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Mission To Russia
By Marc Goldstein
Antwerp World Diamond Centre (AWDC) officers and members of the Antwerp diamond community traveled to Russia in April for a major trade mission with ALROSA, the country’s largest diamond miner. The official Belgian Economic Mission to the Russian Federation, which included Belgium’s Royal Highness Prince Philippe and Her Royal Highness Princess Mathilde, was welcomed by ALROSA President Fyodor Andreev. The meeting also was attended by representatives of the Russian Ministry of Finance and Gokhran, the state repository for precious minerals, as well as members of the Russian diamond industry. (See Moving Forward on page 70.)Upon his return from the trip, Ari Epstein, chief executive officer (CEO) of the AWDC, referring to ADWC’s cooperation agreement with ALROSA, said, “the mission was set up in order to facilitate further contacts between our Belgian companies and ALROSA.” Epstein noted that the presence of Belgium’s royalty at the meeting “opened commercial and human doors more than any individual company could do by itself.”Antwerp’s AdvantagesWhen questioned about the importance of Antwerp for a producer such as ALROSA, Epstein elaborated, “You must understand that today about 70 percent of ALROSA’s production is sent straightaway to Antwerp. This is strong proof of the importance our city holds for the major producers. On top of our infrastructure, which is well known and well respected, Antwerp has an unmatched stability politically and businesswise. This inherent stability undoubtedly owes much to the old traditions and heritage that were developed and nurtured over centuries of diamond polishing and trading in our city.”The mission also was organized by Flanders Investment and Trade (FIT), a Flemish government agency. “Depending on the euro-dollar exchange rate, the importance of the diamonds in the total exports of Belgium is somewhere between 5 percent and 10 percent, whereas it is between 8 percent and 12 percent of the total Flanders exports,” explained Epstein. “People have to understand that these figures are very important for the country, as they impact directly the export surplus figures, which are one of the major indicators of a country’s financial health. Furthermore, let me restate that the diamond business involves 8,000 direct jobs and 26,000 indirect jobs, which certainly is not a negligible business sector for a country of our size.”The Prince’s MissionsMickey Weinstock of Mickey Weinstock & Co. was one of the diamond industry representatives on the mission to Russia. “The Belgian authorities have decided that four times a year, there will be a trade mission to Russia headed by the prince,” Weinstock said. “This first mission of 2011 was to Russia, but it is part of a larger plan to visit all four BRIC nations.” BRIC refers to Brazil, Russia, India and China. A Belgian trade mission visited India in the summer of 2010 and China will be visited in the fall of 2011. A mission to South America is scheduled for next winter.“The Belgian government has decided to focus its attention on BRIC countries because they represent emerging markets, as opposed to the U.S. or Europe, which are basically mature markets,” said Weinstock, noting that among the 200 companies participating in the April mission were eight diamond companies, as well as the AWDC.Weinstock also explained that the two basic reasons underlying the presence of Antwerp diamond dealers on the mission to Russia are supply and demand. “First, let’s remember that since 2009, ALROSA conducted distribution deals with a select number of diamond dealers, most of whom were Antwerp-based,” said Weinstock. “For obvious reasons, those relationships must be maintained and reinforced, especially since the supply agreements are due to be renegotiated in 2014.“The second reason for the trip is domestic demand in Russia,” continued Weinstock. “From this perspective, Russia is in a similar place to where China was about 15 years ago. Right now, Russian customers are only buying stars, full cuts and melees, which are the smaller goods. But China has matured and today is also consuming 30-pointers to 90-pointers, as well as 1-carat-plus stones. This is where Russia is expected to go, and the mission was one way to prepare the domestic Russian diamond industry for the next decade.”Other participants in the mission explained that it is important to recognize that, in addition to its geographic advantages, Antwerp’s economy never did collapse in the midst of the global economic crisis, nor did it ever simply stop operations. That gives the city a reputation for stability, especially in comparison to economic and operational problems that have plagued Dubai and India.The MarketplacePolished- 4-grainer piqués of $2,000 per carat are impossible to find.
- Small goods are still expensive. Prices for stars and full cuts, which are used principally for the watch and jewelry industry, have exceeded $1,000 per carat. These are goods that could be bought for $650 per carat not so long ago.
Rough- Rough prices continue to climb.
- Dealers are reported to be buying original rough Diamond Trading Company (DTC) boxes and BH Billiton bags or Rio Tinto parcels from auctions for very high prices and reselling them at very high margins — some say over 10 percent — barely one week later through internet auctions or on the secondary market. The industry is concerned because the emphasis moves from doing business to speculating when people aren’t buying to polish but to resell.
Article from the Rapaport Magazine - May 2011. To subscribe click here.
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