Andrey Zharkov, the recently appointed president of ALROSA, and Phillippe Mellier, CEO of De Beers, addressed a joint meeting of World Federation of Diamond Bourse (WFDB) and International Diamond Manufacturers Association (IDMA) members on the third and final day of the 2015 Presidents’ Meeting in Tel Aviv today (Tuesday).
Zharkov, whose presence at the Presidents’ Meeting was highly anticipated, expounded on ALROSA’s position, its current investments in mining and plans for the future.
He said that currently the company is concentrating its efforts in Russia, “but our research suggests that it is probable that kimberlites will be found in Angola.”
He also addressed the long-term prospects for diamond supply over the next 10 years, which is expected to decline and said that by 2019, rough diamond demand will outstrip supply.
In tandem, Zharkov highlighted that lab-grown diamonds have already started to affect the rough market.
He also stressed that the industry must come together to find ways to solve the current rough and polished price imbalance. However, in a comment that may not be universally accepted, Zharkov said that the problem was not one of rough pricing, rather the oversupply of polished diamonds.
Like many of the speakers at the Presidents’ Meeting, Zharkov mentioned the importance of marketing diamonds, saying that there needs to be more promotion of diamonds as a category rather than promoting brands. “Brands are earning more,” he said, “and diamonds are earning less.”
In his presentation, Mellier said that both as individuals and as an industry, it has to understand the impossibility of looking for things to go back to how they were in the past. “The world has changed and it will not be changing back. The diamond industry has also changed, and we will not be changing back. Don’t try to do it; you won’t succeed.”
He stressed that there is no “magic bullet” and no “one-size fits all” solution to change the current situation, due to the different nature of the various businesses within the industry. “Each of us must look at the changes we see through the lens of our own company’s aims and attributes… we must all earn our own margins,” he said.
Israel Diamond Exchange president Shmuel Schnitzer and World Federation of Diamond Bourses president Ernie Blom addressed delegates and continued their principal themes from the previous day.
Schnitzer said that “it was important for the diamond industry to meet the challenge of competition from other luxury producers.”
Blom reiterated the issues facing the industry and said that despite the long experience of its leadership, they could not “recall a time when there was this perfect storm of challenges that has hit our industry.” He called too, for the whole industry to provide a united front in dealing with the media – to show that it is clean and transparent. In that vein he stated that the industry must be scrupulous, as the “levels of consumer knowledge and interest… have never been higher.”
IDMA president Maxim Shkadov acknowledged that manufacturers were being squeezed in the pipeline and joked that sometimes the manufacturing of diamonds sometimes seems more like a hobby than a business. He said that he thought the establishment of the Diamond Producers Association (DPA) was a positive development and he hoped to see an improvement in confidence across the entire industry, including factories and offices.
During the session, a lifetime achievement award was presented to Willie Nagel in honor of his long association with the diamond industry, particularly his instrumental contribution to the implementation of the 1999 chain of warranties, to verify the provenance of conflict diamonds.
by David Brummer and Danielle Max