New Deal Shows That Polishing Diamonds In Israel Can Make Financial Sense

The irony was almost palpable this week when Israel Diamond Exchange (IDE) President Yoram Dvash and Shanghai Diamond Exchange (SDE) President Li Qiang signed an historic MoU between the two bourses in Ramat Gan. From now on some Chinese diamantaires will have their large diamonds polished in Israel in a new manufacturing facility that the Israel Diamond Exchange (IDE) and Israel Diamond Institute (IDI) are now building within the IDE complex.

It was one of the areas of cooperation agreed, with representatives of both sides saying that it was a rare case of “globalization in reverse”. “This is a very unusual situation, whereby Chinese diamantaires will send their large diamonds to be polished in Israel,” said Dvash.

It has long been a dream of successive IDE presidents to return diamond polishing to Israel. From the 1940s to approximately the 1980s, Israel had around 20,000 diamond polishers hard at work. With the rise of low-cost polishing centers, particularly India, that number fell sharply, as it did in other centers such as Belgium. Today, there are estimated to be around just 300 diamond polishing workers in Israel. In Antwerp, the figure is similar.

Dvash, who was reelected as president last fall for a three-year term after serving as president of the IDE for two years, has set himself a wide range of targets aimed at bringing back some of the glory days to the Israeli bourse. One of the world’s leading exchanges, the Ramat Gan bourse has been little more than a trading center for the past decade or two. A very important diamond trading center to be sure, but nonetheless a trading center rather than a manufacturing hub. The idea of returning diamond manufacturing to Israel was widely seen as pie in the sky given the high costs of polishing in Israel.

Dvash, however, has been pushing forward with plans to achieve just that. Two polishing centers have been established in recent years for the manufacturing of small and larger diamonds. As Dvash has said on several occasions, when taking into account the savings on shipping and insurance costs, and giving manufacturers the ability to manage the cutting and polishing process up close in total security, processing diamonds locally comes to make sense. There’s also the fact that manufacturing costs are rising in states such as India and China.

“It is testimony to the well-known expertise of the Israeli polishers and the technological advances of the industry here,” said Dvash. “The establishment of our new polishing plant for large stones is part of the technological revolution we are implementing at IDE. Technology is the way to lead the industry on a successful path to the future, especially in light of the recent challenges we have been facing.”

The IDE and IDI are investing over $3 million in building the new plant for polishing large diamonds, which will be the most technologically advanced facility in the world, according to the IDE. The plant will include two polishing centers located within the bourse complex, will measure 1,100 square meters and will employ about 150 polishers. The factory is expected to polish thousands of stones per year ranging in size from 5 to 10 carats and above.

The factory is expected to open in late January 2019, during the next International Diamond Week in Israel, according to the IDE.