International Diamond Manu-facturers Association (IDMA) president Moti Ganz has called on members of the international diamond manufacturing community to rewrite the rules of diamond financing and to ensure a decent return on capital invested.

Addressing the opening of the thirty-fourth World Diamond Congress (WDC), which took place last week, in Moscow, Russia, he noted that the 
industry was currently at a crossroads and that it had the power to make the postcrisis 
situation a defining moment in the diamond industry’s history.

“The current demand for rough diamonds exceeds the supply and there is a growing shortage of certain articles that are in high 
demand,” Ganz stated. 
He added that, despite the shortage of rough product, the 
polished-diamonds retailers were still setting the terms of trade. He pointed out that they were controlling the industry by dictating the prices, the periods of credit and the volumes they wanted on consignment.

In the diamond industry’s prime target market, the US, 
jewellery stores were either closing or were having a hard time turning a profit. 
The facts on the ground showed that the US market was reducing its market share in polished-diamond sales, though it was still leading.

“The demand in the US is on the decline in terms of quality as well. 
“The current focus is on lower quality and lower prices, at a time when many in the industry would like to see the market return to consuming high-quality goods,” said Ganz. 

In addition, prices of precious metals, such as gold and platinum, had risen significantly. 
However, Ganz pointed out that consumers could still buy three pieces of diamond jewellery for the price of one Louis Vuitton bag. Prices of diamonds today should be at least 200% more than prices in the 1990s.


“The time has come to put an end to this. The industry needs to realise that the downstream pipeline, from jewellery manufacturers, through distributors, to 
retailers, has depleted its stock and is now in replenishment mode. But the consumers haven’t yet returned to the stores. That’s why industry has to be cautious in its dealings with the retail sector,” said Ganz.

Ganz added that, in this market situation, manufacturers needed to ensure they got a decent return 
on their capital and financial risks, a precondition to keeping their businesses on a healthy, 
responsible and sustainable financial footing.


“Today, there are no inventories with the producers that are selling current production immediately. There is no stock in the jewellery stores, which are replenishing. This is industry’s chance, and it may be a once-in-a-lifetime 
opportunity. 
“If retailers want an increas-
ingly scarce product, a realistic and fair price will have to be paid,” Ganz declared.


With regard to the current crisis in Zimbabwe, Ganz urged the participants in the Kimberley Process Certification Scheme to accept the findings of the report of the Kimberley Process monitor for Zimbabwe, Abbey Chikane, and to move quickly to include Zimbabwe’s rough diamonds in the legitimate diamond pipeline.

“Chikane has declared the diamonds from Marange to be legitimate. He is a respected member of the industry and knows what he is talking about. I ask all of you to read his report carefully,” Ganz stated.


The IDMA president concluded 
his address by saying that, by failing to allow the Marange diamonds to be traded legitimately, the industry was setting the scene for an untenable situation in the rough market.

“This needs to be done in order to better the lives of the people of Zimbabwe. 
“It also needs to be done 
immediately because the release of the vast quantities of rough diamonds that are accumulating into the diamond pipeline all at once will have a catastrophic effect on the market,” Ganz said.

• The WDC granted Zimbabwe permission to resume trade in diamonds from Marange.

http://www.miningweekly.com/article/idma-calls-for-significant-price-reforms-2010-07-23