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Antwerp Perspectives

Dec 9, 2003 10:51 AM   By Martin Rapaport
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Charlie Bornstein, the president of Belgium’s High Diamond Council (HRD), discussed the Antwerp market and the future of Belgium’s diamond industry with Martin Rapaport.

Martin Rapaport: How is the Antwerp market?

Charlie Bornstein: Antwerp continues to move very large quantities of rough diamonds. We have many major Diamond Trading Company (DTC) sightholders with very large sights and a steady flow of rough diamonds from Canada’s BHP, Aber and Rio Tinto. We are also receiving large amounts of rough from Angola and Australia. We are pleased that Antwerp is the most important rough diamond trading center.

MR: How is the polished market in Antwerp?

CB: The polished market is changing. Fewer buyers are traveling and so the Antwerp manufacturers and dealers are moving their goods and marketing efforts to the consumer countries. Our polished exports are very strong at 6 billion euro for 2002. Antwerp is the world’s largest diamond center with overall annual diamond turnover of 29 billion euro.

MR: Antwerp diamond cutters have been outsourcing their diamond manufacturing to foreign low-cost cutting centers. Is that a good thing?

CB: Many of the Antwerp companies manufacture overseas in places like China, Vietnam, Thailand and India. Antwerp firms are the biggest diamond manufacturers in China. It is important to know that almost all of the diamonds they polished come back here to Antwerp for distribution to the world. That is why our polished diamond exports remain so important.

MR: So Antwerp remains a polished diamond distribution center even though the diamonds are manufactured offshore. Why isn’t Antwerp manufacturing more of its diamonds locally?

CB: Labor costs are relatively high in Belgium and therefore many firms manufacture overseas. There are special needs for very fine-quality diamond manufacturing where Antwerp expertise cannot be replaced. We are hopeful that new automation and other high-technology advances will give us an opportunity to increase the efficiency of our diamond manufacturing to make us more competitive. While small goods and very easily processed ABC goods may be too expensive to cut in Antwerp, I believe that we will be able to maintain successful niches in specialized and automated diamond manufacturing.

MR: How is European demand for polished diamonds?

CB: Italy is a very good market, but Germany is still very weak. Recent reports that the Sotheby’s and Christie’s auctions in Geneva sold 85 percent to 90 percent of their goods confirm that diamonds are still very popular, especially bigger, better-quality special diamonds, which are in very short supply. I believe that we will have a good holiday buying season in Europe and the U.S. this year.

MR: Is the stronger euro a problem?

CB: The euro is now 20 percent higher than the dollar and this has increased our costs greatly. On the other hand, the strong euro has encouraged demand in Europe.

MR: How important is the Indian community in Antwerp?

CB: They are a fabulous part of the Antwerp industry. But you know it’s unfair to say Indians, because these people and their companies are really Belgian. I believe that our vision must be that we are all Antwerp people today. I see the young generation of Indians who have become all Belgian. They speak very good French, Flemish and English and they are a new generation of Belgian diamantaires.

MR: Is there enough rough coming to Antwerp? Are there global shortages of rough?

CB: Manufacturing will always tell you that there is not enough rough. In reality, there is a lot of rough, but you can never find what you need. Diamond manufacturers need to adapt themselves to circumstances and availability. I don’t think that you can say that rough is missing. What you can say, though, is that rough is too expensive and therefore it is very hard to buy rough, manufacture it or sell the polished with profit. This is the point.

MR: Why is the rough so expensive?

CB: This is a question that Martin Rapaport should answer, not Charlie Bornstein.

MR: How is the Kimberley Process working in Antwerp?

CB: It is working very well. I am pleasantly surprised by the professionalism of everyone in Antwerp. The Kimberley Process has become a normal part of our business and everyone is complying with the system. I am extremely proud of the excellent work done by the HRD, by Peter Meeus, MarkVan Bockstael and all of their team and our Belgian political people in Brussels who have made great efforts to make this program successful. While I cannot say that I like the burden the Kimberley Process places on our industry — and that is another question — I can confirm to you that the process is working extremely well and I am very proud of the effort that the Antwerp community is making to ensure that everyone is in full compliance.

MR: What is the Antwerp reaction to the De Beers DTC Supplier of Choice (SOC) initiative?

CB: You know this is a question that I would prefer not to respond to for the simple reasons that there are different options and different visions. The DTC in London has developed its new vision for the distribution of its goods over the past few years. We all knew that it would be difficult and the situation is that it is very difficult for a lot of us. On the other side, the DTC is still the number one diamond mining company in the world. We need to trust them and to be confident that they know what they are doing. It is difficult as the chairman of the Diamond High Council to say much more about this because, as you know, they have cut a lot of sightholders in Antwerp and it hurts. It is very painful for those people because they are all very good manufacturers, very good businessmen. So it is a very difficult situation.

MR: How do you see the future of the Antwerp market?

CB: I am optimistic. We have the biggest and best diamond banks in the world and so the financial position of Antwerp will remain very good. We also have the biggest sightholders from De Beers. Rio Tinto, BHP and all the other important rough suppliers are also in Antwerp. So I am optimistic that the Antwerp market will stay a very strong market.

There is another even more important reason for my optimism. Our people are good people, serious people, and they love the diamond business and the vision of Antwerp. I am very proud of the large, powerful and unique international diamond community that all of us together have built here in Antwerp. Belgians, Indians, Jews, Christians and everyone else are welcome and included in our special community. We are one big international diamond family. No other diamond center has this. This is why I am very optimistic about the future of Antwerp.
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Tags: Angola, Auctions, Australia, Banks, Belgium, China, Compliance, De Beers, DTC, HRD, India, Kimberley Process, Manufacturing, Rio Tinto, Sightholders, Sights, Sotheby's
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