The worldwide diamond and coloured gemstone industry is in danger of being broadsided by a whole new human rights abuse crisis along the lines of the ‘blood diamonds’ issue that hit it last year.
The diamond has been positioned to symbolise not only everything pure and good in the relationships between men and women, but also the fact that these attributes are enduring and transcend time. Which is why the whole ‘blood diamond’ thing was (and still is – it hasn’t really gone away) such a big issue for the global industry and why it immediately closed ranks to launch a worldwide public relations counter-offensive. With that sort of positioning, reputation is everything.
As Robert Gannicott, head of the Harry Winston Diamond Corporation said in a seminar on reputation last year in Hong Kong, the diamond industry runs the risk of suffering the fate of the fur and tobacco industries if it doesn’t keep a sharp eye on its reputation. Not just from the public but from the big brands that actually offer consumers the whole packaged illusion. The way he put it as I recall was to allude to the tobacco industry example – “The big brands will drop diamonds if they get even a whiff of something like cigarette smoke.” What he meant was that the brands are all extremely sensitive about the reputation they carry and wouldn’t hesitate to purge something that might sully it. (more…)
The credit market in the United States, the world’s largest gem and jewellery consumer, has collapsed and the country is headed for a recession – if it isn’t already in one. So say all the pundits. And so we have a universal girding of loins for a tough year. The Indian gem and jewellery industry is braced for the worst.
So what do you make of this report that puts out bank data showing US credit – commercial as well as consumer loans and amazingly, even real estate loans – actually expanded in Q4 2007?
I can tell you for a fact that there isn’t any US buying in the Indian diamond market. Both the diamond and jewellery production industries are, in fact, focussed on the domestic Indian market as well as the Middle East and emerging markets like the CIS – countries of the erstwhile Soviet Union – and, of course China. They are keenly aware though, that all these markets put together cannot at present take up the slack left by the US market. Even a small pick-up in America will be greeted with abounding joy.
But that bank data I mentioned doesn’t seem to have impacted the gem and jewellery industry – and this includes the Israeli industry from what I gathered when I attended the recent rough diamond conference in Tel Aviv. Antwerp and other producing/dealing centres have been reporting pretty much the same thing.
Would someone explain this to me?
Valentine’s Day was a bust as far as the Indian diamond industry is concerned. There wasn’t even a hint of demand and the Indian diamond market continued in the torpor it has been in since last Christmas. From what I can make out, Valentine’s Day has been a bust for most of the gem and jewellery industry around the world. True there have been small pockets of good news but these reports very pointedly only involve small and disparate markets. As far as the overall US market is concerned, for instance, nothing really happened.
Which brings one round to the question, what does one do to survive 2008? It’s very clear that if you’re involved with the high end, you really don’t have too many worries. As this report indicates, there’s no slump in the housing market for the wealthy. And the reports coming in indicate that the high end jewellery market too hasn’t really had too many problems.
The trouble is, the high end, though accounting for a substantial value of the global industry’s sales, represents a tiny fraction of people and companies involved in gems and jewellery. We’re looking at disaster on a humungous scale if no one except the high end can snag consumer wallets. The problem isn’t localized anywhere. It’s all over the world. Unless we can get the middle and low end moving, the global diamond manufacturing industry is in very deep trouble. (more…)
Gareth Penny finally came right out and said what we’ve all known for some time now — with just a 40% market share, De Beers is not going to carry on giving BHP Billiton, Rio Tinto and Alrosa a free ride with its global generic advertising campaign (’A diamond is forever’).
Penny bluntly told the third rough diamond conference now under way in Israel that the global diamond industry should quit asking the question, ‘what is De Beers going to do for the industry?’ He made it clear that the only thing De Beers was willing to do for the industry in general was to join in with its contribution to a collective campaign that had everyone in the industry putting in a contribution.
What surprised everyone was Alrosa president Sergey Vybornov reassuring the global industry, worrying about continuity of supply, that Alrosa had some $109 billion worth of proven diamond reserves that represented up to 40 years of production. There are very good chances that Alrosa’s enhanced exploration program will turn up more reserves.
Overall though, it is now clear that the diamond industry has been unceremoniously dumped into the real world where nothing comes free. Let’s see what the diamond industry does. I don’t know. There are some really smart people who know what future will bring and are willing to act now to meet any challenges that might come up. But these seem to be a minority. Most people don’t look beyond their noses.
Hope the visionaries prevail.
Our guest blogger Ya’akov Almor, serves as joint communications director for CIBJO, the World Jewellery Confederation. This is his final post on the subject of “Nokia’s Sapphire Telephone“.
Well, sometimes victory is just not what you had imagined it would be.
Last night, I decided to have another look at the press section of the Nokia website. Maybe, just maybe, Nokia had indeed corrected their publicity material about the Nokia 8800 Sapphire Arte?
By Jove, they had! This is just great! So there was a point in, eh, making the point!?
But hey, calm down, lets’ look at it again (go to http://www.nokia.com/A4664066?kit=74 and download the kit).
Well, I must admit, ‘they’ did change the information and the word ‘genuine’ is not featured anymore to describe the synthetic (=man-made=laboratory-grown=laboratory-created) sapphire. But it is not identified as a synthetic (=….etc) sapphire either. Actually, the sapphire reference has been mostly massaged away, skillfully into the descriptions of the phone’s other illustrious features.
No doubt, ‘they’ must have opened a can of lawyers, and have let them loose on the text until white smoke rose from Nokia’s headquarters, with the message: we did it.
Well, they may have done it, but it left me with a feeling of “Why did I bother?”
Or did it?
China has moved to block the proposed proposed BHP Billiton bid for Rio Tinto. According to this report, on Mineweb.com, after first having the state-owned Aluminium Corporation of China (Chinalco) team up with US aluminium producer Alcoa to buy a stake in Rio (the Mineweb article says the stake is 12%), thus making a hostile takeover impossible, the Chinese government wants to invoke its newly formulated anti-monopoly law to block the proposed merger altogether.
China’s fears are to do with the control of iron ore supplies and not diamonds. China says the proposed merger would put fully a third of the world’s iron ore supplies into the merged entity’s hands.
How far would the Chinese government go to ensure the merger doesn’t take place? That is the key question. Despite protestations that its stake in Rio is only a strategic investment and it has no plans to take over the mining giant completely, Chinalco could well be used as an instrument to further Chinese strategic concerns.
That means, of course, that a little over a fifth of the world’s diamond supplies too could be in Chinese hands. We could see a rush to set up offices in Shanghai soon!
