Moti Ganz, President of the International Diamond Manufacturers Association and President of the Israel Diamond Manufacturers Association, provided the Israel Diamond Institute (IDI) with an exclusive interview posted at http://www.israelidiamond.co.il to share his insight on the Israeli and global diamond sectors.
IDI: How has the year 2010 been for the Israeli diamond manufacturing sector?
Moti Ganz: 2010 was a better year than the previous one. Diamond exports and imports rose and nearly reached pre-crisis levels.
What are your expectations and hopes for 2011 for the Israeli diamond sector?
There is an expectation in the Israeli Diamond Industry that exports will continue to rise this year as well, mainly in light of the growing markets in China and India, which have been the main markets for Israeli merchandise since the global financial crisis broke out.
The Israeli diamond industry also hopes that the American market will improve and that sales to this market will increase this year.
How are tenders affecting the prices of rough diamonds?
It's no secret that I am a great opponent of the tender method, and I've declared that at every opportunity. I'm not alone, and many diamond dealers, especially manufacturers, oppose the tender approach, which causes an unchecked rise in prices in the sector. Given the developments, I don't think the system will be canceled, but rather will continue to operate. This causes rising prices for rough and reduces the industry's profitability.
We often hear complaints of a lack of rough diamond supplies. Does that complaint still apply, and if so, what is being done about it?
There isn't a lack of rough. The large producers are still increasing their mines' production and will continue to do so in 2011. I expect that a satisfactory solution will soon be found to the issue of Zimbabwe's diamonds, and they will also play their part in the global diamond production chain.
The Israeli diamond industry is working to organize a rough diamond sourcing group in order to give the Israeli industry an advantage. According to diamond industry analyst Chaim Even-Zohar, the global retail diamond demand is expected to grow 7.9% in 2011, following a 5.1% decline in 2007. Rough diamond production, meanwhile, is forecast to grow 20% - if not more - to about $15 billion in value. This follows sales of $12.5 billion last year, which saw an increase of some 68% over production levels in 2009 when De Beers cut its production by more than half.
How is the recovery from the global financial crisis being felt in Israel?
The banks still haven't translated this into increasing the industry's credit. The industry's debt to the banking system stood at $1.6 billion at the end of 2010, whereas at the beginning of the crisis it was $2.6 billion. Exports have almost returned to pre-crisis levels, but not the debt. Banks in Israel should increase the industry's "oxygen" credit, including funding to buy rough, and not just exports.
How would you describe Israel’s diamond statistics this year?
The statistics are very good this year, and I'm encouraged by the development of trade for both polished exports and rough imports. The sector is returning to its pre-crisis level and that says that, at least in Israel, we have successfully weathered the crisis.
The Indian industry recently organized its 2nd rough diamond sourcing group. What can you tell us about a similar group planned for Israel?
As chairman of the Israel Diamond Institute, I've asked for preparation of a plan to establish a rough sourcing group. That's already been done and has been approved by the IDI. The details of the plan will soon be presented to the diamond public, and they can use the proposed model or develop a different one.
What is the Israeli industry doing in response to growing competition from China and India, as well as the growing opportunities from these countries?
The Chinese and Indian markets present both opportunity and competition. The Israeli diamond industry can't compete with the polished prices of these centers, at least in certain sizes or qualities. Israeli companies that manufacture there help maintain the industry's base in Israel and don't compete with it. On the other hand, the fact that in these countries there are large local markets is a top-notch marketing opportunity for Israeli manufacturers operating in those places.
Israel chaired the Kimberley Process during one of its most testing times. How has this affected the industry?
The Kimberley Process showed the world how central Israel is to the global diamond industry, as one of the important centers for rough diamonds and polished diamonds. Israel proved that it can contribute a lot to improving the issue of human rights in the diamond sector and lead international processes, despite our geopolitical status.
Thank you Moti Ganz.
By: Michelle Moshelian
