Eurostar Diamond Traders N.V.

(June 4, '09, 2:11 Edahn Golan, IDEX Antwerp) 

The first ever diamond town hall meeting was received very positively by the market, with traders saying the event, in which De Beers Managing Director Gareth Penny spoke but mostly answered questions from the audience, created a good sense of confidence. Confidence in the future of the industry as well as in the role the leading rough diamond supplier plays in it.

The Antwerp Town Hall Meeting, held Wednesday afternoon in the heart of the diamond district, was where traders heard why De Beers feels confident about the industry’s prospects, answered questions about possible price hikes and made statements on how it feels about such possible price increases.

The meeting was opened by Diamond Trading Company Managing Director Varda Shine, who stated that the industry needs to consider different ways to operate in order to succeed. Answering a question from moderator Chaim Even-Zohar, Penny was not willing to disclose if the company will raise prices at its upcoming Sight.

“We expect rough [prices] to be more in line with polished,” Penny said. “We are looking at it, continue to monitor the situation.” Essentially this is an issue of stocks and liquidity, he added. Polished diamonds have maintained their prices in the past five weeks.

The discussion on the topic, against the backdrop of rising demand for rough diamonds and greater financial liquidity, prompted a number of bold statements. Kaushik Mehta, chairman & CEO of DTC Sightholder Eurostar, warned that rising prices will be a “booms day in the rough market and a dooms day in the polished.”

Penny quoted a golf player that said “You drive for show, but putt for dough,” or in other words, while traders may make bold purchase to show off financial might, at the end of the day, all business decisions must have a sound economic footing.

Answering questions from the audience, Penny said the De Beers’ Element 6 subsidiary, which makes lab-made industrial grade diamonds, will not make gem quality goods; that De Beers was approached many times recently about diamond backed funds, and wondered if it was appropriate for the company to get involved; and that the company has good relations with the banks and all can be confident in the continuation of De Beers.

To a question about finding a way for the industry to avoid speculation, he said the only answer is that we all have to make sensible business decisions. Penny also defended moving the sorting operations to Botswana, saying that London is expensive and therefore the move makes sense.

According to Penny, there are economic indicators that the worst is possibly behind us. With prices historically rising after periods of recession in the U.S., he implored on the industry to not waste this opportunity. “Consumers still want diamonds."

Republished with permission from IDEX Antwerp.