Back in February, the Gems & Jewellery Export Promotion Council (GJEPC) hosted the "Diamond Financing 2017: New Opportunities, New Realities" seminar coinciding with the 2017 Presidents Meeting, the biannual gathering of the World Federation of Diamond Bourses (WFDB). Avi Krawitz reports on the proceedings: "The bankers still view diamonds as a high-risk sector. Representatives from the diamond trade, meanwhile, feel there has been significant progress in improving the industry’s level of compliance, transparency and so-called bankability.
Diamond industry analyst Chaim Even-Zohar has published an analysis of the steps that led to, and the potential results of, De Beers' (DB) deferral of contractually obligated purchases from its own rough supplier in Botswana - Debswana (DW). Suddenly, the standard-bearing producer of rough diamonds is behaving like any other rough trader further downstream, refusing to purchase rough diamonds that are overpriced.
JCK's "Diamond Dialogues", a series meant to take a wider look at the diamond industry and the forces that shape it, has published a thought-provoking presentation by Erik Jens, head of diamond and jewelry clients for ABN Amro, the largest bank in the industry. Jens discusses how other industries, oil in this case, cope with profitability woes, why bankers are wary of the diamond business, and the disruptive change that is quickly heading our way. Jens' considerations reach far and wide.
The Economic Times India reports Indian banks are tightening lending criteria to the industry, following massive defaults in the diamond and jewelry industry amounting to US$1.5 billion. For years, banks in India have been providing credit based on balance sheets, a move the report says is now backfiring. "Banks cannot lend based on balance sheet. One needs to understand the entire business of the clients and how they manage it with their suppliers and buyers,", Ramesh Ganesan, executive vice president, IndusInd Bank commented.
A local businessman believes the islands are ideally placed to serve as a hub for diamond trading, being almost on the United States' doorstep. However, the Cayman Islands would face a range of hurdles, including being accepted by the KP, which could take two years, being accepted as a member of the World Federation of Diamond Bourses (WFDB), which could also be a lengthy process, and competition from the recently opened Panama Diamond Exchange. And then there is the somewhat negative public perception of the islands as a tax hideaway.
Excerpts from a Rapaport interview with Davy Blommaert, former business developer at Antwerp Diamond Bank and currently head of the diamond lending segment of the National Bank of Fujairah (NBF) in the United Arab Emirates (UAE). The bank intends to enter into diamond lending in the hopes that a perceived "geological shift" in the diamond trade will lead to more diamond business coming to Dubai, but there are caveats.
According to The Hindustan Times, an internal audit by the Central Bank of India has found that the promoter of Winsome Diamonds and Jewellery — the country’s top wilfully defaulting company of public sector bank loans — may have shifted abroad. Diamond trader Winsome had taken total loans of Rs 4,276 crore from 11 banks, including Rs 711 crore from Central Bank. The audit note on Winsome says, “This account has caused serious setback to our bank as huge provisions had to be made under IRAC norms… Our bank is not having sufficient security to fall back upon.”
The diamond market is slowly becoming more disciplined. With high rough prices, declining polished, less available credit and lower retail inventory levels, it has become increasingly difficult for diamantaires to turn a profit. Therefore, they need to carefully navigate the significant changes taking place to improve their position in the market.
Finance and liquidity was one of the most hotly debated issues at the Dubai Diamond Conference 2015. The Dubai Diamond Exchange is consequently planning to hold three seminars on diamond financing this year, underscoring the growing importance of the issue for the global diamond industry.
On Friday 27 March, Herman Van Rompuy paid a visit to the Antwerp diamond community, delivering the keynote speech at the Antwerp Diamond Seminar on the financial challenges facing the diamond industry. The Seminar featured a lively discussion panel of financial experts who are thoroughly tuned in to the diamond industry in general and to the situation in Antwerp in particular. The discussion covered issues such as profitability and liquidity, financial transparency, bankability, the availability of finance, sustainability and rough prices.
Organizers of the 2015 Presidents' Meeting say registration for the event is open. The meeting will see presidents of the World Federation of Diamond Bourses (WFDB) and the International Diamond Manufacturers Association (IDMA) meeting in Tel Aviv from June 14 to 16.
The CEO of the bank's Diamond & Jewellery Clients Unit, Erik Jens: "I don't believe there is a lack of liquidity. I think there is a challenge in certain areas of the market and in certain locations. But there is liquidity available for good companies."