AWDC symposium consolidates industry views on financial meltdown

The Antwerp Diamond Symposium was recently organised by the Antwerp World Diamond Centre (AWDC) on behalf of the world diamond industry, which answered sensitive issues of industry growth at the current time of financial crisis. The concluding outlook of the 500 participants at the symposium was that the current downturn is related predominantly to financial liquidity and not to the fundamentals of the diamond business, which are sound.

The industry representatives seemed ready with an action plan and a confident mood of thought. In his opening address, Freddy J. Hanard, CEO of the AWDC, said, “Regardless of the length of this recession, it is clear that we need to take action now, and we must do with a belief that we can succeed. After all, our industry has prospered for centuries. This by no means is the first crisis in our industry, and yet we have always endured and succeeded. This knowledge should at least provide us all here with a great degree of confidence.” He stressed on the need for comprehensive and coordinated industry response. Chaim Even-Zohar, who was the seminar moderator said that demand for diamonds at retail will fall about 10 percent over the coming year, translating to a 20 percent decrease in demand for loose polished diamonds at wholesale, and a 35 percent fall in the amount of rough diamonds required.

As pointed out by Avi Paz, president of the World Federation of Diamond Bourses, the crux of the industry holding on to the silver lining and establishing consumer confidence lies in defending its confidence in itself. “We have to make sure that the market is not flooded with rough. This, of course, requires that the rough producers act with due care, but it also means that we have to act responsibly, and only buy those goods that we need.”

The attending major diamond producers had common goals to reduce supply of roughs over the short term, declaring support for an all-industry body that will be responsible for the generic promotion of diamonds to consumers. Gareth Penny, managing director of the De Beers Group, pointed that while polished diamond prices are correcting, they have not collapsed. “Market conditions are repressed because of liquidity, but the attractiveness of the product we deal in has never been higher. Diamond reserves are at an all time low, and there has not been the discovery of a major diamond mine for years. We should not forget that we are not in the commodity business. We deal in an irreplaceable treasure that is getting rarer all the time.” Penny noted that De Beers has decided to reduce rough production to meet prevailing consumer demand and to support and promote diamonds, generically. President of Alrosa, Sergey Vybornov, said that it too would similarly reduce rough supplies and expects to establish the ‘Diamond Guild’ by December that would manage the all-industry marketing effort to promote diamonds.

To elucidate the approach of generic marketing of diamonds, Stephen Lussier, De Beers’ marketing head, revealed that the company had just undertaken a fourth quarter advertising programme ever in the United States, citing hat the consumers although have reduced and calculated expenses, but there are areas in which they will not compromise, such as diamonds. Although the diamond mining companies, manufacturers and retailers are optimistic, the question of bank involvement was addressed by Paul Goris, the chairman of Antwerp Diamond Bank. He said that the coming few weeks and months will be critical. “It is a period during which asset protection must take precedence over asset growth. During this period, he said, the banks must be careful not to bring the industry to a standstill. They most probably will not increase facilities, but at the same time facilities should be cut.

A careful supply of roughs, generic diamond promotion and a confident prudent outlook seem to be the way the diamond industry is tackling the financial slowdown. The symposium was held at the Antwerp Province House.