The topic of financing, which is crucial to diamond manufacturers and traders, was discussed in great depth on the second day of the 37th World Diamond Congress in Dubai on May 18, 2016, as per the press note from the World Federation of Diamond Bourses (WFDB).
The morning session started with a presentation by Geert van Reisen of ABN Amro Bank, the global diamond industry’s leading financier. Reisen stressed the need for the diamond business to improve working capital and reduce the manufacturing cycle time, while increasing its focus on collecting receivables, inventory management and payment terms. He added that the industry in Antwerp and India would benefit from having more banks involved in diamond financing. He also suggested alternative funding institutions such as pension funds, insurance companies, and other international banks. Also, that the industry needs to change its operating model, shorten payment terms for rough; credit terms for polished and lowering inventories.
Howard Davies, the Head of Commercial Development at De Beers touched upon portable nature of diamonds; rapid cross-border transactions; many family businesses involved ; number of bankruptcies due to bad debts, etc., in recent years. “Banks want to finance quality assets. Transactions must all be real with real clients and real invoices. Sustainability multiplied by transparency equals bankability,” he added.
Panama Diamond Exchange President Mahesh Khemlani explained his country’s efforts to create transparency by passing anti-money laundering legislation. Commenting that most entities and people mentioned in the ‘Panama Papers’ were not Panamanian, he said: “Tax evasion is a global problem, not just Panama’s. Panama wants to be part of the solution to global tax evasion. We are working with the OECD to fight this. We are not a place for parking cash to avoid tax.”
David Bouffard, Signet Jewelers Vice President of Corporate Affairs, said: “We want to know where the diamonds are coming from and who touches them along the way.” Adding that the company is committed to responsible sourcing in terms of the suppliers it works with, he said Signet has mapped 99 percent of its gold supply and believes that understanding where its diamonds were from was also possible.
A panel discussion followed featuring Bouffard, Davies, Khemlani, van Reisen and Feriel Zerouki, the Head of Government and Industry Relations at De Beers, who described the transparency across all operations that the miner has been requesting for the past 10 years and its Best Practice Principles, which were ultimately aimed at increasing consumer confidence. Bouffard commented that responsible sourcing is a “must-have issue, not a nice-to-have option.”