2018 has been a somber year for the diamond industry. While the industry was already grappling with the decreasing demand in diamonds amidst consumers, mining conglomerate De Beers announced its foray into lab-grown business with its brand Lightbox. This earth-shattering move by De Beers was viewed as sanctifying lab-grown diamonds in many ways. But before all that the Indian diamond industry was and is still coping with the aftershocks led by one of world’s biggest bank frauds; Nirav Modi certainly didn’t do any favours for an industry that has already been subject to scrutiny by regulatory bodies, banks and what not! In all this, for the first time this year, results for the eighth sale published end of October by De Beers indicated that sales fell below $500 million recording $475 million. So, all is not well in the diamond industry, the only thing that keeps this industry on high spirits is its enduring optimism.

The Unresolved 14000 Cr Bank Fraud
Exactly nine months ago, PNB reported the Rs 14,000-crore fraud on it committed by diamantaire Nirav Modi and his uncle Mehul Choksi, the whereabouts of both of whom are still being deliberated. Meanwhile, the impact this has had on the jewellery industry is colossal to say the least. Jewellers across India are struggling to get credit from banks. RBI has intervened and has forbidden short term financing in foreign currency to avoid more financial havoc. If things continue to remain the way they are, in all plausibility, businesses may shift to China and Thailand and we are looking at many job losses. While the willful defaulters have still not been presented in court, Deloitte released a survey recently stating that banking frauds will continue to be on the rise because banks are underestimating their ability to prevent frauds and this may impact the nature of anti-fraud compliance programmes being developed.

De Beers’ Lightbox Exclusively Sells Lab- Grown Diamond Jewellery
De Beers, the world’s largest diamond company, which controls around 30 per cent of mined stones in the world, announced the launch of Lightbox in May, a brand of fashion jewellery with labgrown diamonds. Lightbox lab-grown diamonds are retailed US$200 for a quarter-carat stone to US$800 for a one-carat stone. The line was launched to bring something new and innovative to the jewellery sector, featuring pink, blue and white lab-grown diamonds in a selection of accessibly-priced earring and necklace designs. One of the products, a 1-carat pendant with white centre stone for $900 was apparently sold out in the initial months of its offering. The fact that Lightbox is only being retailed online and the brand is embracing novel marketing tools like podcasts to reach its audience is testament to the fact that the brand is targeting millenials. This move has been strategic in the sense that it has been implemented at a time when diamond prices are volatile, not to mention the redundancy of diamond mines across the world. While natural diamond enthusiasts are still hot headed about the issue, a handful of wholesalers and retailers in the U.S. are not entirely opposed to the idea of selling lab-grown diamonds. It is still fairly early to say what kind of an impact Lightbox might have on the sales of natural diamonds, but we can say that the impact will be felt sooner or later.

FTC Diamond Ruling Viewed Pro-Lab Grown by Natural Diamond Industry
The US Federal Trade Commission (FTC), after being in talks with the industry for six years, made a number of changes to its jewellery guidelines, including making the definition of a diamond more ‘inclusive’. As part of its renewed jewellery guidelines, the Federal Trade Commission (FTC) implemented a few changes regarding man-made diamonds. First and foremost, its new definition of a diamond eliminates the word ‘natural’ as opposed to its previous definition that suggests that a diamond is a natural mineral. Also, the terminology ‘synthetic’ is no longer relevant considering the FTC suggests that the term is often interpreted as being ‘artificial’ when in fact man-made diamonds are not artificial. For years, the FTC has omitted words like gem, stone, real, genuine and gemstone from their dictionary when referring to man-made diamonds. However, it said that its previous guidelines as, ‘circular, inadequate guidance that relied on highly subjective judgments.’ So, as a matter of fact, man-made diamonds are gemstones and it is appropriate to call it ‘cultured’ like cultured pearls. Consumer’s understanding of what a diamond is and the perception built around for decades could be changed forever with these new guidelines and that is certainly not good news for the natural diamond industry.

‘Pink Legacy’ Diamond Sold For Record-Breaking $50 Million at Christie’s to Harry Winston
A rare large pink diamond was sold for a recordbreaking $50 million (about 50.3 million Swiss francs) at Christie’s auction house in Geneva. The 18.96-carat Pink Legacy became the world record holder for price paid per carat for a pink diamond at auction. The diamond is an even rarer find because of its size, as Fancy Vivid Pink diamonds larger than 10 carats are “virtually unheard of,” according to Christie’s. Harry Winston renamed the fancy vivid pink diamond the “Winston Pink Legacy” following the sale. The diamond was owned by the De Beers Oppenheimer family before it came to Christie’s for auctioning. GIA gave the diamond the highest grading of ‘vivid’ as the colour pink was intense and saturated. The diamond is also believed to be very pure with minimum inclusion, a quality that is seldom found in pink diamonds.

Israeli Diamantaire Lev Leviev Company Accused of Smuggling Goods Worth $80 million
Leviev’s son Zevulun and brother Moshe were held in connection of their involvement in a smuggling operation that has brought about 300 million shekels’ ($80 million) worth of diamonds illegally into Israel since 2010. Lawyers representing Zevulun Leviev in a statement said the allegations against him were “baseless” and his arrest appeared to be a tactic to “illegitimately pressure his father”. Moshe Leviev’s lawyer denied in court that his client had any connection to the allegations against him. Several employees have been questioned in the ongoing investigation that is being termed ‘Black Diamond’. Diamonds, properties and bank accounts owned by Leviev have been confiscated as part of the investigation. Leviev has refused to cooperate with the police stating that he is currently based in Russia and that he will visit Israel only if he is allowed to come back to Russia again. In a sudden turn of events, Mazal Hadadi, a 42 year-old book-keeper at LLD, fell to her death from the tenth floor of the Diamond Exchange building in Ramat Gan. Though the police have treated the case as suicide, some of her relatives are alleging that it could be murder.

Swatch Group Makes an Exit from Baselworld
In July, the Swiss watch group Swatch in a statement announced that all of its brands will be exiting the Baselworld show, and that it will not be participating in March 2019 fair. This came as a big blow to Baselworld, which in 2017, witnessed the mass departure of 600 exhibitors including the Movado Group. As a result of this, Baselworld was shortened by two days this year. The Swatch Group, which owns 18 brands including Breguet, Blancpain, Harry Winston, Omega, Longines, Tissot, Rado, Jaquet Droz, Glashutte Original, Hamilton and Mido apparently, invests approximately $50 million in Baselworld. We don’t know what the positioning of the booths will be like considering the group used to practically occupy half of Hall 1 shared with Rolex and the like. One of the main reasons for the exiting of Swatch according to its statement is because Baselworld is “outdated” and “old” and is not changing with times. In its statement, the MCH Group said that the success of Baselworld 2018 and the new concept for Baselworld 2019 which is in full swing under the new management, the cancellation by this exhibitor came as a surprise. Baselworld’s Comité Consultatif, consisting of representatives of all the important exhibitors from the watch industry, approved the new concept at its meeting of 4 July 2018. The MCH Group is convinced that this has laid a good foundation for a successful trade fair.

De Beers Tracks First Diamonds From Mine to Retail with Tracr™
In May, De Beers Group announced that it has tracked 100 high-value diamonds along the value chain during the pilot of its industry blockchain platform, marking the first time a diamond’s journey has been digitally tracked from mine to retail. An immutable and secure digital trail was created for a selection of rough diamonds mined by De Beers as they moved from the mine to cutter and polisher, then through to a jeweller. Five leading diamond manufacturers – Diacore, Diarough, KGK Group, Rosy Blue NV and Venus Jewel – have been working with De Beers during the development of Tracr™ and have played an integral role in creating the first blockchain platform to span the entire diamond value chain. ALROSA also joined the industry leaders in creating the blockchain platform. Tracr is focused on providing consumers with confidence that registered diamonds are natural and conflict-free, improving visibility and trust within the industry and enhancing efficiencies across the diamond value chain. In addition, Tracr will work to complement and support the diamond industry’s existing initiatives and regulations to ensure consumer confidence in diamonds, including the Kimberley Process Certification Scheme, World Diamond Council System of Warranties and Responsible Jewellery Council Code of Practices.

Duty Hassles Affecting the Health of the Indian Diamond Industry
In September, the Government had raised the import duty on cut and polished diamonds to 7.5 per cent from 5 per cent, to narrow the current account deficit (CAD). Increase in customs duty on cut and polished diamonds has increased the cost of business and impacted exports and trade. In September alone, the gems and jewellery exports witnessed a decline of 21 per cent - devaluation of rupee against dollar along with increased duty on import of cut and polished diamonds and liquidity crunch have all been detrimental to the growth of one of the most sought after diamond hubs in the world. One of the main discussions in the recently held Gold and Jewellery Summit in New Delhi was about ease of doing business and how excessive regulation is taking the shine off the gems and jewellery industry. There is even the talk of India losing its position of being one of world’s largest cutting and polishing centers.