The World Federation of Diamond Bourses (WFDB) was created in 1947 to protect the interests of its founders, advocating for the sustainable development of the market and cutting industry. Today, the largest organization in the world diamond industry brings together members from 28 affiliated bourses around the world. WFDB president Ernie Blom gave this interview to Rough&Polished, in which he spoke about the challenges facing his organization and described the current situation in the diamond market.
What does the World Federation of Diamond Bourses consider to be its primary goal at this time?
Consumer confidence is of vital importance – building confidence in the consumer’s mind and providing information that helps the consumer make an informed decision when buying diamond jewellery. Promoting the global diamond industry and positioning ourselves for further growth is also one of our key objectives. By this I mean building a profile for the diamond industry across many different platforms. This is achieved through generic advertising, seminars, meetings, conferences and many other initiatives across the globe.
As an organization, we are also currently very eager about the prospects of the World Diamond Mark which is one of the most exciting developments in the history of consumer diamond trading as both the consumer and diamond jewellery seller will benefit from this project.
The WFDB works with many international bodies in the industry and many other sectors across the world to ensure that the diamond industry is projected in the correct light. It is also important for us to create a future for generations to come in the diamond sector.
Why do you think diamond prices are growing at a slower rate compared with prices for other luxury goods?
[two_third]This is a very interesting question as some people might well claim that diamond prices are growing at a higher rate than other luxury items. When comparing diamonds to other luxury goods we need to understand that whilst we are fighting for the “Luxury Dollar” spend, our product is unique in so many ways to other luxury goods. Diamonds are natural gems, which means that you can only mine in limited quantities as opposed to other luxury products which can be produced in any volume – demand will drive supply which is not the case with diamonds. I would also like to think that we deal with a luxury item that appreciates in value while many other items tend to lose value over the years.[/two_third]
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” Luxury products demand will drive supply which is not the case with diamonds.”
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How is the World Diamond Mark being implemented and will it help to increase the market share for diamond goods?
The World Diamond Mark (WDM) will certainly increase the market share of diamonds in overall luxury spending. One has to bear in mind though that the work of improving the conditions where the diamond industry has found itself in comparison with other luxury industries will be long and painstaking. I am glad the WFDB, which represents more than 95% of the diamond trade in the world, has taken the lead to improve this.
The project is currently in its initial stage of implementation since being officially put into action last June. The WDM team is working on industry support while simultaneously preparing the ground for the official launch in early 2014. I’m pleased to see that they find attentive ears everywhere and one after another most national and international organizations declare their support for the initiative.
Do you think the world diamond market may still face the problem of monopolized prices?
[two_third]No, the supply/diamond chain is too diversified; the days of cartels are over. Across the world we have many major diamond trading hubs and these markets work independent and, in so doing, assure that market relating pricing happens on a daily basis. Production is now wide spread with companies like De Beers only representing 35% of diamond sales. The USA remains the world’s largest market for polished stones and as such remains a key consideration in strategy.[/two_third]
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“The supply/diamond chain is too diversified; the days of cartels are over.”
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The major diamond producing countries in 2012 by value were :
Botswana – 39.1%
Russia – 31.4%
Canada – 18.7%
South Africa – 10.8%
Do you expect any growth in demand for diamonds?
Undoubtedly! Every study that has been conducted has shown a growth curve that outstrips the supply chain. China and India have been major growth centers over the past few years for diamonds and this trend is expected to continue.
Bain & Co recently conducted research in India and China on the expected future purchases of diamonds. The study indicated that India and China, together with the Middle East, will be responsible for 40% of the world’s diamond consumption by 2015, up from 8% in 2005. Market that are also showing very positive growth figures include Singapore and Thailand.
What is your opinion about online bourses trading in diamonds?
It is a natural progression for our business and, although still in an infant stage, it should be encouraged. If we are to believe the international trends in all consumer items then online trading is going to be the way of future trading.
Could you give a forecast for polished sales in the medium term?
I believe this will increase as demand growths from especially the Asian markets. If you look at research that’s been conducted in the Asian sector recently it clearly indicates a demand that outstrip supply which will lead to price increases.
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What do you think about rough prices and the situation in the Indian diamond industry?
Rough prices will increase over time as the supply/demand gap will grow wider. The India situation is a concern but will rectify itself as the Indian market is very innovative and creative. We have already seen India reducing manufacturing in order to better manage stock levels and meetings are ongoing to resolve the financial issues that have been affecting trading conditions.
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” The India situation is a concern but will rectify itself as the Indian market is very innovative and creative.”
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The European Union has lifted its sanctions imposed on ZMDC, which is now allowed to sell its rough diamonds. What is your view on this?
I think it is a positive step and will benefit both Zimbabwe and Belgium. They are KP compliant and based on this should be able to trade on the world markets. Zimbabwean diamonds are being sold in many other markets so why not in the EU (Antwerp)? While Zimbabwean diamonds might not always be of the highest quality they make up for this in volume which has helped sustain the demand for rough when many other mines around the world have seen a drop in production. In 2012 Zimbabwe generated 8 million carats and in 2013 they are expected to generate 16.9 million carats.
What are your plans for the rest of this year and 2014?
Bedding down what we have done so far. The year is almost over and we are only effectively left with a few months of trading. Our EXCO will be meeting in London on 20 October 2013 where we will both evaluate and finalize plans to take us into 2014. It is my vision that we will refine and develop operations in 2014 in line with strategies which were put in place during the current year. In summary, we will continue building the diamond industry, consumer confidence, the next generation of diamantaires and position diamonds by means of marketing (the WDM) on a level playing field with other luxury goods.
Picture The Israeli Diamond Industry
