Avi Krawitz, would you please introduce yourself and explain the story of your career?
I grew up in Johannesburg, South Africa, where I studied business finance at Wits University. I moved to Israel in 2002 where I live today, while my parents and two brothers are back in South Africa. So I have a very strong dual identity between the two countries, which has come in handy given the diverse nature of the diamond industry and as these are two historically important diamond centers.
But while my background is as a writer rather than having grown up within the industry, I have developed an appreciation for diamonds. I can appreciate why women are so obsessed with them. Who knows, as a single guy that might work to my advantage one day.
How did you come to work for Rapaport Group ? And if you are a newcomer to this industry, tell us about your studies in this very specific field?
My career in journalism and diamonds began in Israel. Before starting at Rapaport in 2007, I worked as a business reporter covering the local hi-tech, tourism & aviation, and financial industries for The Jerusalem Post. However, given the challenges facing journalism today, my feeling was that you have to specialize to survive. While it was interesting to cover such a broad range of topics, I was frustrated that I was learning a little bit about a wide range of topics but was not able to master any one area.
So after leaving the Post, I heard that Rapaport was looking for a writer and I jumped at the opportunity. I met with Martin Rapaport, chairman of the Group, and recognized that I could combine my interest in business writing and gain some in-depth knowledge about a fascinating specialized industry.
From the beginning I found it to be a good match for me. Throughout the years, I have been able to learn a little more with each story I write. But more importantly, I have been privileged to be exposed to the industry in a unique way through my association with Rapaport.
Could you present Rapaport and Diamonds.net to us ?
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Rapaport is an added-value service provider to the diamond industry. Within that framework, the company has developed to include a number of business units that really complement each other and are evolving all the time.
These include the RapNet® Diamond Trading Network, which is a subscriber-based platform in which diamond buyers and suppliers can interact. RapNet has daily listings of over 1 million diamonds valued at $6.6 billion and 12,000 members in 80 countries.
The Information Services division is best known for the Rapaport Price List, which was established in 1978 and is the industry’s primary source for diamond price and market information. The price list is complimented by the monthly Rapaport Magazine and diamonds.net internet portal, each providing essential in-depth updates on industry developments. In addition, the Rapaport Weekly Report and Rapaport Monthly Report provide focused market-related trends and analysis and are being presented in exciting new formats this month.
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“Rapaport is an added-value service provider to the diamond industry. Among Rapaport’s most exciting initiatives is Rapaport Fair Trade.”
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The Rapaport Auctions division conducts single stone, melee and jewelry auctions at various locations around the world. The auctions address the needs of the international diamond community for enhanced liquidity while presenting unprecedented buying opportunities. The Group also provides shipping services for grading diamonds at the GIA laboratories in the U.S. through GIA LabDirect.
Among Rapaport’s most exciting initiatives is Rapaport Fair Trade, which is a leading resource for socially conscious jewelry consumers and members of the jewelry and diamond trade (www.rapaportfairtrade.com). Among the projects within this initiative include the development of a comprehensive source certification.
Rapaport is an “institution” in this industry. Especially with regard to the price of diamonds, if indeed a diamond price index can be published… Could you tell us a bit about diamond pricing and the peculiar fact that there is no “price” for diamonds as there is for other commodities? How do you collect your intel? How has Rapaport acquired such legitimacy?
Every diamond has a price. What differentiates diamonds from other commodities is that there is no uniform price for diamonds in the same way that there is for an ounce of gold, silver or platinum. Therefore, diamond pricing is organized and structured in a unique way.
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Rapaport was the first company to formalize and publish diamond prices in a structured manner. The Rapaport Price Lists quote the Rapaport opinion of high cash asking prices for various categories of diamonds. These prices may be substantially higher than actual transaction prices and it is common for the diamond trade to transact diamonds at a discount to the List.
The Rapaport Price List provides price indications that may serve as a starting point for negotiations and a basis for estimating value for a broad range of diamond sizes and qualities. RapNet on the other hand gives us access to real-time asking prices of over 1 million diamonds listed on the platform. So the RapNet Diamond Index (RAPI™), which we quote in our market evaluations, is based on the most comprehensive and extensive set of data about polished diamonds available on the market.
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“The Rapaport Price Lists quote the Rapaport opinion of high cash asking prices for various categories of diamonds. These prices may be substantially higher than actual transaction prices.”
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So the answer is yes. A diamond index can be published as the market is yearning for reliable price information which the RAPI provides. The trends we see on RapNet are complimented by consistent market intelligence gathering that is conducted in every diamond trading center around the world. Rapaport has offices in New York, Las Vegas, Mumbai, Surat, Ramat Gan, Antwerp, Shanghai, and Hong Kong, with representatives in the market gathering information that affect the trade every day.
What interests you and keeps you tied to the heart of the diamond industry?
I believe in efficient markets and love the fact that the diamond industry is a work-in-progress toward that goal. I never imagined that such a small industry could be so diverse and dynamic. And it’s a beautiful product that makes people happy. That’s a pretty cool thing to be involved with.
What do you see as the opportunities and challenges facing the diamond industry in the short and long term?
Opportunities exist in every market for the diamond industry as there is always a new stream of people looking to buy diamonds. Clearly, China represents the strongest growth opportunity for the industry but it also means there will be greater competition to tap that market. As a journalist, that’s quite an exciting dynamic to cover.
The volatility we’ve witnessed in the past five years will likely continue and represents a tremendous challenge for everyone. This disconnect between rough and polished prices that has developed since the 2008-09 crisis also needs to be better managed and represents a challenge to manufacturers buying rough and selling polished.
On a deeper level, there are tremendous challenges to maintain the ethical integrity of the industry. There is an urgent need to develop robust ethical sourcing of diamonds across the pipeline that also accounts for human rights violations.
You have just returned from a trip to Yakutia. How do you see the future for mining companies, in particular ALROSA?
[two_third]The way I see it there are two different schools of thought among the mining companies. The pure-play diamond miners, which include the likes of ALROSA, Dominion Diamond Corporation and Petra Diamonds, are looking to drive value through production and expected price escalation. De Beers and to an extent Rio Tinto, are using strong branding initiatives to drive value, which seems to be a more proactive approach toward long-term price growth. There’s no right or wrong answer but it’s an interesting difference in philosophies. [/two_third]
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“I believe in strong branding. There are very few powerful diamond brands out there. “
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I believe in strong branding and think this is an exciting story to watch in the years to come, especially since there are very few powerful diamond brands out there. The question about whether it’s the place of mining companies to push a brand is a different discussion entirely.
In terms of ALROSA, it has ambitions to be the biggest diamond miner by revenue value by 2018 and it seems intent to raise production in order to achieve that. So while De Beers will maintain steady production in the years to come, ALROSA plans to increase its annual production by about 10 percent over the next 5 years.
From the market point of view, volume matters only if the goods are solid at fair and reasonable prices. So I don’t think anyone is particularly concerned about the future of mining. The more pressing question is the profitability further along the pipeline. Diamond cutters, in particular, will need to be more disciplined in their rough buying from mining companies.
What are the immediate goals of the Rapaport Group?
The Rapaport Group believes in the development of fair, transparent, efficient, and competitive diamond and jewelry markets. So our goal is to grow as a company within that framework.
And do you have any personal projects you would like to share with us?
I try to keep a healthy balance between my professional and personal life, including leading a healthy lifestyle. So my personal projects tend to be unrelated to the industry and revolve around my passions, which include creative writing, playing guitar and swimming. My dream is to swim the English Channel but travelling to trade shows keeps getting in the way of my training – we need more swimming pools at diamond trade events.
