Excellencies Ministers of Mines,
Ladies and Gentlemen,
Allow me first of all to apologize Ahmed Bin Sulayem’s absence for this important gathering. He was scheduled to come but had to abstain from traveling unexpectedly. He asked me to send you all his best regards and also requested me to convey the following message on behalf of DMCC and the DDE, DMCC which is the Government Authority, Dubai Diamond Exchange which is the industry representative which I have the honour to chair the BOD.
Obviously the World Diamond Council today is at the crossroad of where it wants to go. It has to decide over it’s future destination now that an important leader like Eli Izhakoff resigns from office after such a long tenure. Mr. Paz we wish you lot’s of success in this new challenge.
For WDC Eli has done a remarkable job for which we thank him. We did that already at our Dubai Diamond Conference in March and we are sure that the same appreciation will be demonstrated here.
Mr. Paz we further have always expressed our interest and willingness to participate more actively in the Board of your organization. We hope your Board will soon reconsider the refusal to accept DDE as full members of your organization. I was so candid to ask for this already last year, also in this same open forum but the request clearly wasn’t expressed loud enough, which is why I want to repeat it once more. Rest assured our intentions are positive. We may Mr. Paz have some ideas on which not always everybody will agree, what is of course also not needed, a democracy is imperfect if everyone always agrees…
Which brings us to a first comment and element on the road that lies ahead for the WDC. As we said last year for many of us it is still unclear who the WDC exactly represents. Nothing became more clear than that at the last meeting of a discussion forum last week at the HQ of the OECD in Paris.
We as DMCC were there because we have been involved in the establishment of the OECD guidelines for the purchase of gold in DRC. What however we didn’t expect was the very limited knowledge and understanding of the whole diamond pipeline in the meeting rooms in Paris. Concepts like mixing, sorting and aggregation seemed to be completely new to the audience. Some participants seemed to think that a rough parcel of a run of mine is sold as such to the wholesaler who then sells to the manufacturer who puts it like that on the polishing wheel and then the result is sold to the polished retailer who then sells it to the consumer. There was very little understanding of the complexity of the industry.
One thing the gathering made clear was the issue of who the WDC represents and who not. Are you also representing the US retail organizations and if so then why was no one from your offices there in Paris. Are they with us or not, at a time when a KP2 is in the make in some Paris HQ, this is not irrelevant isn’t ?
Another question, Mr. Chairman. Is the WDC also a representative of the African mining industry and if so is that in some way reflected in your structures, because I am particularly happy to see our friends Ministers Shabanghu and Mpofu here but that doesn’t really look structural. Are we at the same time defending the interest of the alluvial miners and the American consumer and if so, are these interests the same and is any alignment possible. Because if you try to defend everyone’s interest, at the end of the day you may end up representing no one anymore.
Interesting that we had this meeting there in Paris, the luxury capital of the world. We advised the OECD crowd to go and have a look at who is buying in the store of Louis Vuitton. You will see it is full of Asian, not Western buyers who literally take out bags full of bags. The new world order it is. If we look close at this from a macro perspective you will see that there is a big difference in where the growth in the luxury business comes from. Asia stands for 22% growth in 2012, the GCC for 16%, EU for 5% and the US for 8%.
Because even if the WDC claims it represents the retail business we don’t see here the likes of Chow Tai Fook, Luk Fook, Chow Sang Sang, Gitanjali, Joyallukas, Altinbas or Damas. Their input could be valuable to hear what is on consumer’s minds in their parts of the world. And whether that should be taken into account when we engage in any further supply chain control mechanisms or not.
Because apart from an African under-representation I also see few Indians, no Russians, no Chinese or HK Chinese, no Japanese, Turks or Taiwanese business people in Paris last week. Wasn’t the KP from the start meant to be an inclusive exercise, not an exclusive which may be in the tradition of this French capital but which will not necessarily lead to the same results. Can we neglect in this effort both the growing consumer base in the East and the producing capacities in Africa.
Today Africa has about 2/3 of all diamonds in value and about 60% in carats. But they weren’t there either apart from Maurice Miema from DRC who fortunately reached around noon. Otherwise no African producer would have been there. Can we have any kind of conclusive debates without involving the countries where the diamonds are produced?
Last but not least we heard there that this was a Western sponsored initiative? All this is a bit confusing. Some people argue the real agenda is about the control over minerals in Africa and not about consumer related issues at all? Becomes when it comes to ‘moral’ sourcing and consumers, let’s not forget that for decades and certainly when I joined the business 2 years ago, US consumers, which then represented more than 50% of the world demand, bought diamonds from the Apartheid regime in SA and from the so-called ‘Empire of Evil’, here sitting next to me, my Russian friends.
Some say this initiative is more about to be at par with a super powers like China and Russia that build infrastructure in Africa in exchange of the access to minerals. Is there any validity in this argument or is it really about consumers?
Or is the agenda to built a KP2 as a instrument for social reform and development in Africa and if so shouldn’t we do that together? Because as we all here ought to know, the KP was built in African with African support. And it was just because of the African involvement an amazing success. The KP has by and large regulated the rough diamond production. Can that be said of the production of any other mineral? Is there any other mineral that has a legally enforceable certification scheme regulating it’s production and in complete violation of the WTO principles but enforceable because of the will of it’s African founders to make it happen.
“Can we have any kind of conclusive debates without involving the countries where the diamonds are produced?”
Yes the KP is not perfect. But last year when we met in Brussels the OECD representative admitted that the KP is quite unique while they prefer to work on a voluntary basis rather than imposing legislation which may take years to happen. The whole OECD approach is more about involvement and active encouragement than about true enforcement. Personally I sometimes have the feeling it’s more like a catechisme, a semi-religious code with DO’s and DON’T’s, more than what we have at the KP enforceable rules and procedures. A system that is about education which allows sinners and sins whereas in the KP a breach is a punishable offense which leads to confiscation of the goods.
Isn’t it from our perspective as WDC at a moment that the KP tries to re-invent itself also high time Mr Chairman that after 12 years we professionalize our own body. If we have a KP2 then maybe we need a WDC2 ?If you look at the OECD reports on conflict diamonds of 2012, I have copies. You will see that they all quote NGO sources, not once a WDC study was quoted. There was a time that the DTC took the defense of diamond corporate issues on it’s shoulders but we all know that time is over and out. The DTC is not the monopoly it was and nothing came in it’s place.
So compared to the 50 studies the NGO’s have published since the inception of the KP we have done not one. Is it then not normal that sources like OECD studies only reflect the NGO’s opinion on these matters. They seem to have the funds to pay academics to do research, we seem to do nothing but talk amongst ourselves. Is competition between the several actors of our business really that strong that we cannot come together on one goal and that is to defend ourselves against unjust attacks.
“Is it then not normal that sources like OECD studies only reflect the NGO’s opinion on these matters.They seem to have the funds to pay academics to do research, we seem to do nothing but talk amongst ourselves.”
Which brings me to my last issue, I do apologize for having taken so much time. After the inaugural Zimbabwe Diamond Conference in Victoria Falls last year, you Mr. Chairman made a very important statement which many, including us at DMCC strongly supported and that was that you would engage this WDC Board in an effort to lift sanctions on diamonds from Zimbabwe. When you said this we all saw that the KP Chair Gillian Milovanovic applauded your announcement. We have it on tape and anyone who wants can view it on YouTube.
Nevertheless there were rumors that you didn’t get the backing from your constituents in the Board. Because it was said that the same Western based retailers strongly opposed your proposal. For us, we remember well you took that brave initiative which was applauded by everyone in the room because you realized during your visit that the sanctions actually are one of the reasons why Zimbabwe had difficulties complying with KP minimum standards. Because of the sanctions diamonds cannot be properly financed, shipped, insured and miners are pushed to sell below the market price. You saw this Mr Chairman and you engaged…
A move which your Board – of which we are not a member, yet– didn’t want to support…difficult to understand Mr. Chairman if you truly represent also the interest of the African producers which all have strongly defended this position.
Short, and to conclude Mr. Chairman, this WDC has come to a moment that it is meeting itself in the mirror. Does the WDC is the one body that defends the interests of the worldwide industry or its there a need for more than one body. This existential question I hope you have addressed with your Board yesterday and we look forward in hearing more about it.
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