35th World Diamond Congress - From the World of Diamonds

Until the start of this century, World Diamond Congresses mostly served as a platform to discuss issues predominantly of concern to the industry and trade alone. This had changed tremendously in the past decade or so. However, at the 29th WDC in Antwerp, in 2000, the industry was confronted with the issue conflict diamonds, attracting massive attention from the world media. Since then, the diamond trade's world view has significantly changed and it is recognised that any topic for discussion needs to be set off against the global economic and social framework of which our industry is a part.

At the 35th WDC, the Kimberley Process and conflict diamonds continued to occupy a significant part of the meetings. Add to that—the sluggish diamond and jewellery market, the lack of generic promotion for diamonds, synthetic/cultured diamonds, the need for transparency and the Diamond Source Warranty Protocol (DSWP)—and the slate is pretty well covered.

The 35th World Diamond Congress, organised at the Taj Land’s End hotel in Bandra, Mumbai, was a well-attended event. It was held in India for the first time. The event held much importance especially in the view of the turbulent times that the industry is going through (right now in India itself). The inauguration ceremony took place October 14 as chief guest Prithviraj Chavan, Chief Minister of Maharashtra, announced the conference open by lighting the traditional lamp.

Addressing the opening session, outgoing IDMA President Moti Ganz, urged the diamond producers to give manufacturers stronger backing by vouching for rough supplies. “If producer back the manufacturers, it will in turn enable the manufacturers to commit to their clients with consistent and continuous supplies of polished diamonds, thereby pushing the sale, "he noted He also warned that if retail jewellers cannot be guaranteed a continuous and consistent supply of polished diamonds, offered at competitive prices, they might look at alternative gemstones –including synthetic diamonds – that promise better profit margins. “Of course, this is not the ideal situation that we are looking forward to,” he said.

Talking about the reasons that might lead to a surge in synthetic diamonds, Ganz noted that a lack of sustainable supplies of rough may also push diamond cutters toward the production of synthetic diamonds.

Conflict diamonds were one of the most talked about topics at the congress that not only caught attention of the participants but is also of considerable concern to the members of the downstream market and the consumers.

The US Ambassador Gillian Milovanovic, Chair of the Kimberley Process, noted in her address that the KP needs to discuss and eventually adopt a new definition of the term ‘conflict diamond’. “There should be a definition that applies clearly and predictably to every participant, and one that ensures that KP Certification Scheme assurances correspond to the evolving expectations of consumers, " she stated.

Milovanovic then went into greater detail with respect to the process toward a new, updated definition.

"As I see it, as Chair, in cases where there is concern that a conflict is diamond-related, the goal would be to objectively assess the situation in conjunction with the relevant country. If the conflict does not fit the definition the issue would be closed. If the conflict does fit the definition, the approach would be to assist and resolve, not punish, and the KP would seek to help the country to rectify the situation. Only if these efforts are exhausted and the problem persists would a limitation on the right to issue a KP certificate for rough diamonds originating at the concerned site be considered. The purpose is not to punish or exclude, but first to help a country with a problem to find solutions to fix that problem and only as a last resort move towards limitations on the issuance of KP certificates. All along, we ensure that it is the stakeholders in the diamond sector, from producing countries to manufacturing countries to all elements of industry and civil society, who are focused on making the decisions that affect the KP and the rough diamond supply chain," she stated.

"Leaving specific proposals aside, the important thing to focus on is that evolution and change are necessary. Sooner or later, institutions that do not have the capacity to change are doomed to irrelevance and businesses that fail to keep pace with the market will suffer as a result," Milovanovic said. The KP plenary is taking place while this issue of Diamond World is being printed. Surely, we will report more in detail on this issue in our next issue.

Apart from synthetic and conflict diamonds, another important issue that was brought to the table was the shift in geography and the new markets' needs. Talking about this, Varda Shine, CEO of the De Beers' Diamond Trading Company (DTC), discussed some of the issues that the DTC is addressing. She pointed out that with the new markets in China and India, it is important for the DTC and other diamond suppliers to adapt their production outlook and to look carefully at the needs of the new markets.

Elaborating about the issues at DTC, Shine said that the DTC does not view gem-quality synthetic diamonds as a threat to natural diamonds. Synthetic diamond, she emphasised, are a legitimate product that will find its own market. However, she said that those dealing in these products needed to adhere to the proper rules of disclosure. Detection and proper disclosure of synthetic diamonds were essential for these products, if it is to become accepted among the gemstones that are for sale in the market, she added

Interestingly, it was for the first time in the history of IDMA and WFDB World Diamond Congresses that there was gender parity at the head table at the Congress' joint session, with four men and four women on the stage. The women were: Varda Shine; Gillian Milovanovic; Susan Shabangu, South Africa's minister of Mineral Resources; and Donna Baker, president of the Gemological Institute of America (GIA). All four addressed the meeting.

Both organisations lauded the hosts, the Bharat Diamond Bourse (BDB) and the Gem and Jewellery Export Promotion Council (GJEPC) for their achievements in organising the congress, the mini conference sessions, and other social and cultural events.

Participants were especially pleased with the organisation and the content of the afternoon session—dubbed mini conferences where a variety of topics were discussed. Russell Mehta, CEO of Rosy Blue, spoke in the first session about the Challenges to the Diamond Industry, discussing the long-term challenges, the industry market share and the decrease in production; the sensitive topic of the lack of profitability in diamond manufacturing; the needs for transparency and regulation, how to attract new talents to the industry and other issues.

One of the issues that generated heated discussion--many of them in the meetings' corridors and not on the congress floor itself-- was the introduction and publication of the Diamond Source Warranty Protocol (DSWP), which was developed by Jewelers of America (JA), the Jewelers Vigilance Council (JVC) and the Diamond Manufacturers & Importers Association of America (DMIA). The latter is a member of IDMA and the DMIA representatives at the congress were peppered with questions as why they and their American colleagues had chosen the congress to target with this bombshell.

This protocol is a voluntary approach to inventory management, designed to help individual businesses begin to work toward a higher level of assurance by excluding diamonds from questionable sources, as determined by them. According to Matthew Runci, President and CEO of Jewelers of America, there is increased pressure in certain markets, including the United States – from the public, human rights groups and government – to bring greater transparency and accountability to the supply chains of jewellery and other products.

“The new Diamond Source Warranty Protocol is designed to be an effective tool to help businesses manage these issues and challenges in the context of their relationships with business partners and stakeholders,” said Runci.

A press release, issued after the event, stated, “The DSWP will work alongside the Kimberley Process (KP), which remains the foundation for the exclusion of conflict diamonds from the worldwide marketplace. Industry participants may elect to incorporate the Protocol into their contractual arrangements with vendors." Industry commentator Chaim Even Zohar, who also moderated some of the mini conference sessions in Mumbai criticised the authors of the protocol, arguing that they have failed to understand that the diamond industry’s strength is its ability to buy from various sources and mix the goods to put parcels together. He noted that if the protocol would be implemented it would mean that polished diamonds from each mine and each polishing location had to be tracked separately. “This would be a nightmare for the alluvial miners, who are precisely the people we need to protect and nourish,” Even Zohar said in a comment to a leading daily.

Even Zohar's diatribe was only the beginning of an onslaught on the DSWP. On the concluding day of the congress, the IDMA and WFDB called for all industry consultation on KP and the DSWP. Both the bodies expressed their appreciation of the efforts by the K P Chair to define ‘conflict diamonds’ in consultation with all industry stakeholders to insure and assure that any decision made is reached under complete, industry-wide consensus.

But IDMA and the WFDB also voiced their members' grievances and concerns about the effect of the DSWP on the flow of goods throughout the legitimate diamond supply pipeline.

Speaking on behalf of respective organisations, newly elected IDMA president Maxim Shkadov and newly elected WFDB president Ernie Blom said that the two organisations need to enter into an immediate and intense dialogue with their American colleagues to try and mitigate the perceived difficulties and barriers that DSWP would be presenting to the international gem and jewellery business community.

The WFDB also announced a new partnership initiative, World Diamond Mark, which is a non-profit organisation that would look after the marketing of diamond and diamond jewellery industry. The WFDB represents 28 affiliated diamond bourses worldwide.

Throwing light on the newly formed organisation, Blom said, “This is a not-for-profit organisation that will operate out of Hong Kong. The World Diamond Mark will be the new marketing arm of the entire diamond and diamond jewellery industry. Its objective will be to ensure the health and future growth of our industry in the luxury sector.”

He also mentioned that the 35th World Diamond Congress in Mumbai provided an opportune moment to launch the new entity and officially invite the entire industry that comprises various trade organisations, federations, manufacturers, sightholders and miners to be partners of this global initiative.

“The World Diamond Mark® is also the beginning of the largest accreditation and marketing programme in the history of the diamond—‘Authorized Diamond Dealer®,” said Blom, adding, “For World Diamond Mark, we have a global strategy and action plan based on three fundamental principles: education, confidence and generic marketing to generate the best-sustained returns for the industry. This would bring direct benefits to members and make diamonds and jewellery synonymous with the world’s most desirable luxury items. This initiative will be launched with the new slogan ‘When the world loves, we are here®’.”

All over, the IDMA, WFDB and the hosts were also very pleased with the high level of participation of ministers from South Africa and many senior members of the diplomatic corps in India. New IDMA President Maxim Shkadov and outgoing President Moti Ganz appreciated the efforts of the two organisations that hosted the congress. Thanking Vasant Mehta, Shkadov, said, “The congress was organised flawlessly and its unique format, through the integration of a highly informative and value-adding mini conference, proved to be an absolute winner. We have heard nothing but expressions of satisfaction and praise from the congress' delegates for the time have they have spent here, at the congress in Mumbai."