think that it’s a pretty reasonable assumption from where we are sitting now,” said Penny cautiously, taking comfort from the rising US stock markets and the improved confidence indices.
De Beers chose Antwerp for this initial Town Hall Meeting as it handles well over 80 percent of the world’s rough trade and over 50 percent of all polished. “After the overwhelming success of this first Town Hall Meeting,” said AWDC Deputy CEO Ari Epstein. “We will plan more similar events like this in the future. This format allows a serious interplay between the industry at large with the captains and navigators of the business and can be organized rather spontaneously when the need arises. In times of crisis, the best service the AWDC can provide is accurate and authoritative information to its members,” concludes Epstein.
Alex Shishlo, Rough&Polished European Bureau Editor
