Rapaport Magazine

Antwerp

By Marc Goldstein
AWDC Tender Facility Open For Business

In June, for the first time ever, a major producer, Arcos Belgium, was using the Antwerp World Diamond Center’s (AWDC) independent Tender Facility. “We consider Antwerp as the hub for diamonds, because whatever goods you have for sale, you’ll find buyers over here,” said Sergey Panchekhin of Arcos Belgium. “In doing so, we have multiple goals. We want to have better feedback as to where the goods go, what’s the appropriate pricing and what the market mood is. The AWDC facility is a quiet and effective business center for the buyers, so our choice was obvious.”
   Arcos’ week-long diamond tender featured a standard ALROSA assortment from 5 carats and 10 carats down to -5+2.

Reflecting a Need
   The facility’s construction reflected a real need in Antwerp, recalled Johan Erikson, chief executive officer (CEO) of First Element, an independent valuation consultant and one of the companies that spearheaded the drive to build the facility. “When we decided to sell the production of Firestone in Antwerp instead of Botswana, we went to Belgium and visited a lot of companies based in the Diamond Mile. Unfortunately, we couldn’t find any adequate facility. So we met with AWDC leaders and they just said they’d build one for us.”
   The idea for the facility was launched in June 2012. It opened in October 2012 and staged its first rough tender in early 2013.
In the aftermath of his first tender at the facility, Panchekhin said, “They have very good equipment and environment. Besides, their overall standards are under the auspices of the AWDC. Through them, we’re offering assortments of ALROSA-origin goods by invitation only. What’s certain is that this facility is a comfortable way of expanding business here in Antwerp. Note that, for obvious reasons, we don’t expect any differences in the usual prices paid by our clients because we’re not here to create any kind of competition with ALROSA.”

A Dedicated Facility
   “People come in and are immediately at ease,” added Erikson, whose company has staged three tenders at the facility for Firestone Diamonds. “There’s no other business going on near here. It’s quiet and that’s what’s needed to view goods. People can get privacy and discretion. Moreover, the facility is totally independent, which makes it much more credible and trustworthy.” The rent is a flat fee of $7,000 a week.
   Dries Holvoet, AWDC representative responsible for the tender facility, explained that it is open for hire to any company. “It allows mining companies to tender their goods in a neutral environment,” he said. “The facility is fully secure. There are seven viewing rooms — each monitored by two cameras — a handling and control room, a lounge and a secure access control. Last, but not least, there’s a direct access to the Diamond Office. So when the goods arrive from abroad, no street access is necessary.”
   One big question is whether this facility really helps maximize profit. Erikson, the most experienced user of the tender facility, answered, “We ran three tenders in Antwerp. The number of viewings was between 75 and 109. And the math is simple: the more viewers, the better the results.” Holvoet added, “If you take, for example, Botswana, which has a dedicated neutral facility, the figures are obvious. Where we got 30 viewers in Botswana for a tender — that is, people willing to travel one day in and one day out — we got as many as 109 over here in Antwerp for the same goods.”
   Generally speaking, diamond dealers hate tenders and they hate auctions even more. Most of the grievances against tenders come from the behind-the-scenes manipulations that allegedly happen once in a while. “But if they know they’ll be treated in a fair way, then they will come and do it gladly. What matters is that everybody gets a fair chance to make an offer,” stressed a viewer.

Always a Limitation
   “For outsiders, such as South African companies or Botswana, who don’t have an office in Antwerp, AWDC is offering a good service. And sometimes, even if you do have an office, exposure through the AWDC facility is bigger,” concluded a DTC sightholder viewer who wished to remain anonymous.
   According to Isy Mörsel of Dali Diamonds, “The AWDC facility is ideal for the smaller miners. It makes a lot of sense for them, because they don’t have to invest in an office, logistics, security and to hire a middleman at high fees. My guess is that soon the government of Botswana will decide to come sell their goods in Antwerp. If they do so, they’ll probably want to stage a test here first, and the only available and sound facility to use would be that of the AWDC.”
   The facility is not expected to attract the industry giants, such as ALROSA or De Beers. They would use it only in cases where they don’t have enough room to showcase their diamonds in their own local offices. Apparently, this is what happened with the Arcos Tender, which was taking place both at their premises in Antwerp and at the AWDC Tender Facility.

Article from the Rapaport Magazine - July 2013. To subscribe click here.

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