Anglo records EBITDA of R63 bln in H1

Anglo Platinum has recorded earnings before interest, taxes, depreciation, and amortisation (EBITDA) of R63.3 billion in the first six months of 2021, a 385% increase from R13.1 billion in the first half of 2020.

Today

IIJS Premiere 2021 to be held in Bengaluru from 15 to 19 September

India International Jewellery Show (IIJS) Premiere 2021, the Gem & Jewellery Export Promotion Council’s (GJEPC) flagship trade show is being organised in physical form from September 15 to 19, 2021 at the Bangalore International Exhibition...

Today

HKTDC twin jewellery events open in Hong Kong

The HKTDC Hong Kong International Jewellery Show and HKTDC Hong Kong International Diamond, Gem & Pearl Show, opened on 25 July at the Hong Kong Convention and Exhibition Centre (HKCEC) and will run until 29 July.

Yesterday

Zim gold output improves following central bank intervention – report

Zimbabwe's gold output improved last month by 75% to 2,924 tonnes from 1,668 tonnes in May following incentives introduced by the Reserve Bank of Zimbabwe (RBZ), according to the local media.

Yesterday

Petra reports 109 incidents of illegal incursions onto Williamson in three months

Petra Diamonds has reported 109 incidents of illegal incursions onto its 75%-owned Williamson mine, in Tanzania during the period from 1 April to the end of June 2021.

Yesterday

“I think LGDs will never be a threat to natural diamonds,” asserts Suresh Hathiramani, Managing Director, Facets Singapore

28 june 2021
suresh_hathiramani_xx.pngA diamantaire and industry expert with a deep knowledge of the gem & jewellery industry, Suresh Hathiramani is also a GIA trained diamond grader, researcher and writer about all things related to diamonds. His work experience stretches over 45 years and covers three countries in Asia.

Besides being an ardent proponent of diamonds as a store of emotional and financial value, Suresh is an environmentalist and nature photographer as well.

Here, in an interview with Rough&Polished, Suresh Hathiramani talks about his journey and his passion for diamonds and what excites him most about the future of the industry.

Some excerpts:

Starting from the beginning, let’s hear your story. How, where, and when did you enter the diamond business? And how has the journey been, in terms of contentment and satisfaction?

I graduated in 1974 from St. Xavier’s College, Mumbai with a BSc. degree in Physics. After some adventuring, in 1975 I landed up working in Indonesia in the textile industry. During one of my trips back to India in early 1979, a serendipitous turn of events resulted in an abrupt change in the direction of my career. I was offered to set up a sales office for an Indian diamond manufacturing company in S.E Asia. Since I was familiar with Singapore, it was the obvious location for me to start a business, due to its proximity to the consuming centres, and good security and a duty-free entrepôt status.

I was always fascinated with diamonds since my teenage days but had neither family nor any connections in the diamond business. All I knew was that a diamond was the hardest known substance to man and that it was an allotrope of carbon and that it was expensive.

I resigned from my comfortable well-paying job, then after a year’s training in Mumbai, a quick correspondence course in GIA diamond grading, some serious study about diamonds and in the 3rd quarter of 1980, Facets was in operation. I still remember my first sale of $5000 in the second month of operation and obviously, that was cause for joy. I had made my first sale and made a friend. That person is today still a customer and a dear friend.

Work as an owner/salesman was tough but I still managed to find time to travel in the region and continued learning whatever I could about diamonds and the way the markets operated. That was also about the time that a one-carat D, IF hit $65,000 on the Rapaport List. It didn’t affect me or my business so much as I was dealing only in the small Indian goods but by the time the list fell to $18,000 two years later, the world of diamonds had changed. Gone was the investment hype and the speculation and by 1983-84, the markets returned to normalcy.

Being actively involved in the Diamond Exchange of Singapore (DES) helped me a great deal and in 1984 I was elected member of the executive committee of the DES and have been a member ever since, having held the post of President for a total of eight years over 2 terms. I am presently the most senior member in the DES and continue to serve on the Exco.

I have been very satisfied with my life as a diamantaire for over 40 years as it has been one long learning process with never a dull moment. I have seen rewarding and interesting times as well as seen many ups and downs. I have made many good friends in all the 5 continents where diamonds are sold and traded.

If there is anything that I have regrets about, it is that we as an industry haven’t modernised fast enough and kept up with the changing needs of the customer. We haven’t perfected the art of marketing our beautiful product. We merely sell what is produced, with little marketing research, forecasting or value add in the mid-stream.

Can you walk us through your company Facets Singapore and its activities for the benefit of our readers?

As mentioned earlier, Facets Singapore started as a loose diamond wholesaler distributing mainly small settings sizes to jewellery manufacturers. That was a time when every country in the region had at least a semblance of their jewellery manufacturing industry and China was not a major player. Over time, as jewellery manufacturing shifted to China, and the regional demand for small goods slackened, we moved up our product size to include pointers in rounds and fancy cuts. Beginning in the early 90s, we added to our stock offering certified round and fancy shapes up to 5 carats.

Facets is a leading diamond wholesaler in the SE Asian region, with a solid reputation for the consistent and accurately graded supply of small and medium-sized goods. Our attention to detail and quality control is legendary and most of our customers are happy for us to ship goods directly to their production facilities without the need to do a prior quality check at their receiving centres. We ship overseas regularly and have never had a parcel returned due to inaccurate or inconsistent grading.

In the last 7-8 years, Facets has established a division that creates bespoke jewellery, designed in-house. We cater to end-users and are slowly growing this part of the business. We rely on modern marketing methods to bring in new customers and benefit a great deal from customer recommendations. Half of last year was a washout due to the pandemic, but from the beginning of this year, activity and prices have picked up. I believe the industry’s positive and mature response to the pandemic; the Natural Diamond Council taking over the role of generic marketing; as well as the confluence of some fortunate events in 2020 has given a boost to the market.

Are you into trading as well as manufacturing diamonds/jewellery? Besides catering to the Singapore market, do you export to other consumer countries as well?

We are mainly into the trading of polished diamonds and have a small division creating designer bespoke jewellery for end-user customers.

Our trade customers, being mainly independent jewellers, designers and specialist jewellery manufacturers rely on our consistent supply, accurately sorted and matched goods and just-in-time deliveries. These customers are mainly in the SE Asian region where I have long-standing connections and know the landscape well. Singapore, Indonesia, Malaysia, Thailand, and Australia are where our trade customers are. Since we began offering certified goods in the early 90s, our customer base has widened to include dealers, investors, and high-end private jewellers. So our reach is both from the supply side and the customer side.

My philosophy has always been that a customer is a friend first, then a customer. If I can’t sit across the table and have a meal with a customer and talk about family or sports or health or any other random topic, then doing business with such a person becomes formal and fraught. After all, this business is about trust and faith, and if I can’t get into your heart, I can’t sell you diamonds.

The late 90s saw DeBeers relinquish control as the industry’s custodian. It was also the beginning of the internet era and financial market speculation and the entry of lab-grown diamonds into our otherwise steady and some say secretive businesses. And the rise of China and India as huge consumer markets added a measure of excitement. This was a time of great change that the industry was not prepared for, and was slow to respond to.

Polishers became jewellery manufacturers and dealers/middlemen became retailers and retailers had to transition to brand owners - and all three groups were not good at what they were doing. From a B-to-B business to transition almost overnight to a B-to-C requires skill, resources and above all a willingness to change.

The middleman’s role was diminishing. Along with it, traditional trade and communication channels were also disrupted. The business became transactional and impersonal, and this was not how business was done when selling a product with great emotional and non-fungible value. Expectedly, volumes increased but profits declined drastically. If commoditisation and market growth was the goal, the approach for getting there was not well thought out.

Facets was admittedly slow to make the change although I recognized that change was coming, and it was essential to move with the times. We had begun the slow transition to add bespoke jewellery to our product line almost 8 years ago and it has now gathered speed.

From where do you source your diamonds in general? Does Facets deal in coloured diamonds too? What is your forecast for coloured diamonds’ future in terms of demand in comparison to white diamonds? Are loose diamonds seen as an investment vehicle in SG?

We source our diamonds from India of course, and also from Israel, Belgium and a small portion of special stones we buy from New York. I don’t travel as frequently as in the past to these manufacturing centres as I can meet many of my suppliers during the shows in Hong Kong.

Besides the full-size range in white goods in rounds and fancy shapes, we also deal in a limited range of well-made fancy-coloured diamonds, but we are not specialists or stockists of the high-value pinks and blues.

I cannot keep up with the ever-increasing prices of the fancy blues, pinks and violets and I find them a little overpriced. Interestingly though, I feel that the run-up in prices of the blues and the pinks isn’t done yet because the shock and fear of shortages post the closure of the Argyle mine is yet to settle.

By comparison, ‘investment’ grade white diamonds are still attractively priced. And I still see value in a well-made D to H colour, VVS-VS above 3 carats.

What makes a good diamond investment? It is much more than quick monetary rewards. It is a combination of financial returns, convenience, portability and anonymity in the context of the family division of wealth and inheritance. If one also factors in their emotional appeal, beauty and rarity as one should, the investment decision becomes more balanced and defensible. It becomes something akin to investing in art and collectibles. The thought of a quick profit should not influence the buying decision.

Singaporeans are generally more attracted to coloured gemstones and are well versed in the investment potential of a rare unheated ruby or sapphire or an untreated Paraiba tourmaline.

As elsewhere in Asia (save for Hong Kong), Singaporeans are a little hesitant to invest in diamonds because exit options are not easily available and pricing for sale is always a challenge. In my opinion, investing in diamonds requires a certain astuteness and one needs to do proper research and seek the advice of a trusted expert… as well as study the results of auction house sales before taking the plunge.

I foresee, post the Covid turmoil, we are going to experience a period of extended prosperity and rising prices for the diamond business over the next few years.

I am a firm believer in the store of value proposition of diamonds rather than their pure investment potential. Asset diversification is necessary and I see diamonds fitting into that role perfectly.

Is there anything you are doing differently than other companies to increase/ensure transparency? Transparency is the key today in all businesses, more so in diamonds…what is your USP?

We have experienced and survived 2 major recessionary cycles in the past 22 years, first the Asian financial crisis in 97-98 and 12 years ago, the world financial meltdown of 2007-2008. Both occurred after periods of excessive growth and speculation in financial markets, but the diamond markets, though battered survived and peaked a few years after both events. What we did not fully grasp was that customer behaviour and expectations also changed irreversibly during that time. But our industry did not change as the landscape changed. Transparency, provenance, lab-grown, conservation, conflict became the new buzzwords and the industry did not fully grasp what was going on or rather chose to ignore it.

As we unwittingly witnessed a slow and painful loss of market share and a loss of customer confidence in our product, we saw a painful drop in prices and demand.

I was one of the co-founders of the World Diamond Mark (WDM) in 2012 together with my colleagues in the WFDB, Mr Alex Popov (President of the Moscow Diamond Bourse) and Mr Rami Baron (President of the Australian Diamond Dealers Club). The three of us founded the WDM with the collective vision to use it as a vehicle to revive generic marketing of diamonds and empower retailers with the knowledge to address the consumer’s concerns about transparency, provenance, conflict, environmental and rights issues. It was an extremely well planned and forward-looking initiative to be owned and operated by the WFDB. Unfortunately, it did not receive enough buy-in and financial support from the entities that mattered and had to be abandoned after a few years. The core intent of the WDM has seen a reincarnation in the work of the Natural Diamond Council, and that to me is a satisfying thought.

As a founder of the World Diamond Mark, I could see early in the last decade that the only way to increase diamond demand was to be transparent and talk directly to the customer about the emotional value and unique properties of our product. That meant, as had been done with conflict diamonds, to be upfront with the consumer about provenance, industry practices, pricing, and grading. Only then would our marketing message carry weight and not sound hollow.

In the conduct of my business, I practice what I preach. I am an environmentalist and those who know me know how passionate I am about protecting the environment and the rights to life of all its living creatures. In a trading business with little manufacturing, the impact of my conservation efforts is minimal, but I do lecture and write about the environment to educate the youngsters and yes, I deal only in natural diamonds. I believe, and recent studies have shown that the environmental impact or carbon footprint if you may, of mining natural diamonds, is much smaller than that of lab-grown. There are other equally compelling reasons why I would deal only in natural diamonds but that will be an extended discussion best left for another occasion.

The environment-conscious and rights-sensitive millennials may prefer to avoid the mined gems altogether and go in for lab-grown diamonds. Will all this adversely affect the natural diamond business on the whole? Please comment.

I am glad you asked this question. I have strong opinions about both these topics. In one short simple answer, “I think lab-grown will never be a threat to natural diamonds. They will find their niche and will drastically come down in price and find their distinct market with their value-seeking customers”. I made this statement 5 years ago during a presentation in Kuala Lumpur at a Malaysian Bank’s investment seminar and I say it again now. I think my prediction is proving more and more accurate as time goes by.

When cubic zirconia first appeared in the early eighties, our industry was concerned that they would replace diamonds. When moissanite made its debut in the nineties, the industry was even more worried that the consumer will switch preferences or get misled and lose confidence in diamonds. In both instances, these simulants ended up creating their vibrant niche markets once their prices bottomed. Today the diamond industry would scoff at the mention of moissanite as a threat.

With lab-grown, the facts are slightly different, but the storyline is the same. This is a diamond in chemical composition and physical properties and more difficult to differentiate from a natural diamond than the two earlier look-alikes.

But the basic elements of the story are the same. Prices will keep on dropping as LGD can be endlessly replicated and production gets more efficient. And they have little resale value with no history or emotional backbone to boast about.

There is nothing high-tech or modern or pure about a lab-grown as compared to a natural. A lab-grown diamond set in a gold setting that is unethically mined using child labour is not any more ethical than a natural diamond set using the same unethical gold.

I am encouraged to see the natural diamond industry of which I am a proud member, finally responding appropriately, promoting the unique qualities of the natural diamond and at the same time debunking and even challenging the frivolous and unsubstantiated claims of the lab-grown producers.

One essential element that our industry ignored in the past and which we now see happening in response to the two major crises that occurred in recent years, is that the production of polished is closely reflecting market demand and that is a good thing for price stability. The producers and the mid-stream players are seeing the benefits of having an ear close to the ground and consumers are responding positively with a renewed confidence in diamonds.

There is great joy and value in owning a beautiful natural diamond, wearing it often and then handing it over to future generations while seeing its value appreciate over time. Isn’t that the definition of an ideal investment?

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