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Gem Diamonds unearths two large stones at Letšeng

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Gaetano Cavalieri: We need to protect the long-term health of our industry

23 march 2020

gaetano_cavalieri_xx.pngThe World Jewellery Confederation (CIBJO) represents the entire jewelry industry embracing a whole variety of companies, from those mining precious metals and gems to those, which are manufacturing and selling final products.

The confederation members are national jewelry associations from more than 40 countries, including Russia. In 2006, the CIBJO was the only organization granted the official status of a consultant to the UN Economic and Social Council on the development of the global jewelry industry.

The President of CIBJO, Gaetano Cavalieri, kindly agreed to answer questions from Rough&Polished related to the most pressing topic for the world community today – the COVID-19 coronavirus.

How do you feel about the threat of coronavirus to the diamond and jewelry trade?

Let’s first be clear. We must not lose sight of the fact that the coronavirus is first and foremost a health crisis, and that is what needs to be dealt with before anything else. I live in Milan, which at the moment is in almost total shutdown. As of today, March 18, Italy has suffered more than 2,500 deaths, and worldwide the figure has passed 8,000. It’s people who are threatened and protecting their physical condition is the priority. So, before we think of anything else, it is important that we practice social distancing, and remain in quarantine if that is necessary.

But enabling people to get through the crisis is also critical, and here the state of the business is relevant of course. Clearly the immediate economic fallout is substantial, with stores shut, trading offices and factories working with limited capacity, if at all, and supply lines unreliable. In times like this, luxury products are not at the top of most people’s shopping list.

So, as an industry, our first priority needs first to be able to limit the damage, meaning that we do not become overextended financially. Clearly those with employees will want to protect them, and they should do so to the best of their ability. But at the same time, they will not be doing themselves or their employees a service if they cannot keep afloat through a period of prolonged inactivity. Everyone will need to be resolute, patient and flexible.

Simultaneously, we need to protect the long-term health of our industry, and this means being in a state that will allow us to bounce back as quickly as possible, playing a key role in the recovery that will inevitably follow the crisis. And when I talk about long-term health, I refer not only to being economically stable, but also to being stable from a reputational perspective. It is not only important to act responsibly, but it is important that we are seen to be acting responsibly.

When will we see a recovery in the diamond market?

Under current condition that is a question that is almost impossible to answer. If the experience of countries like China and South Korea are indicative of how things develop, there appears to a cycle to the epidemic that last two to three months, before society can return to a degree of normalcy. But because different regions of the world are at different stages in that cycle, the effects on the global supply chain are likely to be prolonged. There may be one wave, although presumably governments will be better informed and equipped to deal with future upsurges than they are right now.

Structurally, our supply chain is solid, but we will need to be very careful to keep things in balance once retail sales resume a more normal pace, or what will become a new normal. If there is too much production and not yet enough demand, we could see prices suppressed at a time that companies are in need of cash.

I am reluctant to make predictions, but it is fair to assume that we will need to hold tight through to the summer, meaning July or August. Hopefully, we will see the beginnings of recovery before the fourth quarter and the start of the holiday season.

With all that said, if we have learned one thing over the past several weeks, it is to expect the unexpected.

What are the CIBJO’s plans for the near future?

Right now, CIBJO is continuing with its regular schedule, although we are making adjustments as events demand. We were supposed to attend the OECD conflict minerals forum in Paris at the beginning of April, and that has been canceled. We also were engaged to run a series of seminars at Baselworld at the end of April and early May, and the show has been delayed until next January.

Ironically, however, with so many people confined to their homes, we are finding that members involved in the work of our technical commissions and committees have more time than usual to devote to CIBJO business. This work is being done long distance, digitally and by teleconference, and this is the way we have worked for a long while already, long before the current crisis.

What I am currently planning is creating some type of cross-industry forum, to discuss the impacts of the coronavirus crisis, and how we may respond as a sector. There are range of issues that should be considered, for it is clear already that this not simply a bump along the road, but rather a formative event. The New York Times today published an article by its columnist Tom Friedman, who talks of the world B.C., or “Before Corona,” and A.C., or “After Corona.” Things will change and we’ll be doing them differently. We need to discuss that now, and while we are all at home waiting for the crisis to pass, we have time to do so.

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