The Israel Diamond Institute Portal has published an exclusive interview with Israel’s Diamond Controller Shmuel Mordechai taken by Iris Hortman and Michelle Moshelian.
Based on the import-export data for Israel’s diamond sector in 2011, how does the Israeli Diamond Industry look compared to previous years?
Total polished diamond exports for 2011 reached some $7.2 billion. Compared to 2010, when polished exports stood at $5.8 billion, this is an increase of 23.5%. This is a very nice number, and this past year’s exports actually surpassed the figures of 2007, prior to the financial crisis.
By quarters, 2011 looked excellent until the start of the fourth quarter – every quarter saw increased polished diamond exports compared to the corresponding quarter of the previous year. The first quarter saw an increase of 46.5%, the second quarter saw an increase of 22% and the third quarter saw an increase of 45.1%. Unfortunately, the fourth quarter wasn’t good and there was a 13% decrease in exports compared to the year before.
In your opinion, how has the rise in rough prices affected Israeli diamond exports?
2011 was characterized by disproportionate prices of rough diamonds and polished prices. The DTC sold its rough diamonds at prices that were disproportionately high to those of polished. Sightholders all over the world, who are committed to buying from the DTC at any price, lost money. The annual summary of Israel’s diamond exports looks excellent and reflects positive numbers but doesn’t tell the whole story.
What was the breakdown of Israel’s export markets?
For the past few years there has been a continual decrease in Israel’s diamond exports to the US. If in the past the US was the main market to which some 70% of Israel’s diamond exports went, today only about 40% of Israel’s total exports go to the US. But along with the drop in exports to the US, there has been a rise in exports to the Far East. I believe that this trend will continue, in light of the slowdown in the US economy.
A list of Israel’s top exporters for 2011 was recently published. What can you tell us about the list?
The published list included 25 companies that agreed to have their data published. In total, 37 companies exported some 52% of Israel’s polished diamond. I’m happy to say that this is a reasonable breakdown and more accepted than in other sectors. 5% of all active companies export 50%, worth $3.5 billion. This is split between many companies. It’s a very positive thing and I hope that in the coming years other large companies will be established here along with the companies that already exist.
You took part in the Kimberley Process session in the DRC. What is your opinion of the solution found for Zimbabwe’s diamond exports?
The issue of Zimbabwe and the Kimberley Process is very complex and took center stage at the meeting. The authorization given to Zimbabwe to export its diamonds created divisions and different camps among KP member nations. The African nations banded together in favor of exports and the some of the other countries opposed it. The meeting in the DRC found a solution for Zimbabwe’s rough diamond exports, not an ideal one but a partial solution. Kimberley Process monitors, Mark Van Bockstel and Abbey Chikane, are supposed to write a report for the KP to be presented at the upcoming meeting in November 2012. Their report is supposed to supply information as to how Zimbabwe has complied with the minimum standards for exporting diamonds.
In your opinion, how will the KP’s green light for Zimbabwe to export diamonds affect the Israel industry?
Allowing Zimbabwe to export rough diamonds won’t have an effect on Israeli diamantaires in the short term. Israeli companies have cut ties with these markets due to the ban on imports from Zimbabwe. Diamond dealers will need to renew trade contacts in the country, which could take time. While the ban was in effect, there were very attractive rough prices. Today, rough prices are as high in Zimbabwe as everywhere else. I believe that the amount of rough diamonds sent to Israel from Zimbabwe will grow, but not in the short term…. maybe in another two years.
Were there any other important developments in the Kimberley Process?
The Global Witness NGO, which was one of the main organizations that took part in establishing the process, decided to quit the KP. As Diamond Controller, I can say that the Israeli Diamond Industry regrets that this group has left the KP. We wrote to them and also published a statement that we believe that the KP, without the NGOs, will be missing something. We hope that at the next meeting, to be chaired by the US, they will rejoin.
In 2011, were there any diamond shipments sent to Israel in violation of the KP? How did the Diamond Authority deal with these shipments?
Shipments of rough diamonds arrive in Israel accompanied by Kimberley Process certificates. Undocumented shipments don’t come in. If one does, it is confiscated. Beyond confiscating the shipment, the companies are fined heavily and can even be taken to court. Last year, happily, there were no such incidents.
What are your expectations and hopes for the Israel Diamond Industry in 2012?
Of course, I hope that this will be a good year, but according to global economic assessments it won’t be as good as 2011. I believe that the first half will be difficult, I hope that after that there will be a recovery. The latest economic crisis lasted 3-4 months, but then there was a recovery. I believe that the present crisis will last longer and that the recovery will be slower.
You are currently dealing with the Israel Police’s investigation into the illegal bank in the diamond bourse. What do you think of it?
The Israeli Diamond Industry must condemn these companies. It’s very important that this activity not be identified with the diamond sector. There are a lot of companies here and many people who work hard and make a living honestly, who shouldn’t be stained. The diamond industry should cooperate fully with the legal authorities. These people can’t be part of us.
