Q. What is CIBJO’s role in the international gem and jewelry industries?
GAETANO CAVALIERI: CIBJO, or the World Jewellery Confederation, is the primary international jewelry, gemstone and precious metals association, representing the interests of all individuals, organizations and companies earning their livelihoods from the mining, processing, manufacturing and trade of these products. We cover the entire sector – vertically, from mine to marketplace, and horizontally within each of the component parts in the various production, manufacturing and trading centers. Our members include national and international trade organizations from more than 45 countries around the world and many of the international jewelry sector’s leading corporations and service providers.
One of our most important roles is promoting the harmonization of technical standards, terminology, operating principles, and practices related to sustainability, responsible sourcing and transparent supply chains in diamonds, colored gemstones, pearls, coral and precious metals. To do this, we maintain the Blue Book system, which today is the most universally recognized set of jewelry and gemstone standards. We also produce other guidance documents, almost all of which are available at no cost.
Additionally, we are the only organization in the international diamond, gemstone and jewelry sectors to have received official consultative status with the Economic and Social Council (ECOSOC) of the United Nations. This enables us to advance programs and goals of the UN within the industry, serving as a technical expert, adviser and consultant to governments and the UN Secretariat. We also are a member of the UN Global Compact and are committed to the fulfilment of the Sustainable Development Goals.
Q. What are the most significant issues concerning the diamond industry that CIBJO is dealing with now?
GAETANO CAVALIERI: There are many issues being dealt with, but I will mention two specifically.
Within theInternational Organisation for Standardisation (ISO), we are currently assisting in the creation of International Standard 6893, which will provide quality control standards for diamonds of 0.25 carats and less. Our Diamond Commission Vice President Jean-Pierre Chalain was appointed as convenor of the working group overseeing the project.
The still-to-be-approved Standard 6893 will describe under which conditions the quality control of batches of small diamonds can be performed. It will provide recommendations using a statistical tool, known as Acceptable Quality Level, which will enable laboratories to perform the quality control of large quantities of small diamonds – including parcels of 500, 2,000 and even more than 50,000 diamonds – based on random samplings. This is extremely important for the luxury watch industry.
The second issue is the work that we have done in our Laboratory-Grown Diamond Committee, working in conjunction of our Diamond Commission. We have updated our guidelines, first published about two years ago, which outline the principles that will ensure laboratory-grown diamonds and natural diamonds are transparently separated. This is to protect consumer interests and the integrity of the diamond supply chain in general.
Related to this are defining guidelines for making claims related to social and environmental responsibility. We have stated clearly that no company can make such a claim when promoting its products unless it is able to back it up with clear third-party evidence.
Q. Still concerning diamonds, what were the most important takeaways from the CIBJO Congress in Jaipur in October?
GAETANO CAVALIERI: Our Diamond Commission focused largely on the currently complicated state of the natural diamond market. During the session, the Indian industry reported that rough imports have fallen quite dramatically this year, directly impacting the level of manufacturing in the center.
The Chinese market also performed less strongly than many originally thought it would after emerging from its government’s zero-COVID policy. But Simon Hui, Director of the Chow Tai Fook Jewellery Group’s Diamond Management Centre, told the congress that the fundamentals of market in China are still strong. Savings are up, meaning the potential for natural diamond sales remain high. Disposable income rose by 6.5 percent, and brand jewellery sales are expected to rise 10 percent to 14 percent over the coming year.
In his presentation to the session, Mahiar Borhanjoo, CEO of UNI Diamonds, looked at diamond price movement. The industry is cyclical, he said, but he suggested that much of the current data is distorted because it is being compared to the unusual rise in sales registered in 2021, which were themselves skewed because of COVID.
The congress in general considered the question of origin. In the case of diamonds, this is not because diamonds from one location are fundamentally more or less desirable physically than diamonds from another location, as is the case with colored gemstones, but rather because certain regions are considered to pose lower ethical risk than other regions.
But, as our Diamond Commission President Udi Sheintal pointed out, this type of differentiation is problematic, especially if diamonds extracted by artisanal miners are considered higher risk. For if those miners are automatically excluded from the supply chain, an often-poverty-stricken sector would be cut off from their main source of income, and that is not an ethical outcome.
Q. You have headed CIBJO for the past two decades. How has the diamond industry changed over this time?
GAETANO CAVALIERI: It has changed dramatically. When I became president, De Beers was still the overwhelmingly dominant rough diamond supplier, and only recently had relinquished its role as a generic promoter of diamonds. The Internet was in its infancy, so there were almost no online-sales. Digital scanning and pre-manufacturing planning devices were also largely non-existent, so diamond cutting was largely conducted as it had been for centuries. The Chinese market was still relatively small, and Dubai was not yet considered an important trading center. Synthetic diamonds, for that is what were they called then, were exclusively for industrial use. The Kimberley Process had just been established, although there was not yet a certification scheme, and conflict diamonds, which then constituted more than 4 percent of all goods sold, were considered the industry’s greatest challenge.
How different the world is now. De Beers’ market share today is about one third in terms of value, and less in terms of volume, and it mainly markets its own brands – both for diamonds and diamond jewelry. The amount spent on the generic promotion of diamonds, mainly through the Natural Diamond Council, is less than one third of that spent in 2000 by De Beers, and taking inflation into consideration is actually worth considerably less.
Diamond manufacturing has shifted almost entirely, at least in terms of value, to a computer-added design and computer-aided manufacturing model, which has not only enabled it to me more efficient but has allowed for the establishment of multi-national corporations with factories in multiple countries.
Online sales are of critical importance, for rough – much of which is sold today by tender, polished and diamond jewelry. Technologies and systems have been developed that allow for goods to be examined from afar.
Technological advancement also allowed for the development of gem-quality laboratory-grown diamonds – as synthetics are today mainly referred to – and the development of a new market category that competes for a share of the consumer’s pocket with natural goods.
Dubai is today the world’s largest rough trading center, and China the world’s second largest diamond jewelry market, with India also become a major consumer.
Conflict diamonds today make up considerably less than 1 percent rough diamonds produced, largely thanks to the Kimberley Process Certification Scheme, but ethical supply chains and responsible sourcing are considerably more prominent issues, and and due diligence compliance has become part and parcel of doing business.
All this happened over a 23-year period.
Q. What does the future look like for the world diamond industry? What are the challenges and opportunities it faces?
GAETANO CAVALIERI: The natural diamond remains an eminently marketable luxury product, and with the growing wealth in massive markets like China and India should have a glorious future. But it does face challenges.
One is laboratory-grown diamonds. As a product category, it too faces very real challenges, as it needs to find a way to maintain its aspirational status as its real value per-carat plummets, in the same way that other mass-produced products tend to do. Therefore, it is imperative that natural diamonds establish a very separate identity from laboratory-grown diamonds, so as not to suffer collateral damage.
As we all know, traceability is an extremely difficult task to achieve with diamonds, but we do need to aspire toward creating more traceable supply chains, in part because of consumer demand, but also because geopolitical forces are making this necessary.
There are no simple fixes for the challenge, although maybe one day technology will provide easily implementable solutions. In the meantime, all players – large and small – will need to do basic due diligence, to try and ensure that those before them in the pipeline acted ethically and responsibly.
Q. Tell us about your journey in the gem and jewelry industry, how you began and where you are now.
GAETANO CAVALIERI: My family has been in jewelry business for more than 200 years. I am the seventh generation in the industry, and my son is the eighth.
Our family wholesaling business was established in Sicily in the early 1800s. I am also the principal owner of a Milan-based consultancy offering strategic and marketing services to governments, organizations and companies in the luxury business sector.
I earned a Ph.D. in Economics from Catania University, where I specialized in marketing and market research. I also hold a Master’s Degree, awarded jointly by Catania University and the University of Rotterdam, in multi-criteria decision theory and business administration, finance and international marketing.
I have been President of CIBJO since 2000. In addition to that, I have served as president of the Italian Federation of Gold, Silver and Jewellery Wholesalers, been a member of the International Executive Council of the Gemological Institute of America (GIA), of the Goldsmiths’ Company of London, of the European Assay Association, of the International Coloured Gemstone Association (ICA), and chief financial officer of the World Diamond Council.
I was a consultant to the Italian Ministry of Industry and Commerce and the Ministry of Welfare, and to the European Economic Commission in the areas of harmonization of standards and value added tax (VAT) on gold.
I have been a consultant to trade fair organizers across Europe, specializing in the luxury industries, was chief of the International Relations Office of Confcommercio, the Italian General Trade Organization , a delegate to the Commission of Foreign Trade, a member of the board of the Italian Trade Commission, and an Italian representative to the World Trade Organization and the Transatlantic Business Dialogue.