De Beers Tel Aviv Town Hall Meeting: A Positive Future Ahead

The second diamond town hall meeting held in Tel Aviv gave De Beers an opportunity to directly address Israeli diamond traders, and providing the local traders a chance to ask the company questions about the market.

Following an opening statement by Diamond Trading Company (DTC) Managing Director Varda Shine, De Beers Managing Director Gareth Penny discussed for 15 minutes how the company views the current state of the industry.

Noting that rough diamond stocks and bank borrowing peaked last August, and then saw stock levels decline and borrowing cut by 20-30 percent (and 40 percent in Israel), Penny said that in De Beers’ 121 year history the industry only grew, despite repeated adverse circumstances.

Moderated by Chaim Even-Zohar, a trader asked why Diamdel wouldn’t sell goods for credit, as away to elevate the financial burden off manufacturers’ shoulders. Penny said that the company buys rough from its producers, and therefore sale for cash.

“What would happen if a bank refused to finance the next Sight, another trader asked. “I would be very surprised,” Penny replied, adding that rough diamonds are “a profitable business,” pointing out the Israeli banks, which “stood by players here.”

Answering a question about how De Beers views diamonds as investments, Penny said that while De Beers has historically stayed away from diamond funds, the company has been approached a number of times in recent months by financial institutions and is now re-examining the issue. He noted that one of the problems with such an effort is the lack of a polished diamond price index that is accepted by the industry.

The third and final Diamond Town Hall meeting will be held in Mumbai in July.