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Jean-Marc Lieberherr: Medium to long term prospects for the world diamond market are strong

17 april 2017

jean_marc_lieberherr_xx.jpgDiamond Producers Association (DPA) was established in May 2015 by seven of the world's leading diamond companies, including ALROSA and DE BEERS, to maintain and increase the demand for diamonds, as well as their credibility.

One of DPA’s most important recent initiatives was the campaign "Real is rare" launched in October 2016, which is aimed at reviving the prestige of diamond jewelry.

In an interview to Rough&Polished, DPA Chief Executive Officer Jean-Marc Lieberherr tells about this campaign and speaks of his vision on the situation in the diamond industry.

The diamond market has stabilized, but remains cautious. Is it too early to say that the market has embarked on the path of recovery?

There are indeed some very positive signs from all key markets, including India and China which have been subdued over the past couple of years.  Confidence seems to be stronger, which is benefitting diamond consumption.  It is early days but there are some very positive signs.

What is your vision of prospects of the world diamond market in the medium and long term future?

The medium to long term prospects for the world diamond market are strong. The US market continues to demonstrate strong resilience and some pockets of strength, and we see opportunities to further grow demand from younger consumers.  In China and India, the growth of the affluent middle class will be a fundamental driver of growth and levels of market penetration are still low in comparison with mature markets.   The DPA of course will play a key role to play in driving demand in the US, India and China in particular.

What is the most disturbing for you at the moment, and what is encouraging?

There are still many misconceptions about the diamond industry, which do not take into consideration the very significant changes that have taken place in the diamond sector over the past decade.  The media coverage unfortunately often reflects issues of the past as opposed to today’s reality of an increasingly transparent and very responsible industry.  It is a key role of the DPA to ensure our sector is represented accurately and fairly so consumers understand that diamonds make the world a better place.

I am encouraged to see that the industry is coming together to build a strong future for diamonds. The sector is increasingly collaborative and focused, and certainly the DPA has been receiving strong support from other industry organizations and diamond centers.  It is also encouraging to see that younger generations are reacting very positively to the diamond narrative of naturalness, authenticity, sincerity and preciousness.  

What measures are required to improve consumer demand?

To increase consumer demand in a sustainable and durable way, we need to ensure that diamonds continue to appeal to consumers – and especially younger consumers at an emotional level.  Diamonds are billion-year old miracles of nature and unique symbols of durable love and genuine commitment.  There is magic in diamonds and that magic has to be communicated.  Many consumers today do not understand where diamonds come from and what a gift of nature they are.

It is also important to improve and continuously modernize the consumer experience through product innovation, designs, new on-line and in-store experience.  Other categories have probably evolved faster and we need to catch up.  This is work that involves all actors of the diamond jewelry value chain.  

Can the stake on consumer confidence stimulate increased demand?

Ensuring consumer confidence in the product and the supply chain is very important, but it also needs to work hand in hand with building desirability for the product and favorability for the industry – which are key aspects of the DPA’s work.

What are the objectives of the campaign ‘Real is Rare’?

‘Real is Rare’ is a new category marketing and communications platform. It reflects what we heard from millennials about how diamonds can continue to be an expression of love, adventure and commitment, however that looks to them.

A diamond stands for authenticity, strength and rarity. Like relationships, no two diamonds are the same and can represent a symbol of a real connection and commitment in all of its infinite variety guided by personal choice, not convention.

Our research suggests that Millennials are looking for something that feels real in a modern life that is fuelled by digital engagements. Real is Rare is a new narrative rooted in insights that reflects the emotion of today’s relationships and speaks to the more than 83 MM millennials an influential group that will be fundamental to the industry’s expansion.

The campaign invites millennials to think differently about diamonds with a compelling and relevant message of rarity and celebration based on what is most meaningful and personal to them. It asserts that like diamonds, authentic connections are rare and reinforces why they are an ideal symbol for the sincerity and authenticity of a modern relationship.

Do you see any threat from synthetic diamonds?

Diamonds are true miracles of nature.  They are often more than three billion years old, as old as life on earth, and they are inherently precious and valuable because they are rare and finite.   This is why diamonds communicate sincerity, love, and depth of emotion in a way that word often cannot.

Synthetics are not diamonds, they are industrial reproductions of a diamond made in a matter of weeks in factories.  They are not comparable products and they compete more in the market of fashion accessories than in the fine jewelry market.

Issues arise if synthetics are not correctly identified and disclosed, which is why detection technology is such an important tool.  The DPA will play a role in improving transparency on the functionality and performance of various screening devices available in the market so the trade can choose the right equipment for their needs and give their consumers the assurance they deserve.

What importance does your organization attach to issues of corporate social responsibility?

Corporate Social Responsibility is at the heart of how DPA members operate, it is their “license to operate”.  To qualify for DPA membership, producers must apply very strict international guidelines to their sustainability reporting, which means that their CSR record is audited and verified.  They furthermore sign a specific sustainability commitment as part of their membership application. 

DPA members represent today 75% of world diamond production and operate by the world’s strictest standards when it comes to environmental management, community partnerships or health and safety programs.   Beyond this, DPA members make significant contributions to the communities and regions in which they operate in the form of skills development, employment, community participation schemes, social programs, infrastructure development, tax or royalties.

Working together with governments and civil society – the diamond industry has helped transform extremely poor regions, such as in Botswana in Southern Africa, into prosperous communities.

From six miles of paved roads, Botswana now counts 7,000.  Every child in Botswana receives free education until the age of 13 and the country now has 300 secondary schools compared to just three back in 1966, when the first significant diamond discovery was made. 

There are many such examples of how diamonds have transformed mining regions and communities, but it is not only in diamond mining: over 600,000 workers are employed in the Indian diamond cutting sector in the state of Gujarat, and millions depend on diamonds for livelihood, health and education around the world.

Alex Shishlo, Editor of the Rough&Polished European Bureau in Brussels