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Schnitzer Addresses Challenges Facing Diamond Industry

Jun 15, 2015 9:16 AM   By Israel Diamond Exchange
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RAPAPORT... Israel Diamond Exchange's (IDE) president, Shmuel Schnitzer, addressed the opening session of the presidents meeting of the World Federation of Diamond Bourses (WFDB) and International Diamond Manufacturers Association (IDMA) on June 15 in Tel Aviv.

WFDB president, Mr. Ernie Blom; IDMA president, Mr. Maxim Shkadov; my fellow host of the presidents meeting, Israel Diamond Manufacturers Association president Mr. Kobi Korn; Israel Diamond Institute chairman Mr. Moti Ganz; Diamond Controller Mr. Shmuel Mordechai; Precious Stones Exchange president Mr. Shlomo Eshed; CIBJO president Dr. Gaetano Cavalieri; World Diamond Council chairman Mr. Edward Asscher; honorary presidents Mr. Eli Izhakoff, Mr. Avi Paz and Mr. Jeffrey Fischer; the chair of the presidents meeting steering committee, IDE vicepresident, Mr. Yehezkel Blum, together with IsDMA deputy president Mr. David De Toledo; honorable ambassadors, whom we are all pleased to see here, distinguished audience!

I am delighted that we have the privilege of hosting the 2015 presidents meeting here in Israel. With your permission, I would like to open with a few words about the Israeli diamond center.

When we look back on the development of the Israeli diamond industry over the past century and to this day, we are pleased to see that despite quite a challenging starting point, and despite the objective difficulties, we have been very successful.  Today tens of thousands of Israelis make a living in the diamond industry in Israel and other countries.

We, in Israel, have an annual turnover of over $20 billion. We are leaders of the diamond world in technological development for manufacturing and online marketing.  We recently set up a model factory, where we make cutting-edge, advanced machinery available to all manufacturers in our industry. A young generation is joining the ranks of those involved in the industry, and indeed, the potential in Israel is endless.

However, for this marvelous potential to be realized, we must make sure that the world diamond industry is properly organized. To that end, we have to address several fundamental challenges prevailing in the industry at the present time.

The first such issue is that of profitability. This is a difficult, painful problem that runs like a thread through all the diamond centers in the world. It's good that all sides are here, from the rough producers to the polished dealers, so we can discuss the situation together.

We have to sound the alert. We must find a solution to the industry's problem of profitability. Things can't go on this way for long.  I will elaborate on this subject when I speak tomorrow, in the presence of the heads of two leading mining companies.

The second challenge is finance, or more precisely ­-difficulty in obtaining financing. As a result of the changing regulations, including Basel II and III, and as a result of the anti-money laundering laws, which are making very strict order in the economy, the global banking industry has changed its attitude to the diamond industry.

This change is making it hard for diamantaires to obtain credit, regardless of their economic and business situation. Very simply, some banks decided that the diamond industry doesn't suit them.

We are certain that this attitude is totally unjustified. Our industry is becoming increasingly transparent by the day. So the opposite is true -- I think that the time has definitely come for more banks and non-banking financial institutions to join in financing the diamond industry. It's good that many bankers are with us here, and I hope we can reach better understandings with them.

I mentioned transparency. Transparency is closely associated with the issue of finance. In Israel, we are doing our utmost to create a center that operates with full transparency. It seems that soon we will sign a comprehensive arrangement with the tax authorities, which will lead to the right solution.

The third subject is the price list. I am friendly with Martin Rapaport and I admire the positive things he has done for the industry.  The responsibility on Martin Rapaport's shoulders is immense. His influence on the world diamond industry is no less than that of the rough producers and this status comes with great responsibility.

His decision-making process, especially when making changes in the list, must be totally transparent.  The feeling in the industry is that the decision-making forum is not broad enough and it isn't transparent. I believe that this issue will be discussed at the presidents meeting, in an effort to reach a solution that increases the stability of our industry.

It's difficult to rank these issues by importance. Each of them is absolutely critical for us. This is also true for the current problem discovered at the Gemological Institute of America (GIA) Israel involving the suspicion of temporary color treatment. Our exchange acted assertively and called in the Israeli police without hesitation. We all await the results of the investigation in Israel and the U.S.

I want to urge us all to wait for completion of the investigation and discovery of the truth. Only then can we draw the right conclusions and take firm action. Under the leadership of the presidents of our international organizations -- Ernie Blom and Maxim Shkadov -- the presidents meeting will discuss these issues and others.

As a present exchange president and past federation president, I am in close and frequent contact with WFDB president, my friend -- Ernie Blom. I see the extensive effort and intensive work he is devoting to the diamond industry as a whole and I wish him success in leading the discussions over the coming days, and in continuing to lead the world diamond industry.

Of course, our colleague in IDMA -- Maxim Shkadov -- also has my deepest respect and gratitude for his actions, and my wishes for success in his continued endeavors on behalf of the industry.

I would like to invite you all to the next International Diamond Week, which will take place from August 30 to September 3 -- an intensive week of polished diamond sales, held in partnership by the Israeli, U.S., Belgian and Indian diamond exchanges, based on the belief that only cooperation and friendship can lead us to success.

Thank you

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