On the eve of the Antwerp World Diamond Centre’s (AWDC) diamond conference, which will display Antwerp in its full glory, it is kind of amazing to reflect on what has happened in the city on the Schelde in just a little over a year. It was not so long ago, in January 2006, that Belgium’s Premier, Guy Verhofstadt, delivered an earthquake when he declared that the board of what was then still called the Diamond High Council (HRD) was not properly constituted and needed to be reorganized.

The Belgian diamond sector was so vital to the economy of the country that the nation’s federal premier, together with regional government leaders, personally intervened to restructure the umbrella governing body of the diamond industry.

A New Vision
In May 2006, the HRD board, chaired by Jacky Roth, brought in former diamond banker Freddy Hanard as managing director of the HRD to restore tranquility and re-launch the organization, to give it a new vision and a renewed lease on life. Days after the appointment, a series of protocols were signed with the government, which included many technical items such as the social levies, the one-time stock revaluation, issues related to transfer pricing and anti-money laundering, free trade area, etc. The protocols did not provide a clear blue-print of the Antwerp of tomorrow.

It was up to the incoming team, together with the new 12-member board of directors, to find a new vision. They were facing a changing industry with increasing competition from other emerging centers to which some offices relocated. They were facing an industry of people who weren’t clear about the direction in which Antwerp was heading. The breakdown of dialogue with the judicial branch had seriously shaken tranquility.

Freddy Hanard accomplished the scheduled reorganization and splitting up of the HRD into two organizations: the non-profit, mainly promotional Antwerp World Diamond Centre (AWDC), and a commercial arm, HRD Antwerp NV, a fully owned affiliate of AWDC that focuses on selling certificates and educational programs. The AWDC now employs a staff of some 100 people, while HRD Antwerp has an additional 210 employees. With a characteristic banking approach, Hanard brought the organization’s finances into balance and appointed a new set of senior executives.

The most difficult challenge was to develop and get broad support for a new vision for Belgium. In a reversal of previous policies, a renewed emphasis was placed on internationalization. The AWDC became a brand in itself that was marketed around the world. The organization’s main “export” products are the HRD certificates and the various gemological educational programs, beyond the generic promotion of the city’s industry.

Hanard understood and together with his newly appointed HRD Antwerp general manager, Georges Brys – a former Bekaert top manager, he adopted the time-honored model of the Gemological Institute of America (GIA): by organizing gemological courses around the world, you widen the market of users for the GIA certificate product. Both are trying to do the same thing for the HRD Antwerp certificates. Within a few months, the HRD Antwerp opened representative offices in India and Shanghai, promoting the HRD certificates.

In an ambitious move, industry purchasers of the HRD certificate will also have access to a range of HRD support services. Hanard wants to make it worthwhile for companies to sell only diamonds with HRD certification.

Efforts in Israel to develop its own certification laboratory were countered by the establishment of an HRD Antwerp drop-off (drop-off point) in the heart of the Ramat Gan diamond exchange, where, for minimum money and maximum speed, HRD certificates are issued. Just like the GIA, the HRD Antwerp has also targeted Israel as a market in which to launch gemological education programs, reaffirming the perceived – but proven – link between a person’s education and his choice of certificates.

The generic promotion of Antwerp is now taking place through participation in at least 13 annual jewelry exhibitions around the world, and the number is growing. But the real, long-term vision of the Antwerp of tomorrow is really “hidden” in the forthcoming diamond conference.

Changing Distribution Models
The Antwerp Diamond Conference is focusing on beneficiation policies. In the narrowest sense of the word, beneficiation refers to diamond manufacturing in producer countries. In a wider sense, it involves the development of trading and marketing infrastructure, support services, financing institutions, downstream jewelry manufacturing and retailing, etc., in the African producing countries.

The rough distribution function that was traditionally assumed by De Beers in London has now fallen away. These tasks are now assumed by a number of different country organizations in Africa. The matching of getting the right rough into the hands of the right factories is, if anything, becoming more complex. In the short and medium run, the Antwerp market is going to become far more central in playing a role in this – and it will partially fill the vacuum created by London’s falling away.

For beneficiation to be successful, it will need the skills of the rough traders in order for the factories to secure needed supplies. As the local country Diamond Trading Companies (DTCs) seem determined to divide a minimum amount of rough among (too) many license-holders, virtually all the African factories will end up being “hungry” for rough. Antwerp will have to fulfill this appetite. Freddy Hanard recognizes the aspirations of the African producer countries and views this as an opportunity for Belgium. This is the focus of the Antwerp Diamond Conference.

While some Antwerp traders seem concerned about the policies of the producer countries, Hanard appears to put everything into perspective. He recognizes that there is a renewed role here for Antwerp, especially since the ability of De Beers to fine-tune rough allocations globally has eroded, if not largely dissipated.

It may take up to a decade or more for active, efficient marketing structures to be developed in a whole range of different countries. What is needed is time and money. Freddy Hanard realizes that the very success of these African beneficiation policies depend on the input of Antwerp.

In a way, with its current board, the AWDC is establishing wider roles for the Antwerp diamond industry. The single-greatest competitive advantage that De Beers enjoyed in London was its ability to deliver to the market excellent assortments, consistency of sorting, and it had the critical mass of rough to enable creation of very marketable parcels. None of the producing countries alone will have the critical mass either to do the same or to have a global orientation in how to bring rough to the most natural parties for processing.

Antwerp will continue to have that critical mass and it may well be the only place to have it. While the focus on certification and promotion are very much geared toward the polished markets, retailers and consumers, the Antwerp Diamond Conference signals Hanard’s determination to pursue no-less-ambitious goals in the rough market.

The man has hardly been on the job for a year-and-a-half, and I was among those who had initially regarded Freddy Hanard as a temporary, transitional manager. I must have been wrong. If this is what a transitional Hanard has been doing, just imagine what he might accomplish if he sticks around. The AWDC (HRD) is certainly giving the industry every penny’s worth out of its budget. No pun intended.