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Debate on the main issues affecting the diamond business is absolutely critical - Ernie Blom

10 september 2018

ernie_blom_xxn.jpgHaving taken part in the fruitful discussions with the world leaders at the Asian Summit held recently in Vladivostok, Ernie Blom, President, World Federation of Diamond Bourses (WFDB) now looks forward to taking the worthy inputs received at the Summit and the Executive Committee Meeting for further growth of the diamond industry.

The WFDB, with 28 bourses around the world affiliated to it now, was created in 1947 to protect and advocate the sustainable development of the diamond cutting industry and the market.

Here, in an Interview with Rough&Polished, Ernie Blom, while steering the organization amicably, expresses confidence in the world diamond industry, reiterating his hope to take forward the role of the WFDB on the global stage.

Some excerpts:

While the global diamond industry looks forward to the ensuing World Diamond Congress in October at Mumbai, how optimistic are you about the outcome of the discussions with business leaders? The industry hopes to find solutions for all the current issues related to the global diamond industry. Can it look forward to some solace? Your thoughts.

This biennial meeting is a very important international forum which provides the opportunity for WFDB Presidents and their delegations as well as other members of the global trade to come together.

Debate on the main issues affecting the diamond business is absolutely critical. We are all so busy with our daily work, so the Congress agenda is specially created to deal with all the issues that concern our trade. It is not a question of solace but that we need to become proactive to meet with business leaders to promote the industry.

What was the outcome of the recently concluded Asian Summit/Executive Committee meeting of the World Federation of Diamond Bourses’ (WFDB) in Vladivostok, Russia? With the Russian Federation's Finance Ministry, Gokhran and others having participated, any game-changing decisions taken during the event regarding the diamond industry at large?

We debated a wide range of issues, and I was delighted with the very broad representation at the Asian Summit, and the Executive Committee meeting. We met with members of the Kimberley Process review mission to Russia and they were very informative regarding the KP's work and the nature of Review Missions, and we discussed a broad range of industry topics with them. Representatives of the Gokhran and Finance Ministry were also invited to get a better understanding of the diamond industry and its needs.

The WFDB Executive restated its support for the World Diamond Council's System of Warranties and the Strategic Plan which are currently under review.

We agreed on an important resolution about the Federal Trade Commission's Jewelry Guides and the change to the nomenclature. We reiterated our position that the only definition of a diamond that we support is the one agreed upon last year by the WFDB, IDMA, CIBJO, the International Diamond Council and the International Standards Organisation. While we do understand that national jurisdictions always take precedence, we hope there can be an agreed global definition.

We also took a strong step forward in agreeing that we need to ensure that the WFDB is seen as by far the world's leading trade body. We critically assessed our role as an industry body and looked at ways of maintaining that presence.

Can you give us a gist of the discussions on issues pertaining, especially to diamond exchanges in that region, as it is said that the Presidents from bourses in the region were present at the event? Was the issue concerning the Kimberly Process discussed? Some details, please.

There was a long and in-depth discussion of the System Of Warranties, the World Diamond Mark, the KP and its importance to the diamond industry and also succession planning and how to encourage the younger generation to enter the industry together with the work of the Young Diamantaires and its meetings.

As members of the WFDB Executive Committee from across the world attended the meeting at Vladivostok, can we conclude that major issues have been discussed, screened and decided upon resulting in a clearer agenda for discussions at the World Diamond Congress in Mumbai?

It's certainly the case that we were able to refine our overall view on the major issues of the day which will help us enormously at the Congress in October. They will be discussed at the Congress and that's why the agenda for the Congress is so important.

The revised U.S. Federal Trade Commission's (FTC) guidelines relating to the issue of descriptors for diamonds has created confusion in the global diamond industry. Will WFDB take any action to offset the consequences of the revised guidelines? In the event of the guidelines remaining unchanged, what do you think will be the market situation in terms of natural/synthetic diamond confrontation? Your views?

As mentioned above, we agreed on an important resolution about the Federal Trade Commission's Jewelry Guides and the change to the nomenclature. We do not want one set of definitions for the United States and another for the rest of the world. The FTC has pointed out that synthetic diamond manufacturers must absolutely make clear what they are selling in their description and we are pleased with that. However, we do believe that the FTC swayed unnecessarily to the side of factory diamond manufacturers.

We will endeavour to ensure there is no confusion among consumers and we are actively engaging through industry bodies with the FTC and hopefully, eventually, there will be an agreed global standard.

What, in your opinion, will be the position of the natural diamond industry say in a decade from now with challenges of like low demand; being hit with competition from other luxury products; no new diamond fields discovered; millennials losing interest; cheaper synthetic stones emerging; liquidity problems; diamond financing issues, etc.? Should the natural diamond sector be concerned?

I do not see this in such pessimistic terms. There are challenges as there always have been, but there are also solutions and many other factors which influence the overall picture.

I don't believe there will be low demand. Firstly, we must bear in mind the approaching supply-demand shortfall. This will become acuter due to the lack of large new mines, but it also will underpin diamond prices, and this is a positive.

The issue of Millennials is the mission that the Diamond Producers Association has set itself. This year it has a budget of $70 million compared with $57 million last year and $6 million the year before. The DPA is doing extremely dedicated work, starting with the US market, then India and China and then moving on to European and Asian markets.

The DPA's aim is to engage with Millennials via the social media and other platforms that they use and I believe we will see excellent results.

Synthetic diamonds are an issue where they are undisclosed. As far as synthetics for diamond jewellery more widely, will a consumer buy one today knowing that it has almost no inherent value and will be manufactured more cheaply in a few months or next year and has no resale value? Or will the buyer prefer the real thing that has been made by Mother Nature, has a real and romantic story to tell and does good by providing a livelihood for miners and their families?

As you are aware, the Indian diamond/jewellery industry is going through a challenging phase right now. Though it is known for its resilience, the industry is facing multiple issues of late. What's your advice to the industry during these trying times?

As long as I have been involved in the diamond trade – and that is for more than 40 years – there have been challenges. There always are in business. We tend to think that only our industry is undergoing them, but they affect all trades.

The $2 billion fraud case in India is extremely unfortunate. It just goes to show how vigilant diamantaires, bankers and the authorities need to be. The Indian diamond business is huge and powerful and that is why it is a leading diamond centre. I believe the vast majority of diamantaires run their businesses in a very prudent manner. This is a setback, but the Indian trade will bounce back forcefully.

The Indian diamond industry must always do what it does best - and that is manufacturing and trading.

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