The need for significant capital investments will be the main trend in the diamond mining industry in 2021-2030

The prospects of the diamond industry in the post-crisis period are discussed by the Rough&Polished correspondent with Sergey Mityukhin, Candidate of Geological and Mineralogical Sciences, Honored Geologist of the Russian Federation.

06 july 2020

Young Diamantaires: We create initiatives for the benefit of diamond communities worldwide

The World Federation of Diamond Bourses recently launched its Young Diamantaires website. The organization has worked for the past four years with young members of the diamond community all over the world to create a platform through which they can express...

29 june 2020

Those who implement the right anti-crisis strategies have more chances

It is not surprising that because of the pandemic and the crisis, the most heated debate in the jewellery industry is about what is happening and the possible ways of survival. Irina Slesareva, an expert, art director of the Russian Diamond Line contest...

22 june 2020

The secondary diamond market in Russia is not mature although its prospects are huge

Pavel Barannik, the founder and head of the Moscow Gemological Laboratory, the founder of the Gemological Institute and President of the Moscow Diamond Club, graduated from the Gemological Institute of America (GIA). He is an expert and consultant...

15 june 2020

Johan Erikson: The industry needs to spend more on advertising and marketing

First Element is a fully independent Diamond Services Company registered in Belgium, Botswana, South Africa and Dubai. First Element is committed to providing a world class diamond service aimed at adding value to the entire supply chain, from the daily...

08 june 2020

Post COVID-19 Scenario: A stronger and more organized Indian diamond industry to emerge

01 june 2020

As India went into ‘Lockdown 4.0’, analysts from the Indian G&J industry believed that many of the Surat's diamond factories will not survive COVID-19, especially the city’s 5000 odd units that form 90% of the manufacturing units which are small unregistered and vulnerable.

Surat, the cutting-and-polishing hub had been dormant since the COVID-19 lockdown was imposed on 25 March, until recently. Besides, as most of the units are small, and the nature of cutting and polishing typically needs four workers to operate near each other, implementing any kind of social distancing rules are unlikely when lockdown eases.

Another major issue will be the shortage of workers, as an exodus of unpaid migrant artisans has returned to their villages in Gujurat. More than 400,000 have already left Surat, maybe for good. And, it is estimated that about half of the city's 750,000 diamond workers, who are still in the city may eventually resume work at the larger units.

Meanwhile, to bring a balance to the diamond industry in terms of high inventory of rough and polished stones, the diamond trade bodies urged members to sign up for a voluntary embargo on rough imports, so that they can sell existing inventory rather than produce new goods.

In a bid to stop the exodus of workers, The Surat Diamond Association and the Gems and Jewellery Export Promotion Council called for work to resume in Surat with up to 30 per cent of workers. According to the industry leaders, this step is urgently needed to prevent thousands of laid-off migrant workers from returning to their homes in Saurashtra... maybe never to return. By resuming even limited production, India's diamond industry can clear an estimated $1bn polished diamond inventory for export, according to industry leaders.

Industry leaders stated that making these units operation will help workers to earn their livelihood again. SDA president Babu Kathiriya said, “The units should be allowed to start by maintaining social distancing and limited manpower. If units restart, the workers’ exodus can be controlled.” However, the challenge remains with the MSMEs, who have diamond units in the Varaccha, Katargam, Punagam and Mahidharpur areas of Surat, where Corona cases were abundant.

As the Indian G&J industry is slowly opening up, Rough&Polished tried to assess the prospects of diamond manufacturing companies for polished diamond sales, after the COVID-19 period. A few diamond industry leaders shared their views on the possible volumes of future polished sales, prices and demand in the market… post COVID-19.

The Surat Hira Bourse (SHB) exported about Rs 3,000 crore worth of polished diamonds via Mumbai to Hong Kong. Regional chairman of GJEPC, Dinesh Navadiya said, “Diamantaires need to meet their export orders. The units should be allowed to start with less than 30% workforce. The diamond offices in Mumbai are working with 10% workforce.”

Painting a positive picture, Sanjay Kothari, Vice Chairman- KGK Group said: "The industry is going to pick up a global momentum post-July 2020, starting from China to Europe to the US, but volumes are anticipated to descend by about 1/3rd. No large pressure will be seen on prices because the supply is contained for the entire April, May, and June. Larger stones above 5 carats might witness a little stressful sale but other prices will be more or less stable with minimal adjustments. Demand for goods will escalate slowly towards the third quarter of the budget year. The first quarter was completely barren but we are hopeful that it might shape up in the second quarter. Thereafter demands will grow in the third quarter, followed by good scores in the fourth quarter of the financial year 2020-21."

Initially, polished diamonds of around $90 mln were exported from Surat, which is minuscule compared to the polished diamond inventory of more than $2 bln heavily weighing on the cutting centre. However, the diamond industry in Surat has heaved a sigh of relief with the resumption of exports, though in a small quantity, because the diamond polishing units and traders who import rough diamonds were also facing payment challenges with depreciation in rupee value.

To provide some relief, the Indian diamond trade revised its appeal to rough diamond importers and now has recommended to hold back imports from June 1 instead of from May 15. This is to give rough importers sufficient time to complete outstanding shipments. As a result, GJEPC and the trade organizations have now recommended that members refrain from rough imports from June 1 until June 30, assuring that further course of action will be decided by the end of June.

About the situation in the Indian diamond industry currently, Piyush Patel, Director-Dharmanandan Diamonds Pvt Ltd said, “The situation is still unclear and changing every week, therefore, it's very hard to predict anything. To the best of my knowledge, factories may start from this month with a maximum of 25-35% capacity then gradually more workers may start returning from their hometown. Hopefully, things might come back to normal in September- October 2020. On the other hand, sales started slowly in China, I believe that its nearly 25% activity of the normal market. A positive side of the trade in all other centres like Dubai, Antwerp and NY is that they are opened with limited trading activities, but they will gradually be geared up since retailers in the USA started operating stores. I also believe that due to less manufacturing, strong demand for polished goods may be observed in the month of July-August and that will drive prices upward.”

Regarding the rough import situation in India, the picture is still somewhat hazy in India. Contrary to the fact that India was considering the possibility of introducing a moratorium on rough diamonds, Angola’s national diamond trading company, Sodiam claims that it has sold five parcels of rough diamonds produced by Sociedade Mineira de Catoca to three Indian companies. How such imports will affect the Indian diamond industry’s health is left to be seen, as there are possibilities that such imports may continue to take place as Indians are known to source rough diamonds from multiple sources.

Recently, India’s retail jewellery industry too began to reopen as restrictions were partially lifted in certain parts of the country, bringing relief to the trade, which remained closed since March 25, 2020. In a report, India Ratings and Research on 11 May said it expects jewellery sales to decline by 25 per cent in 2020-21 - April-March on account of over 40 days of lockdown following COVID-19 pandemic and an overall reduction in disposable income. The demand for retail jewellery will also remain muted in 1H FY21 -April-September, however, a sharp recovery is expected in the third quarter of FY21 - October-December, due to the festive and wedding season.

Recently, the regional Government of Maharashtra State relaxed rules to allow a limited return to work for jewellery businesses in the SEEPZ special economic zone, as well as the Bharat Diamond Bourse with certain precautions and only for fulfilling export commitments. The Bharat Diamond Bourse (BDB) in Mumbai has reopened and business is slowly resuming in India's key export markets - Hong Kong, China and UAE. Also, it is believed that BDB had received export interest applications from the members worth $550Mn from 1673 consignment parcels. SEEPZ is also expected to have exported $10Mn worth of diamonds from 50 units.

On the march forward beyond COVID-19, the diamond and jewellery industry is taking all steps to return to normalcy. The Surat, as well as the Jaipur manufacturing centres, have resumed work after many weeks. These centres are operational by adhering to the Covid-19 safety guidelines set up by Government. The Gem and Jewellery Export Promotion Council, along with other trade bodies have been pursuing the State and Central Government to make all the major gem and jewellery centres operational across India to clear the backlog of orders from the pre-lockdown period.

Aruna Gaitonde, Editor in Chief of the Asian Bureau, Rough&Polished