Antwerp Diamond Conference - October 2007

After the conference was over when I congratulated Freddy Hanard, CEO of the Antwerp World Diamond Centre which organised the conference, on an excellent job, he explained that he had achieved the aim of making the discussions controversial and that there was genuine debate. 

All of us enjoyed hearing the South African Minister for Minerals and Energy asking the president of Alrosa, Sergey Vybornov, if he would be willing to send rough from Russia to be manufactured in South Africa!  Oddly enough, some rough already is, as the rough diamonds delivered to sightholders in Africa are often mixed with goods from other countries like Russia.  Mr Vybornov was very clear about the chances of failure of beneficiation by showing how little polishing is left in Russia and summed it up with the dry comment, “you don’t locate a uranium processing plant next to a uranium deposit.”

For Antwerp’s future as a diamond centre, a lot more people should have listened to what Sir David Brewer, former Lord Mayor of London, had to say.  Don’t worry if beneficiation draws some of the gravity of the diamond trade to Africa, as long as you are adding value and being creative you can hold your own.  Drawing on the experience of the City of London as the leading financial, equity and insurance market in the world, he cited various examples of other centres trying to take the lead, and ending back in London.  When the Euro was introduced and the UK opted not to join, Frankfurt was poised to supersede London as the main Forex centre.  Today, Deutche Bank’s main foreign exchange section is in London.  The competition has been good for London, and speakers at the launch event of Dubai’s IDL certificates hoped competition would keep Antwerp competitive and creative.

Some speakers were doubtful if beneficiation could work without subsidies or market intervention.  Currently, there is a hidden subsidy as the better and larger stones are retained local manufacturing while the lower quality and sizes go to London for distribution there to other manufacturing centres..

Gareth Penny, managing director of the De Beers group, stressed his eight point master-plan for beneficiation, but could have added a ninth point, that his group are pushing a lot of the burden of beneficiation onto the sightholders.  This strategy has worked well with the Kimberley Process and SOC generated marketing, so it can also work with beneficiation.

Professor Stiglitz, head of the world bank, explained that without a reinvestment of the financial benefits of beneficiation in advancing the technology and know-how, the macroeconomic benefits will be short term.

Kennedy Hamutenya, the diamond commissioner of Namibia, showed an interesting presentation of the development of the diamond industry in his country over the last 85 years, including a few slides of the first rough diamond discovered there.  A black railroad worker found the stone, and he achieved fame.  His foreman sold the stone, and he achieved wealth.

He was very forthright about some of the difficulties of doing business in his country.  He commented that the trade unions are very powerful as they were used to fighting apartheid, now they have to fight different bosses!

President Johnson Sirleaf of Liberia explained the achievements to date and the difficult challenges her country faces to reap the economic benefits that diamonds can bring while still building up the legal and administrative infrastructure.  It is amazing how one person can change a country.

Bob Geldorf highlighted the hypocrisy of the diamond industry’s commitment to Africa.  He was wrong for a few reasons.  The moral debt to Africa has to be paid by the whole developed world, not just a handful of diamantaires, although the mining companies of all mineral products, not just diamonds, should be at the forefront.  A lot of sightholders donate large sums of money and amounts of time to charitable causes around the world.  If it is not already, Africa should also be on their list, but Africa cannot be the exclusive recipient of the diamond sector’s benevolence. 

However, I believe that Sir Geldorf missed an opportunity.  After arousing the audience, had he said “I want 40 people to come up and each pledge $50k to help Liberia’s KP development” he would have collected, big time.  The gala dinner could then have ended with President Johnson Sirleaf going home with a much needed check from Bob for $2m instead of a diamond broach of Liberia’s flag which the president is not allowed to wear.

One of the most poignant comments was from Varda Shine, “why is the price of diamond jewellery going down while the price of ladies handbags going up?”  This is an issue worthy of a conference on its own. If we can make diamond manufacturing more profitable, then beneficiation has a stronger chance of succeeding. 

Overall, I was hoping to hear more about the initiatives to make the move to Africa work.  There has to be more cooperation between the producing countries, and the smaller producers need extra help.

If consumers around the world are happy and willing to pay extra for fair-trade and ethical products, the producing countries should be creating African beneficiation brand where the premium charged goes to education in Africa.  Instead of wannabe African sightholders proposing small-scale brands, the sightholders, the DTC, the other African mining companies and the governments involved should combine their efforts to brand the African beneficiation diamond to create wealth and opportunity for Africa.  Customers will pay for this and beneficiation will work.

editor@diamondfinance.info