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ALROSA’s diamond cutting and polishing to be headed by Pavel Vinikhin

Pavel Vinikhin appointed as Director of DIAMONDS ALROSA – ALROSA’s cutting and polishing division, one of the largest diamond manufacturers in Russia. In fact, he has been managing the enterprise since October 2016 when he was an acting director.

Yesterday

ALROSA posts financial results for H1 2017

On Thursday, ALROSA published a report on financial results for the period of January-June 2017 in line with the Russian Accounting Standards (RAS), from which it follows that the company's profit before tax amounted to 53.5 billion rubles...

Yesterday

De Beers Q2 diamond output up 36pc to 8.7 million carats

Anglo American said De Beers’ rough diamond production leaped 36 percent to 8.7 million carats in the second quarter of the year.

Yesterday

Rapaport Melee Index stable in 2Q

Melee diamond prices remained stable during the second quarter of 2017, with the Rapaport Melee Index (RMI) for small diamonds unchanged at 108.50 for the period.

Yesterday

Angola’s Lulo more than doubles Q2 output, sales

Sociedade Mineira Do Lulo (SML), which is owned by Lucapa, Endiama and Rosas & Petalas produced 4,203 carats of diamonds during the quarter ended 30 June 2017, an increase of 63 percent from 2,581 carats, a year earlier.

Yesterday

If not gemologists, who else will maintain the image of diamonds in consumers’ eyes?

10 may 2017

yuriy_shelementyev_xx3.jpgThe Moscow State University’s Gemological Centre created in 1995 trains the specialists in rough and polished diamonds, colour gems, jewellery, characterization, expert evaluation, grading and marketing. The MSU’s lecturers and researchers, scientists and experienced gemologists take part in its work. The Centre offers a number of educational programmes to the jewellery marker players as well as the services in gem and jewellery expert evaluation and grading. The Centre’s Gemological Laboratory develops the express methods for checking a big number of small-size diamond studs for being natural ones. This is of great interest to diamond jewellery manufacturers and importers. Yuri Shelementiev, Chief of the MSU’s Gemological Centre in an interview to the industry information agency Rough&Polished speaks on the creation of the National Gemological Association and shares his vision of the current jewellery market.

What is your prognosis about the demand for rough and polished diamonds?

The demand for polished diamonds is a driver for the demand for rough ones. The global demand for polished remains steady but it is necessary to take into account the effect of some decline in the demand due to the long-term and global economic recession. In the countries where this recession was deeper, a marked slowdown in the diamond demand will be more apparent. Moreover, the values and preferences of the younger consumer generations are different. They are less interested in the polished diamonds than the older generations are. 

What expects the Russian jewellery market in the years to come?

Over the last three years, the Russia’s jewellery market has been in a state of crisis. This crisis was caused by four reasons: lower purchasing power of the population with the high prices for gems and precious metals that account for the jewellery cost; more cautious approach of the people to planning their purchases, which reduces the number of impulse purchases; jewellery is losing its competitive edge to gadgets and other electronics; and the crisis of the consumer confidence in jewelers and jewellery on the whole. All this led to the jewellery market shrinkage and the recovery is not expected. The result is lighter jewellery, the use of low-end gems and their imitations, increased share of silver jewellery. All these are mass consumer goods. I do not see a single driver able to increase the demand for polished diamonds in the near future in Russia.

What can influence the diamond and diamond jewellery sales in the short-term, medium-term and long-term perspectives?

It is the image created by media and advertising that influences. With promoting the positive features of these goods – for example, emotional component in purchasing diamond jewellery and using it as a gift choice – one can expect the surge in demand. With the aggressive promotion of synthetics and polished diamonds bashing in media, the slide in demand could be expected. I think that two factors are the pre-requisite for the demand for polished diamonds: 1) higher income of the buyers as compared to their expenses, which allow to have disposable income to buy luxury goods, and 2) high position of polished diamonds in the hierarchy of values, which allows to prefer purchasing diamonds rather than watches, prestigious cars or exceptional travel experiences.

Some years ago, the talk about synthetic diamonds subsided. Is the subject launched again, in particular due to the demonetization in India?

The discussions of the synthetics diamonds in media start, progress and subside every now and then. Probably, because media finds it easy to describe the problem but finds it difficult to show the way out of the problem, practically the same information is used in the articles about the lab-grown diamonds. As for the market, the topic of the synthetics has not varnished, it has been existing since 1992. The problem is that mixing the synthetic diamonds to the natural ones would result (and already resulted) in the erosion of the customer confidence in these goods. Virtually, the synthetic diamond manufacturers try to sell the crystals for some percentage of the natural diamonds’ price, but they do not look further ahead and do not think about what price would the customer agree to pay for the synthetic diamonds if the synthetic diamond manufacturers would depress the demand for natural diamonds and their prices.

The percent of the lab-grown diamonds in the market will continue to increase. It means that the percentage of people seeking to buy natural diamonds but purchasing synthetic ones instead will also increase. I know the case, when the woman I know purchased an ‘ecodiamond’ in the USA. When making this purchase she did not know that she was buying a synthetic diamond. It is a perfect example of ‘ethical’ attitude towards a buyer! And you tell that the discussion of the topic has subsided …

Is this problem becoming a major hazard threating the natural diamonds market?

Just have a look at the history… 300 years ago, some goldsmiths came to the tsar Peter the Great and asked him humbly to set up an Assay Chamber. They were interested in having a hallmark on all the real gold jewellery in the market to fight against the imitation jewelry. Just imagine a situation that there is no assay supervision and a customer enters today the jewellery store but he does’t know whether there is gold in the jewellery in the shop displays…I believe the person will leave the store without any purchase and never comes back again to this store. Applying this analogy to the polished diamonds market, you will see how interconnected the uncontrolled development of the synthetic diamond market and the consumer demand drop are. But remember that polished diamonds are more expensive than gold.

How important is the generic marketing to maintain the demand for diamonds and should the diamond miners take part in it?

We always considered the promotion carried out by De Deers as an example of strategic marketing. These advertising activities enabled the creation of a steady demand for polished diamonds in the developed countries. When De Beers stopped investing much in these marketing campaigns it became clear at once that the demand would continue by inertia for some time but then would start declining. The existence of that advertising campaign itself in the diamond industry was unique: De Beers spent its money but thousands of dealers, jewellers and jewellery stores benefited from this marketing… They got a free ride - did not spend a dime but the customers came to them. It is no longer the case and it will never happen again. The recent promotion initiatives are a wan shadow of those campaigns when the tagline ‘A Diamond is Forever’ was acknowledged as the most successful advertisement slogan of the 20th century and the diamonds were recognized as currency valuable. This is no more than fantasy that today someone can work with rough and polished diamonds, diamond jewellery and spend no money on advertising. The gems do not sell themselves any more.

What is the National Gemological Association focused on, what are its tasks and goals, what was achieved for almost a year of its operation and what are the plans for the near future?

Let me tell you right here that gemology is not limited to rough and polished diamonds only. The knowledge about the gems is required alongside the whole pipeline – from a mine to customers – and a diamond is only one among the gems. Prior to the establishment of the National Gemological Association, the gemology formed long ago both in our country and abroad as a field of knowledge and profession. The unifying trends usually appear with the development of the market, it means that the gemological association in other countries have existed for rather a long time. One of the main challenges facing the gemology in our country is the difficult access to new knowledge constantly appearing in other countries as well as to the professional developments and ethical achievements made by experts in other countries.

As a result, our Association was set up to share best practices both in the country and abroad. These processes of exchanging the experience cannot be established quickly because much knowledge, many skills are know-how and those who own it are not ready to share it with the rest. However, gradually we accumulate that knowledge and co-operate with those who are willing to share it for the public good and for the development of our profession. Educational programmes, research projects, various forms of sharing of experience, conferences, visits to the deposits and international co-operation – these are the forms of the current work of the Association, and it plans to strengthen these lines of activities.

Actually, we are talking about creation of a professional community of gemologists who unite to solve mutual tasks, build up the professional image, gain recognition in our country and abroad, and - in no small measure – to strengthen the customer confidence in gems. Remember the analogy with the hallmark and think - if not the gemologist, who else will maintain the image of diamonds in the consumers’ eyes?

We believe that the qualified gemologists and laboratories able to distinguish the natural gems from the synthetic ones or imitations, as well as identify treated stones are the pre-requisite for the diamond and other gems market. All the jewelers who manufacture and sell the jewellery with natural stones and do not ask for the grade reports issued by laboratories when purchasing the stones, I would recommend to think about why they bring their goods to the Assay Chamber thereby giving their buyers the guaranty of the precious metal content, but do not get or give any guaranty to their buyers regarding the gems. Don’t they see any direct relationship between this practice and the lower sales of their goods?

Galina Semyonova for Rough&Polished

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