In a speech given without any notes and apparently completely spontaneously, Israeli diamantaire Lev Leviev gave a packed audience at a rough diamond seminar in Tel Aviv a quick history of how his business abroad developed, attacked De Beers and its Supplier of Choice policy, and called on his Israeli listeners to go out get involved in mining.

“Upstream, downstream, middlestream, I’m getting confused by all these terms,” opened Leviev. Diamond offices that hire advertising firms, running all over the world with fancy laptops and presentations, begging retailers to buy jewelry – all this is an effort to preserve or increase a Sight, he said. “I doubt many manufacturers will survive the heavy marketing costs.”

 

In the past Leviev questioned why De Beers was forcing Sightholders to make the shift downstream, saying that diamond manufacturing and retailing are two different businesses that require different types of expertise.

 

Leviev feels the secret to success is not just in lowering costs. Moving manufacturing plants to India, then Thailand, China, and now Vietnam “where you can pay three kilos of rice for polishing,” did not improve profitability from 20 years ago when manufacturing was mostly carried in Israel.

 

“I’m doing well while paying Israeli polishers $1,500 a month,” he said, adding on a somber note, “We have not become rich from the enslavement of the worker.”

 

He told the audience of the time his father reminded him of John Kennedy’s inauguration speech and the line “Do not ask what the country can do for you, ask what you can do for your country”. At the time he was contemplating investing in a plant in Russia for the first time. “The lesson was that if you take that approach and stand by the country during hard times it will pay back in the long run.”

 

That is at the basis of his relations with the Russians, Angolans and Namibians, he said.

 

In Angola, the Russians asked for his help and quickly found that the Angolan President appreciated his efforts when Alrosa was short on cash and that he did not fold his business even when UNITA rebels were firing missiles all around the $100 million, uninsured plant during the civil war.

 

Slamming De Beers again - without mentioning its name - he said the Angolans did not understand why they can’t sort or polish in their country. He said it also happened in Namibia. “But now polishers at the new plant in Namibia are making excellent-excellent makes!”

 

His conclusion was that for the Israeli industry to survive it must share its knowledge with the producing countries and maximize profits.

 

As an example, he suggested that a group of Israelis create a pool of investors and invest in a mine in Angola to secure their rough diamond supply, adding that the Catoca mine is a place where partners work together well. He immediately invited Israelis to talk with Endiama’s President about such a project.

 

“Mining is complicated, but possible. Knowing how to polish is much more difficult…and requires 24 hours a day attention.”

 

He concluded by saying that the “era of fools and suckers is behind us, now we need to grow together.”

 

Israel Diamond Exchange President Shmuel Schnitzer told IDEX Online after the speech that Israeli initiatives to enter mining in Africa are already starting, and “a number of options are being examined”.

 

Schnitzer, who called on Israelis to start looking for new sources of rough when De Beers’ SoC rolled out and many Israeli Sightholders found they were dropped from the DTC supply list, said that looking for a mine together is one possible solution.

 

A source close to Leviev told IDEX Online before the speech that several African diamond producing countries remembered how poorly they were treated by De Beers in the past when they were weak or under colonial rule and remember that insult.

 

The Leviev Group is treating them differently, the source said, by investing and creating jobs and that brought more business.

 

Considering the unhappy murmurs coming from Botswana, De Beers might find itself once again at odds with Leviev, as the negotiations between the world’s biggest supplier of rough and the world’s biggest producing country are dragging out.

 

If the Botswana government is looking around at its neighbors, and it no doubt is, De Beers could expect to hear demands that it make similar investments, if not an outright demand to leave some of the goods in the country.

 

Leviev, for his part, is not planning to rest on his laurels. Canada, the fastest growing source of diamonds, is now in his sights and his group is apparently considering projects in the country.