RAPAPORT...
The issue of blood diamonds is tainting the industry red —
red with anger, red with frustration and red with despair over resolving the
issue anytime soon. It seems likely to be a long time before the controversy
surrounding Marange diamonds will see an amicable solution. In his recent visit
to Mumbai to meet with players from the Indian diamond industry, Martin Rapaport, chairman of the Rapaport Group, made it
clear that diamonds that violate human rights should be traded with caution. At the time of the meeting, Indian diamond dealers were awaiting a Kimberley
Process (KP) clearance certificate that would allow them to trade Marange
diamonds.
Indian diamond companies say receipt of the Marange shipments
will help ease the high diamond prices caused by supply shortages and help
stabilize the prices of rough versus polished. On condition of anonymity, one
diamantaire said, “We desperately need the diamonds to reach the country. If
so, we shall see a significant correction in the price of rough. This is the
need of the hour, keeping in mind that the situation in the industry is getting
worse with each passing day.”
A Date With Martin Rapaport
Rapaport’s August 10, 2011, presentation on “The Future of
the Diamond Industry” attracted a packed-room attendance of 275 people to The
Taj in Mumbai. The focus of the meeting was to build confidence in the members
of the diamond industry that the future of diamonds is bright. That message
comes at a time when the entire industry is treading a cautious path in
stocking goods because of the turmoil in the U.S. market and in the Indian
market as well. Rapaport was quick to point out the growing importance of
branded diamonds, noting that “Five years down the line, all the diamonds being
sold will have a brand name associated with them.”
He stressed the “social responsibility” aspect of diamonds
from Marange. “If you cannot stop the bad stuff, let us at least start the good
stuff.” Referring to the Rapaport Minimum Standard being followed by the
Rapaport Group, Rapaport defined it as “All diamonds that are legal and not
directly involved in severe human rights violations should be freely, fairly
and legally traded.” Elaborating on what is meant by “directly involved in
severe human rights violations,” he said it applies to diamonds “whose physical
production involved murder, rape, physical
violence or forced servitude. The Rapaport position is that if these diamonds
meet the Rapaport Minimum Standard, ensuring they are free of human right
violations, they can be purchased, cut and traded in all jurisdictions where
they are legal.”
Rapaport said by no means did the Rapaport Group seek to
restrict legal trade in Marange diamonds or honest efforts to legitimize the
Marange mining sector through the introduction of responsible firms that
implement proper human rights standards. “The diamond industry needs more rough
and Marange goods should be legitimized and made available,” he said. “We
recognize the positive opportunity that Marange diamonds bring for increased
employment in India.”
About the New Initiatives
Rapaport also shared with the audience two other developments
taking place within the Rapaport Group. The first is the upcoming introduction
of a diamond price index (RAPI) designed for use by the financial sector to
monitor diamond prices. It would be published daily and made available online
throughout the day.
The second project under development is a proprietary diamond
investment fund that will provide an opportunity for the financial community to
invest in diamonds.
In his speech to the Mumbai audience, Rapaport stated that
globalization is driving an interactive, multidimensional transformation in the
way people are buying and selling goods. He advised the listeners to “have a
big-picture perspective. The world post-2008 has been different and now, with
the most recent stock market crash in the U.S., it is going to be a different
story altogether. India is growing. In fact, India and China are the America of
tomorrow.” That description highlights the growing opportunities in India and
China, not only from their manufacturing sector, but also in terms of domestic
consumption. “Yesterday’s suppliers shall now become tomorrow’s customers and
factory nations shall now become consumer nations,” he explained.
Bank Dynamics
The Times of India has reported that Indian banks are expected to
become more cautious in lending money to the diamond industry after a number of
recent loan defaults by industry borrowers.
A consortium of seven banks led by
Bank of India (BOI) recently issued a
notice of the sale of assets belonging to
loan defaulter Kalsaria Diamond Private Limited (KDPL) to recover debts worth
$53 million. The State Bank of India (SBI) and other leading bankers plan to
sell properties and assets of JB Diamond Ltd. and Pankaj Diamonds to recover
debts of $169.6 million and $34.3 million, respectively.
The Marketplace
The market is facing serious liquidity issues.
IIJS did not meet sales expectations for most exhibitors
due to current market conditions.
Polished prices are softening across the board.
Local activity has slowed tremendously.
A wait-and-watch attitude seems to prevail because of
uncertainty in the trading markets.
Rough prices are expected to decline within the next
month.
Article from the Rapaport Magazine - September 2011. To subscribe click here.