Antwerp Symposium: Industry Considering its Fate

Reduction in rough diamond supply, a ban on imports, a call to reduce VAT and even media coverage were discussed in the morning session of the Antwerp Symposium on Monday.

Called as an emergency meeting, the symposium opened with a presentation by Chaim Even-Zohar who told the crowd that a 15 percent drop in sales in North America should be expected in the next 12 months. Sales in Japan and Europe are also expected to decrease, by 5 and 10 percent respectively.

The ripple effect will be a 35 percent reduction in rough diamond demand to just $14.5 billion. Rough diamond prices need to decrease an additional 15 to 20 percent, he said.

Confronted with that reality, the next speaker, De Beers Managing Director Gareth Penny noted that household debt has shot up from 12 percent to 130 percent since 1982. At the same time, personal savings have dropped from 12 percent to almost zero. Diamond reserves are at an all time low and demand is expected to surpass supply by late 2011 or early 2012.

This, according to Penny, should be the industry's long-term perspective. De Beers, in its response to the immediate situation, is reducing production, turning to a maintenance phase at its mines and is focusing on “diamond value management,” he said.

Therefore, the company will offer smaller Sights, is looking at the mixture of boxes and is considering scheduling.

Alrosa President Sergei Vybornov announced that the Russian miner will reduce rough diamond supplies by as much as 40 percent, selling the excess production to the state repository Gokhran. In response to a question from the audience, Vypornov agreed that while this is not a good time to hold tenders, the company uses them to better understand the market.

Surprisingly, diamond jewelry sales in Russia increased by 30 to 40 percent in the last couple of months. At the same time, industry players interested in exporting polished diamonds to Russia complain that taxation on imports and VAT is prohibiting international trade.

GJEPC President Vasant Mehta backed last week’s announcement by the Indian industry to stop importing rough for a month. IDMA President Moti Ganz called on the industry to remember that manufacturers employee nearly a million people and that cutting back production means many lost jobs. He called for increased industry investment in generic advertising to protect these jobs.

In his address, WFDB President Avi Paz said the banks are nervous and acting suspiciously. His call that “We must act together and make sure there is no overflow of rough, we should only buy the rough we need,” was met with a strong round of applause.