End Year Letter From Ernie Blom

2017-12-26

From the office of Ernie Blom,

President,

World Federation of Diamond Bourses


 

December 2017


 

Dear WFDB Member,

 

It seems incredible, but we are already approaching the end of 2017 and a new year is waiting just around the corner. And on that note, I would like to give you a brief review of the year and where I believe we will be heading in 2018.


 

We had a wonderful start to the year with our Presidents Meeting in Mumbai, where we were so kindly hosted by the Bharat Diamond Bourse and the Gem and Jewellery Export Promotion Council with their warm hospitality. I was delighted that there was such a large number of participants, and we held excellent discussions on all the most critical diamond industry issues.


 

This year was also a milestone for the WFDB as we celebrated the 70th anniversary of this organisation we all love so much. It was completely right that the celebration took place in Antwerp where the WFDB was established following the Second World War. As I said in my speech to members of the Antwerp diamond industry, WFDB Presidents and others at the gala dinner in October, the creation of the WFDB from our perspective today seems like an obvious development. However, at the time, after the tragedy of World War II, there was great distrust in the air and not all industry members across Europe and elsewhere were in favour.


 

Fortunately, people were able to put aside their suspicions and antagonism, and that allowed for the establishment of the WFDB which does such extraordinary work in bringing us all together and creating a mechanism that works for the good of diamantaires everywhere, and for consumers who benefit from our work in defending the integrity of diamonds.

 

It has been my honour to inherit and preserve the heritage of the WFDB while working with colleagues to take the industry forward and to encourage a new generation of diamantaires to follow in our footsteps and set a new path.


 

And in this vein, I would like to draw your attention to a letter from Prince Mbetse, Chairperson of the South African Diamond Manufacturers Association (SADMA) and an executive member of the Diamond Dealers Club of South Africa, which follows my letter. Prince summarises perfectly the important role played by the WFDB and why it still has a critical function today in dealing with the issues that face the global trade. 


 

Please take the time to read it, and quote it or use it any interviews or publications in which you are involved.
 

Among the more disturbing issues that I would pick out from this year was the advertising being carried out by some of the synthetic stone manufacturers. I believe that promotion based on the claim that such factories are environmentally clean and that the diamond industry, by contrast, is somehow destroying the setting in which mines are located is not only false, but utterly misleading. Factories producing synthetics – and let's remember that they produce hundreds of stones at a time – clearly has a negative impact on the environment due to the huge amounts of energy that these plants require. Needless to say, this is not mentioned.


 

Diamond producers, on the other hand, have to clear tens of bureaucratic and other hurdles relating to environmental and other concerns. They must commit to monitoring the quality of the air, ground and water in the vicinity of the mines. And when the mining work is completed, they are committed to returning the area to its former self.


 

And what of the synthetic stones themselves? Ironically, the biggest problem that synthetics makers face is that as output becomes ever more efficient, their stones lose even more money when a similar stone is made more cheaply. In other words, a stone that was made a few months ago in China, for example, and sold for 40 percent less than a diamond created billions of years ago and brought to consumers by miners who are making a livelihood for their families, loses even more of its value. Meanwhile, a diamond retains its value and is passed on from generation to generation. We need to remain vigilant to continuing false advertising which seeks to paint our industry as something it most certainly is not. 


 

Let us all commit to spread this message: diamonds do good. It's not a slogan, it's a real fact. Diamonds put food on the table and pay bills. It's a fact. We must continue to tell the story of the good that diamonds do and the livelihoods they provide for miners and their families across the world, particularly in Africa. We have a wonderful story to tell and should be proud of telling consumers about it.


 

Moving on to other developments this year, I think the most important by far is the expansion of the budget – and geographical footprint – of the work of the Diamond Producers Association. From an initial annual budget of $6 million which was expanded to $12 million, members of the DPA made the courageous decision to boost it very substantially this year to $57 million. This is allowing the DPA to carry out much-needed work not only in the United States, but also in India this year, and in China in 2018. And talking of 2018, I hope the DPA's budget will be further increased next year.


 

I believe we will see our industry continue to stabilise next year and, in addition, after several years of thin margins for diamond manufacturers, they will start to see expanding profits. 
 

In the area of financing, which has created challenges for us in recent years, I expect the diamond industry and the financial institutions to come closer together providing much needed credit for the midstream sector of the pipeline. As we continue to show that we are a transparent business with nothing to hide and willing to regulate ourselves at the highest levels in order to defend the integrity of diamonds and the whole pipeline, we will see a range of financing options becoming available.

 

I believe we will see some of the world's major economies – particularly those of the United States, China and India which are also the main diamond-consuming countries – continue to improve in 2018. This gives great encouragement and reason to be optimistic as we head into the New Year.


 

I would like to wish you all a healthy and prosperous 2018, with best wishes to you and your families.

 

With sincerest regards,

 

Ernie Blom


 

 

The Relevance Of The WFDB Today


 

By Prince Mbetse 


 

To all members,


 

The World Federation of Diamonds Bourses (WFDB) is a body that has been in existence for 70 years. Its chief aim, as set out by the founders, has been to bring together the world’s diamond exchanges. From the time of its inception, industry players saw the importance of a universal body that would focus on all matters that affected this trade. Interestingly, this is the first time in its history that a South African is at its helm. 


 

One may ask whether there is still any need for an umbrella body to keep an eye on the affairs of the diamond trade globally. Perhaps each individual country’s own domestic laws and regulations coupled with its home grown industry organization could be sufficient to cater for the global industry needs, including keeping it beyond reproach.

 

To answer this question it may be helpful to look at the WFDB’s own mission statement. The statement reads, “The WFDB will lead, advise and manage its affairs with the objective of securing a growing, profitable, respected, and sustainable internat ional diamond industry. The WFDB will fulfil its responsibility by upholding and ensuring standards, protecting the industry’s reputation and, where necessary, instituting disciplinary measures.” It is currently arguable as to whether or not the diamond industry is either growing or profitable, and it is these very two factors that have a bearing on its sustainability. If the first two are compromised, one can logically conclude that the future of the industry is itself compromised.


 

As far as commodities go, few can be compared to diamonds in terms of their vulnerability to negative perceptions. The diamond needs to project a positive sentiment in the minds of the consuming public in order to maintain its place as a preferred luxury item. This requires a uniform list of standards, rules, and values with which any person involved in the trade must comply. Today’s consumer, and especially the so called millennial generation, is not only interested in the bling inherent in diamond adornment, but also cares about other factors such as environmental degradation and the industry’s moral and financial rectitude. If these issues are to be addressed, transparency is crucial. For transparency to be achieved a universal body is necessary to formulate, apply, and oversee a uniform set of rules and to sanction transgressors. In this respect, the WFDB has been serving industry for nearly three quarters of a century.


 

One of the biggest achievements of the global diamond industry has been the formation of the World Diamond Council by the WFDB and the International Diamond Manufacturers Association (IDMA), which played a major role in the establishment of the Kimberley Process. This initiative was aimed at ensuring a universally clean diamond trade, and was, of course, in response to the very important matter of “blood diamonds” that were seen as fuelling and funding conflicts in countries such as Angola and Sierra Leone. Despite the challenges that this initiative has had, including real and perceived structural shortcomings, it cannot be denied that the Kimberley Process has been effective in ensuring the filtering of the bulk of globally traded diamonds and thereby restoring the confidence of the consumer in the commodity. It is difficult to imagine such a process successfully being launched and maintained without a united global industry body taking the lead.
 

The diamond industry today faces challenges that are different from those it had even as recent as 10 to 15 years ago. Declining demand, a weak global economy, fierce competition from other luxury items and the growth of a synthetic diamond trade that does not always play fair are amongst the biggest sore points with which the industry has to contend. These issues are too vast and too important to be left to the industry players of an individual country to address. If anything, today more than ever before, the industry needs a body such as the WFDB to coordinate all the programs necessary to ensure the survival of the industry. Strengthening the organisation should be considered the top priority in these very turbulent times for the diamond. It is only through a well-defined and sustained effort that the diamond can regain lost ground and reclaim some of its lost sparkle.


 

Prince Mbetse is the Chairperson of the South African Diamond Manufacturers Association (SADMA) and an executive member of the Diamond Club of South Africa.


 


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