India to Lead Demand for Natural Diamonds

India will lead demand for natural diamonds in 2024, says David Kellie, CEO of Natural Diamond Council (NDC), as US buyers increasingly switch to lab grown.

“The Indian market remains the strongest growth market in the world because of its strong financial position and changing demographics,” he told The Economic Times, in India.

“Indian women are now financially stronger, and they are driving the demand. The key economic indicators in the US are not yet favourable for a demand recovery in diamond purchase.”

Kellie (pictured) predicts a polarization between the natural and lab grown markets, with a price difference currently at 80 per cent to 90 per cent.

Natural diamonds will become increasingly rare, he said, with no new mines in prospect, and with miners digging deeper, and spending more, to reach remaining deposits.

IDEX

The world’s largest office building is filled with diamonds

A new office building in India’s diamond city Surat in Gujarat, where 90% of the world’s diamonds are manufactured has surpassed the Pentagon as the largest structure of the kind.

Built over 7.1 million square feet of floor space, the Surat Diamond Bourse (SDB) has a big leg up on the 6.5 million square feet headquarters building of the US department of defense in Arlington, Virginia. The Pentagon was the world’s largest building for 80 years before it got dethroned.

The 15-story structure, featuring a succession of nine rectangular structures spilling out from a central “spine,” cost a whopping 32-billion-rupee ($388 million) to develop and build.

Indian architecture firm Morphogenesis stopped and started construction over four years because over pandemic-related delays. The building is finally due to open its doors in November 2023, with prime minister Narendra Modi due to inaugurate it.

Quotable: Narendra Modi lauds Surat Diamond Bourse
“Surat Diamond Bourse showcases the dynamism and growth of Surat’s diamond industry. It is also a testament to India’s entrepreneurial spirit. It will serve as a hub for trade, innovation and collaboration, further boosting our economy and creating employment opportunities.” Prime minister Narendra Modi, who was Gujarat’s chief minister from 2001 to 2014, quote-tweeted a video of the Surat premises yesterday.

Working in the Surat Diamond Bourse, by the digits 4,700 office spaces: Office spaces in the Surat Diamond Bourse, which can also double up as small workshops for cutting and polishing diamonds. The offices were all purchased by diamond companies prior to construction, project CEO Mahesh Gadhavi.

65,000: Diamond professionals, including cutters, polishers and traders, that can work on the premises at a given time. Besides offices, the workers also have access to dining, retail, wellness and conference facilities

9: Number of 1.5-acre courtyards with seating and water features that can serve as casual meeting places for traders

131: Number of elevators on the premises

7 minutes: The maximum amount of time it takes to reach any office from any of the building’s entry gates, according to Sonali Rastogi, co-founder of the Indian architecture firm Morphogenesis that designed the behemoth building. In a democratic move, the offices were assigned to business via a lottery system

3 times: How much bigger SDB is compared its counterpart in Mumbai, Bharat Diamond Burse (BDB)

400: The small number of merchants that were willing to move in during the touted November 2022 opening, which led to the opening being postponed. Mumbai’s Palanpuri diamantaires are staying put because they do not want to incur establishment cost, transport cost, and take on overheads of maintenance when the trading business is struggling.

Source: qz.com

India Warns of Impact from Proposed US Tariffs

Indian jewelry
Indian jewelry

India’s jewelry industry could lose business to rivals such as China and Mexico if the US goes ahead with its proposed new tariffs on the sector, industry leaders warned this week.

Fresh import duties would jeopardize jobs and the well-being of the industry in both India and America, officials from the southern Asian nation said Monday in a meeting with the US Trade Representative (USTR).

The calls come after the USTR threatened to levy punitive tariffs of up to 25% on 17 jewelry categories originating in India, as well as on certain goods from other countries. The action, which it announced in March, was a response to e-commerce taxes in those jurisdictions that targeted online retailers. The proposed tax excludes loose diamonds.

Around 140 members of the Indian trade submitted petitions against the move before the April 30 deadline, the Gem & Jewellery Export Promotion Council (GJEPC) said Tuesday. The USTR allowed a panel of industry representatives to present comments at the virtual meeting.

Leading the delegation, GJEPC chairman Colin Shah argued that India had already seen a decline in gold-jewelry exports to the US after losing its preferential trade status with the US around 15 years ago. The latest move would exacerbate the situation, he insisted.

“Further [duties] on jewelry will accelerate that drop, and the beneficiaries will be China and Mexico,” Shah told USTR officials.

While Indian jobs would shift to other countries, US jewelry companies would miss out on the long credit and memo facilities that Indian suppliers offer, Shah added. In addition, India jewelry companies operate an estimated 500 offices across the US, employing thousands of locals, he asserted.

India’s exports of gold jewelry to America fell 22% from $1.9 billion in 2007 to $1.49 billion in 2019, according to a report the GJEPC released in March.

Source: Diamonds.net

Retail Diamond Jewelry Sales Recover in India

Forevermark store

Sales of diamond jewelry in India are recovering and could reach 85 per cent of last year, despite the pandemic, says De Beers.

A surge over the Diwali period, together with strong performances early in 2020 before COVID-19 hit, will largely make up for the second-quarter “washout”, said De Beers India managing director Sachin Jain.

“We saw very high surge in number of consumers with pent-up demand where consumers came and bought,” he told the Press Trust of India news agency.

“Due to government restrictions on travel and number of people allowed in gatherings, a lot of the overall budget for wedding is being utilised towards jewellery.”

He said the De Beers’ brand Forevermark was expected to increase its number of retail outlets by 10, to 270, by the end of the year.

He predicted diamond jewelry sales across all retailers for 2020 would be 70 to 85 per cent of 2019.

Source: idexonline.com

India Says Slump in Diamond Exports Is Much Worse Than 2008

India diamond

Diamond exports from India, which polishes about 90% of the world’s rough diamonds, will collapse by as much as a quarter this year as the pandemic crushes demand and breaks supply chains.

Overseas sales of cut and polished diamonds may slump 20% to 25% in the year ending March from $18.66 billion last year, according to Colin Shah, chairman of the Gem & Jewellery Export Promotion Council. That will push exports to the lowest in data going back to the 2009 fiscal year on the association’s website.

“In 2008, things were bad for a quarter and business recovered after that,” Shah said in an interview. “This is now two quarters gone.” While festivals such as Diwali, Christmas and Valentine’s Day will prop up demand in the next six months, that won’t be enough to lift full-year exports, he said.

Losing Luster

India imposed one of the world’s strictest lockdowns in March to contain the coronavirus outbreak. That brought activity to a halt and put the economy on course for its first annual contraction in more than four decades. With more than 7 million infections, the country is one of the world’s virus hot spots.

The measures to control the pandemic meant production centers were closed or operating at very low levels, and rough-diamond imports fell in line with poor end-product demand. The country’s diamond exports sank 37% to $5.5 billion in the six months through September from the year-earlier period.

Workers have now started returning to the diamond-polishing hubs of Surat, Mumbai and Kolkata, and factories are operating at 70% to 80% of capacity with social-distancing norms in place, Shah said. Still, it’s difficult to predict global supply chains as rules to control the virus change frequently, he said.

Uneven Recovery

The International Monetary Fund warned this week the world economy faces an uneven recovery until the virus is tamed. Chinese consumers are starting to spend again, while in Europe, the luxury sector is back near pre-pandemic levels despite a surge in Covid-19 cases that’s hurting normal tourism.

De Beers sold about $467 million of rough diamonds in its eighth sales cycle of 2020, Anglo American Plc said Wednesday. Sales improved compared with $334 million in the previous cycle, and $297 million during the same cycle in 2019.

“We continue to see a steady improvement in demand for rough diamonds in the eighth sales cycle of the year, with cutters and polishers increasing their purchases,” said Bruce Cleaver, chief executive officer of De Beers. “But these are still early days and there is a long way to go before we can be sure of a sustained recovery in trading conditions.”

Source: bloomberg

A Crucial Moment for Artisanal Miners

Artisanal Miners Sierra Leone

The question of how to tackle the hardships facing informal diamond miners is as pressing today as it was when it first arose nearly 20 years ago.

It was first touted as an issue that perhaps the Kimberley Process (KP) could incorporate into its mission. But the KP was not equipped — or mandated — to meet the challenge, even if the sector represented an Achilles heel for a body tasked with facilitating the cross-border trade of responsibly sourced rough.

Instead, the Diamond Development Initiative (DDI) formed, taking a developmental approach to advancing artisanal miners. Since its inception, the DDI’s goal has been to create an infrastructure that allows these miners to sell their diamonds through legitimate means, get a fair price for them, and make a sustainable living.

Operating primarily, though not exclusively, in Sierra Leone and the Democratic Republic of the Congo (DRC), the organization’s work includes enabling community development; engaging with governments to formulate policies; organizing miners into cooperatives; providing professional training; and running initiatives to raise the diggers’ income, such as introducing them to new buyers.

Typically, the diggers work for less than $2 a day. With such low income, they’ve historically been incentivized to sell their diamonds on the black market, where the stones may be smuggled across the border, mixed with other goods, given a KP certificate and sold on the global market.

With an estimated 1 million to 1.5 million people working in the sector across 15 countries in Africa and three in South America, the DDI has spent much of its time registering miners in its systems and educating them on how they can benefit from working through its channels.

The organization achieved a significant milestone in April last year when it launched the Maendeleo Diamond Standards, a certification system designed to connect artisanal and small-scale diamond miners with responsible supply chains.

The standards include training on legal issues, community engagement, human rights, health and safety, ways to ensure violence-free operations, environmental management, interactions with large-scale mining, and navigating a site closure.

Clearly, given the scope of the artisanal mining sector, challenges remain. The DDI has had limited resources to pursue its goals and expand its reach.

In that context, the group announced in late July that it had merged with Resolve, a much larger non-government organization (NGO) engaged in addressing social, health and environmental issues. Being part of Resolve will give the DDI additional resources, such as administrative support for the work it wants to carry out, explained DDI founder and chairman Ian Smillie, who is joining Resolve’s board of advisers along with DDI vice chair Stephane Fischler. The group will be a division within Resolve and go by DDI@Resolve, with DDI executive director Ian Rowe at the helm.

The merger was born of the realization that the vast number of initiatives out there advocating for artisanal miners — not just in diamonds, but also in minerals such as gold, cobalt, tin, tantalum and tungsten — could lead to confusion. With NGOs, private companies, and government agencies all approaching donors and policy-makers to get support for their programs, the messaging could get muddled, Smillie explained. A pooling of resources would make for more efficient processes and a better outcome for the artisanal mining community.

Another example in July was De Beers’ GemFair program partnering with the Deutsche Gesellschaft für Internationale Zusammenarbeit and the Mano River Union — a cross-border association comprising Sierra Leone, Liberia, Guinea and the Ivory Coast — to develop training in those four countries. Efforts like these have become especially important in the Covid-19 environment, where diamond demand has slumped to historic lows.

While the pandemic has halted activity in the DRC, Sierra Leone has been better able to manage due to its experience with the 2014 Ebola outbreak. But like the rest of the trade, artisanal miners need to think beyond Covid-19 and make sure the right systems are in place to facilitate sales when demand returns. That challenge is especially difficult for these miners, who rely on the DDI’s guidance to gain access to the global diamond market. Hopefully, Resolve will help broaden the DDI’s scope. And as activity scales up, it will be up to the greater jewelry industry to support this important part of the global diamond community.

Source: Diamonds.net

India Extends Deadline for Duty-Free Reimports

Polished diamonds

The Indian government has granted diamond companies extra time to ship polished goods back to the country without incurring customs duty.

At present, reimports are subject to the 7.5% levy once the diamonds have been outside India for three months. The Central Board of Indirect Taxes and Customs (CBIC) has extended the deadline by a further three months for all parcels for which the cutoff date was previously between February 1 and July 31, it said Friday.

The country’s Gem & Jewellery Export Promotion Council (GJEPC) had been lobbying for the change after the Covid-19 pandemic delayed the return of goods companies had sent overseas for grading and other services.

“The latest notification on the extension of three months on reimport of certified diamonds is a great respite for our exporters,” said GJEPC chairman Colin Shah.

Last week, the council urged the government to reduce customs duty on polished to 2.5%, arguing that the move would boost India’s status as a hub for trading and distribution of diamonds.

Source: Diamonds.net

India Extends Import Curbs as Surat Shuts Again

Melee grading at De Beers Group

Indian trade bodies have recommended continued limits on rough-diamond imports in July, with a fresh weeklong shutdown of the Surat cutting sector adding to concerns about the market.

The Gem & Jewellery Export Promotion Council (GJEPC) and four other organizations have called for the industry to avoid shipping rough into the country between July 10 and 31. They are giving companies a window of July 1 to 9 in which to import goods to keep factories operational, and will review the policy in the final week of the month, the groups said in a letter to members Tuesday.

“Over [the] last few weeks, manufacturing operations have commenced, albeit under several constraints because of issues [such as social distancing],” they noted. “In view of this, it was generally felt that some new raw materials would be needed for continuing operations and keeping the labor force employed.”

Weak polished demand during the coronavirus pandemic led to fears of a diamond oversupply, prompting the GJEPC, the Bharat Diamond Bourse, the Mumbai Diamond Merchants Association, the Surat Diamond Bourse and the Surat Diamond Association to call for a rough-import pause for a month from May 15. They later delayed it to June 1 so companies could complete outstanding shipments.

These initial curbs have helped reduce stockpiles and manage cash flow, while miners have also offered support by being flexible with contract clients’ purchasing obligations, the groups added. The GJEPC will write to the large rough producers, urging them to continue that policy to avoid a collapse in the value of inventory, the letter stated.

However, the industry must still “proceed with great caution,” the organizations warned following a Saturday meeting with trade members.

“It is difficult to say when the Indian diamond industry will be fully operational,” said GJEPC chairman Colin Shah. “The industry [has] resumed manufacturing activities in a limited way, while maintaining all the stringent safety norms. But these are unprecedented times.”

The trade must, therefore, strike a delicate balance between continuing operations and maintaining workers’ livelihoods on the one hand, and ensuring health and safety on the other, Shah added.

Surat closure

The sector suffered a setback on Monday when the Surat Municipal Corporation ordered the closure of all diamond-manufacturing units in the city for seven days, according to a note the Surat Diamond Association released on Tuesday. More than 700 diamond workers in Surat have tested positive for Covid-19 in recent weeks, with the polishing industry becoming a local virus hot spot, the Deccan Herald reported.

Diamond cutting in India has struggled to restart, even after the government relaxed the lockdown rules it introduced in March to contain the coronavirus. The Surat sector gradually reopened in May following a full closure, with the government allowing 50% of workers in factories and 33% in offices. But several outbreaks at manufacturing units have forced companies to shut again and send workers into quarantine.

Local media have carried reports of staff members attending work while unwell, with communal meals and the use of air-conditioning intensifying the risk of infection.

China dispute

Adding to the troubles, a diplomatic rift with Beijing has led to unsold memo goods being held up at Indian customs on their return from Hong Kong and China, traders told Rapaport News. The Indian government has reportedly told customs officials to check all imports from China following a June 15 military clash in a disputed Himalayan border region that killed 20 Indian soldiers and caused an unknown number of Chinese casualties.

Companies might need to route goods via other locations such as Dubai at extra cost to avoid the bottleneck, an executive at a diamond manufacturer explained.

“We have been instructed [by customs agents] not to export anything, specifically diamonds, from Hong Kong to India, as customs have completely refused to release those parcels,” he said. “I see a problem escalating, and if this situation doesn’t get under control in the next two or three weeks, there definitely will be an issue.”

Source: Diamonds.net

Robert Mugabe’s appearance in diamonds inquiry delayed

Thief

Former Zimbabwe president Robert Mugabe will not appear before a parliament committee this week to answer questions on multi-billion-dollar corruption in the diamond industry after the hearing was postponed, a lawmaker said on Monday.

The 94 year old Mugabe had been summoned to appear before the mines and energy committee on Wednesday.

But the member of parliament who is leading the inquiry said the hearing had been postponed to a date yet to be decided by the clerk of parliament.

“The committee had already resolved to invite the former president to give evidence,” Temba Mliswa, mines and energy committee chairperson told AFP.

“It is the clerk of parliament who will write to him (Mugabe) to come to parliament.”

Mugabe’s name did not appear on the parliament committee meetings scheduled for this week.

The lawmakers plan to question Mugabe over his 2016 claim that the country had lost $15-billion (R188-billion) due to corruption and foreign exploitation in the diamond sector.

The committee has already interviewed former ministers, police and intelligence chiefs to answer on diamond mining operations at the vast Chiadzwa gem fields.

Mugabe ruled Zimbabwe from 1980 until he was ousted last year after the military took over briefly and his once loyal Zanu PF party turned against him.

The former ruler, whose own regime was accused of siphoning off diamond profits, has described his ousting as a coup, and that it must be “undone”.

Zimbabwe discovered alluvial diamonds in Chiadzwa, in the east of the country, over 10 years ago, and rights groups have accused security forces of using brutal methods to control the scattered deposits.

Rights groups say over 200 people were killed during operations to remove illegal panners from the area.

Amid allegations of massive looting, Zimbabwe allowed several diamond companies to mine the area – most of them as joint ventures between the government and Chinese firms.

Source: AFP