WFDB, IDMA discuss diamond-industry challenges

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WFDB, IDMA discuss diamond-industry challenges

By Susan Thea Posnock

June 26, 2007

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Amsterdam, the Netherlands—The World Federation of Diamond Bourses (WFDB) and the International Diamond Manufacturers Association (IDMA) Presidents' Meeting kicked off on Sunday, focusing on issues that could seriously impact the retail jewelry business such as diamond supply, price volatility and consumer confidence.

"There are real questions [such as] whether there will be enough rough goods coming into the market to satisfy demand," said WFDB President Ernest Blom, noting the fast growth of diamond demand in places such as India and China.

With De Beers relinquishing its role as diamond-industry steward and facing its own challenges, changes to the Diamond Trading Co.'s (DTC) Supplier of Choice program and to Diamdel, which supplies the secondary market, cause more uncertainty.

"Many of our members are hurting and their pain is real," IDMA President Jeffrey Fischer said.

Fischer also said that the industry must be open to change and new ideas, and that the enormous challenges it faces will also impact retailers. He noted that many retailers believe the answer to their difficulties lies in seeking the biggest diamond suppliers, who are allocated rough directly. But according to Fischer, that assumption is incorrect.

"Your fate is inexorably intertwined with the middle-market dealers," he said. "If the smaller and medium-size diamond dealers go, as some would like to see, do not ask for whom the bell tolls—your fate will be the same."

DTC Managing Director Varda Shine, in a presentation to members of both organizations on Monday afternoon, said the DTC is aware of the significance of small to medium-size players who make up the majority of WFDB and IDMA membership.

"As you know, the DTC is busy selecting its clients for the 2008-2011 contract period," she said. "The evolution of Supplier of Choice is all about trying to select the businesses most likely to add value to our rough diamonds regardless of their size or their position in the diamond pipeline."

She once again acknowledged a concern over supply.

"General lack of availability of rough impacts us all," Shine said. "The DTC has made some radical changes to its own business structure to secure sustainable supplies to the market, but unlikely there will be sufficient rough—from all sources—to meet everyone's expectations."

She added that the DTC will honor its commitment to the European Commission to supply the secondary market, and that even with Diamdel's reorganization there would still be hundreds of millions of rough supplied to non-sightholders.

The meeting, which also marks the 60th anniversary of the WFDB, concludes today.

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