PRESIDENT'S MESSAGE

October 25, 2012 - Dear Members and other stake holders,
The 35th Congress of the World Federation of Diamond Bourses in 2012 was a great success. Please allow me to firstly congratulate and thank those who have contributed towards making this event possible.

The venue and organisation of this, the 35th Congress of the World Federation of Diamond Bourses, has been outstanding and I would like to extend my personal thanks to the hard working organising committee that have made this possible, you have made us proud.

I would like to thank all the Presidents from the various Bourses around the world as well as other delegates who took time out of their busy schedules to attend this congress in Mumbai. A goal of mine is to ensure that we, as an organisation, add value to all our members and I am certain that many of you have already been made aware of some of the new ventures we aim to incorporate in our strategy.

We need to take a step forward ensuring that we move from “talk to action” and bring our organisation to the forefront of the diamond industry, a leader and “do-er”. The diamond industry is unlike any other industry in the world in the sense that these precious gems will be around forever, but this also means that every year the number of diamonds in circulation grow exponentially.

Every year we introduce more diamonds into the market place, but the trade in diamonds is not restricted to what we place in the market. Over the past few hundred years, diamonds have been put into circulation and as private individuals sell these precious gems, we have also seen a major growth in “previously owned” diamonds. This we have to protect at all cost. The new Executive team elected at this Congress will be required to build the image and long term standing of the WFDB.

Like any other organisation, it entails hard work and dedication from all to achieve the position we want to occupy in the world diamond arena. As the great writer Daniel Defoe said: “The soul is placed in the body like a rough diamond, and must be polished, or the lustre of it will never appear.” Going forward it is my intention to lead this organisation and entrench it as a global entity that is recognised and respected as such.

The WFDB must add value to its membership while protecting the emotion and integrity of diamonds in all phases across the globe. We must never fear change for without change nothing will ever develop, as I have often said in the past: “Change is not necessary an indictment of the past, but rather building on it.” Diamonds take millions of years to create, but if we are unwilling to change with the “today generation,” we undoubtedly stand the chance of being left behind. While we build our future, it is also our duty to ensure that the industry speaks up against any form of human rights abuses and, whenever possible, invest in the development of skills for those lesser fortunate people associated with our industry.

The diamond industry has shown itself to be a compassionate industry and we would like to see this sense of responsibility leading to the development of communities in under developed areas. Empowerment by means of education of people and investment in development is key to our long-term goals as a global industry. “The world economic picture in the past year was not a happy one. The forecast recovery of the economies of some of the major western countries – particular the USA –was not maintained at the expected pace. Unemployment continues at a high level while inflation rates abated only moderately, and international monetary markets were assailed by currency instability.” This account would probably accurately summarise conditions of the past 12 months. Yet, it is a statement made by Mr Harry Oppenheimer 35 years ago in an interview with SA jewellery News.

By this statement, it is clear that we as an industry have been faced with many difficult times. However, what is evident is that during these trying circumstances, the industry has grown and has shown its resilience during challenges, especially these past few years. The issue of synthetics – a subject I suspect will remain on the table for many years to come. Our policy is and remains: we appreciate that synthetic diamonds have a place in the market and we have no objection with this as long as it is clearly stated that these products are synthetic diamonds when they are sold to consumers or channelled into the industry.

This is critical as we need to protect the consumer’s rights when they are buying diamonds and if this is not done we risk losing consumer confidence. All various role players in the diamond industry must unite to speak with one voice and show a united front to protect the integrity of our businesses by declaring synthetic diamonds as is required by law. We need to adapt a zero tolerance in this respect in order to ensure an orderly marketplace, one in which consumers are assured of what they purchase. The grading of diamonds remains a debatable issue. As we see the “global village” expanding and new methodologies employed to sell diamonds, i.e. the growth in Internet sales, grading consistency is a concern now more than ever before as buyers will buy diamonds via the Internet without having physically seen them. I would like to call on all labs across the world to strive for uniformity in grading.

A word of recommendation in this regard is to ensure that you know and trust the source from which you buy. Another issue which remains contentious is that of brown overtones. As with my previous point this is an issue effecting consumer confidence and in order to deal with this in the most transparent manner possible we need to strive to have all diamond grading labs across the world recognise the existence of “brown overtones” and make these disclosures when grading diamonds in order to promote consistency in determining their true value. It remains the best policy to buy from people or companies that are members of recognised trade associations as you will always have recourse if something is not correct.

While the Kimberley Process has done a great job in eliminating conflict diamonds across the world we need to be aware of continued pockets of bad publicity, often based on bad research or ignorance of the actual facts. We ask our members to be on the lookout for any negative publicity and to counter this when possible. The Kimberley Process is currently being evaluated and certain reforms will possibly be made to the KP by-laws to ensure that the needs of all stakeholders are met across the world. I want to make a strong call to the KP and governments across the globe who manage the KP to make it an “inclusive process” and involve the industry at all levels for it is only by including all role players that total buy-in is possible.

Africa remains a major producer of rough diamonds with 65% of the world’s production being mined on the continent. Set against this background, South Africa is set to take over from the USA as the next chair of the KP in 2013, the tenth anniversary of the Process, marking a special date and celebrating a Process started in Kimberley, South Africa in 2003.

The successes of the KP speak for itself with the reduction of conflict diamonds from an estimated 4% ten years ago to a minimal 0.25% today. Coupled to processes like the KP our industry remains one of the most regulated and self-regulated industries in the world. A very robust chain of warranties exists and we as an industry are proud of this as it ensures transparency at all levels and creates confidence in the minds of end users. In a fast changing world we need to be “light on our feet” and ready to embrace a changing marketplace. We have seen the phenomenal growth from the Asian markets, the repositioning and emergence of new financial super powers.

The growth seen over the past few years from the Chinese and Indian markets as opposed to the decline in real terms from the traditional western markets can leave no doubt as to the direction in which trade is developing. The long-term supply and demand gap of diamonds is growing exponentially as we approach 2020 and this is ensuring a more robust industry. Currently we have 14 billion US Dollars worth of diamonds being mined every year and it is estimated that the demand for diamonds in 2020 will be 20 billion US Dollars. This will place more pressure on the supply chain of Rough.

Yours sincerely

Ernie Blom President

World Federation of Diamond Bourses