Shake Up for Change

RAPAPORT… The long period of suffering isn’t over yet for Antwerp. It could take years before the city finds itself at the pinnacle of the global diamond industry again. But the 2007 Antwerp Diamond Conference — the first international diamond conference in the city since 2004 — hosted by the Antwerp World Diamond Centre (AWDC) on October 15 and 16 and the grand opening of a new diamond laboratory on October 16 attracted visitors from around the world and placed Antwerp back in the headlines.

IDL Grand Opening

It was no surprise that International Diamond Laboratories (IDL) located one of its three new certification laboratories in Antwerp, the former home of Peter Meeus, its chief executive officer. Meeus was the managing director of HRD, Antwerp’s Diamond High Council, when he left to join the Dubai-based IDL earlier this year. IDL’s certification labs in Dubai and Mumbai were launched earlier, and all three laboratories were to begin operations on October 22. Not only was the Antwerp lab’s grand opening held during the diamond conference, but the IDL facility is housed across the street from the HRD building.

During the interviews that accompanied the grand opening, Meeus explained that one of the real breakthroughs with the IDL certs is that there’s no more use of masterstones in the certification process, which is expected to reduce the risks of error from as high as 20 percent with the traditional masterstone method to 1 percent. Meeus insisted that “Over 20,000 tests were made to ascertain the [error percentage] figures.”

Obviously, as with every new endeavor, it will take a while to assess to what extent IDL is going to bring added value to the diamond industry. But there is at least one thing that it should bring immediately to Antwerp: stronger competition between labs. Some diamantaires complained recently that the delay to get HRD certs had been increasing. With a 24-hour or even 12-hour delivery promise from IDL, the pressure on HRD to speed its certification process could increase. That is, of course, unless those in the industry decide having an HRD cert is worth waiting a little longer for because it helps them market diamonds more easily and sell them faster than an IDL cert.

Marketing-wise, IDL’s introduction of its services and opening of its labs has been very successful and has gotten a good deal of attention from the media and the industry.

Negative Headlines

But all the news about the Antwerp diamond industry in October was not positive. Two days before the start of the conference, Bart Van Lijsebeth, Antwerp’s general prosecutor, was quoted in De Tijd, the Flemish daily magazine, as saying “The fraud in the Antwerp diamond sector is by no means a problem of the past.” Both the Antwerp city government and the diamond industry sector reacted by accusing the courts of carrying out a witch hunt and undermining the reforms that are underway by prosecuting “old cases.”

“Still today we ascertain crimes and new investigations are running…The diamond sector must remain in our focus,” Van Lijsebeth was quoted as saying, “all the more since we have ascertained that the heavy organized crime is using the fraud structure within the sector. Recently we found out that a criminal group was hiding large sums in cash in vaults of companies linked to the diamond sector.”

Van Lijsebeth reportedly was speaking in reaction to comments made recently by diamantaires in other magazines. Leaving aside the issue of which side is right, one thing that is clear is that there’s an abyssal misunderstanding between the diamantaires and the fiscal authorities.

Even though diamantaires recognize they will have to adapt to a new legal and fiscal environment, they are very upset by the situation. Many share the opinion of Gon Raz of Windiam when he said, “There are no concrete matters being discussed during the [conference]. Only macroeconomic [theories] are being discussed with no bottom lines for us. I can understand that the AWDC is attempting to bring attention to Antwerp, but I see no content, especially if the real issues are not addressed. If the Belgian tax people continue to harass us like this, soon there’ll be no more Antwerp. First, we have to save ourselves as a diamond center, in order to be able then to help Africa or producing countries. We’re business people!”

Whether the AWDC can do something to alleviate diamantaires’ concerns is still unclear. Contrary to what’s been reported, though, the absence of a fully functioning government in Belgium for more than four months — while the newly elected leaders attempt to organize the new government — has not been a significant obstacle to AWDC, which has submitted a list of major requests to the government in formation. AWDC sources say those requests are essential to the maintenance and development of the diamond trade in Antwerp.

The Marketplace

• In polished, 30 to 50 points, P to clean, cape to collection, round and princess are hot. Heart shapes are super hot and dealers are finding it difficult to meet the demand.
• People are noticing a real slowdown in the U.S. market since the subprime mortgage crisis. The impression is that end-users have postponed purchases.
• The general feeling is that the U.S. is a mature market and investment is better made in developing China or India markets.
• Rough prices went up excessively during September and first half of October, with plus or minus 10 percent increases across the board. A global correction of about 2 to 3 percent brings the actual price hike down to about 8 percent.