The Bourse President Who Wants to ‘Kill’ Synthetics

Nissim Zuaretz was a well-known figure in the Israeli diamond industry even before his election as president of the country’s bourse on May 20. A blunt opponent of lab-grown diamonds, he is CEO of DN Diamonds, a specialist in large stones and one of Israel’s biggest polished exporters. He is also president of the Israel Diamond Manufacturers Association (ISDMA), a position he intends to keep for now. 

The day after his confirmation as Israel Diamond Exchange (IDE) president for a three-year term, he spoke with Rapaport News about his plans for a free zone enabling overseas diamond companies to transact in Israel with tax advantages, similar to the policy that enabled Dubai to flourish as a trading center. This has been on the agenda for years, but various factors — politics, the Gaza war and others — have prevented it from happening, he explained.  

Zuaretz also gave his predictions for the JCK Las Vegas show, which begins this Friday, and expressed his views on the European Union plan to have all diamonds pass through Antwerp before entering Group of Seven (G7) nations. (This proposal looks unlikely to materialize.) He also shared his outlook on the sale of De Beers as well as the pricing situation in natural and lab-grown diamonds, and how he thinks the industry should talk to the public about synthetics. 

The interview — carried out in English and Hebrew — has been edited for length and clarity. 

Do you have any plans yet for your term as president? 

I want to [implement] the [free zone]. I have started to work on it with the government, to change the tax [situation] in Israel, to try to do like Dubai [did] in the diamond industry. And [I aim] to bring back rough companies to make auctions here and to try to make the Israel Diamond Exchange like [it was] before. Not [completely] like before, because today the business all over the world is not the same, but to try to [lift] it up from this position, because this position now is the [worst] ever. For me, now, everything can be just much better.  

Is the tender center for rough still active?  

Not in Israel, no. 

Does it exist?  

Before it was, but the last three years, [there has been] nothing. Everybody pulled out.  

Because of Covid-19?  

Because of Covid-19 and then because of Russia. I wish we will get the free zone here, so then we can bring many big companies to Israel to make it [a] big center [for] diamonds [again].  

So, the free zone will attract tender houses and also mining companies?  

Yes. And also many big companies from all over the world. I spoke with many companies. They told me, “Okay, if it’s going to be [a] free zone here [and] we don’t pay tax in Israel, so then we’re going to come. We [won’t] need to stay in Dubai. We [won’t] need to stay in Belgium. We like to live in Tel Aviv.” 

What about some of the other things that have been proposed, like the expansion of the bourse? 

As for the real estate, we have permission to build a huge commercial area. We will work on this with the government and the authorities. [We intend] to do it in the best possible way for the benefit of the members of the bourse, so they will get what we are entitled to here as fast as possible. If it materializes, we will really be a huge bourse center with new buildings and a new area. 

Will the new buildings be for bourse members or for other companies? 

There will be one building for the bourse, and after that we will sell it to other companies.  

When will it happen? 

It’s in process. We are waiting for permission. It will take a few years — [it won’t be] tomorrow…but we believe eventually it will happen.  

Why has this not been done until now? 

It’s not that they didn’t do it. They started. It’s in process. Real estate in Israel takes time. I also want to create a jewelry center. At the moment, jewelry is a big part of the business. We are going to try to [work] with the government [to make it easier] for [the] jewelry [sector]. We want to make a free zone for jewelry.  

So, the free zone means foreign companies will be able to come here and create business?  

Yes. And then when they create the business, the Israeli people will also have a lot of jobs and business. 

Will they come here to sell or to buy?  

Everything.  

I read that DN Diamonds opened a new store in the US. What’s behind that? 

The future is going to [be in] diamonds and jewelry together. So [being involved in the supply chain] from the mine to the last customer, I think this is the future for everybody. 

Does DN Diamonds own that store? 

Yes.  

100%? 

No, 50%, with [jewelry designer] Isa Grutman.  

Is that your first US store?  

Yes. [It’s] in the Design District of Miami, the shopping center where all the big brands are.  

How many Israeli companies are going to the JCK Las Vegas show? 

Around 50, at least.  

How many of those 50 will be at the Israel pavilion?  

Around 40.  

How does that compare with past years?  

It’s 20% to 30% less. People don’t want to [incur] too [many] expenses. Some of them are sharing booths to make [it] cheaper.  

Has the cost of going to JCK increased?  

Yes. Don’t forget also the flights are very expensive. The booth is also not cheap. Everything is going up. 

Do you have an estimate of how much it’s gone up since last year? 

20% to 30%. (JCK later confirmed the cost of a booth for international exhibitors had risen by 5% to 6% compared with last year. This excludes increases in travel and other costs.) 

What are the Israeli industry’s expectations for sales at the show?  

I think it’s going to be okay. It’s not going to be [a] boom. I think it’s going to be the same as last year. It’s not going to be like two years ago. Two years ago it was crazy. 

Is it difficult for the Israeli companies to compete with the Indians that come [to the show] maybe with lower prices?  

Yes and no. There are customers [who are] looking for price and there are customers [who are] looking for a relationship and they don’t only look for price. Also, the difference between calls and [selling] on the table is very big now. When you have a call, you can ask any price you want, and people are paying. Because the interest [rate] is so high, [a retailer will] prefer to take the stone on memo when he needs it and pay you 20% more and not to buy, because if he’s going to keep the goods for one year it’s going to cost 10% [in inventory finance costs]. But when the interest [rate] comes down, then people are going to come back to buying on the table more.  

Does the IDE have an official position on the G7 sanctions?  

My position is not to go for [what] the G7 [wants]. I am also a board member of the WDC [the World Diamond Council]. What the Belgians want to do, I don’t accept this. I don’t like what they [are doing]. (The Antwerp World Diamond Centre [AWDC] later announced it was supporting the establishment of multiple verification points outside the G7, rather than calling for all goods to pass through Antwerp.) I think it’s impossible to do it, because they don’t have the machines to check [the diamonds]. I think it’s enough only to give a declaration, like what the Americans [require]. I don’t think the Americans are going to agree with the G7 [and] what they want. 

You’re talking about the possibility that all diamonds going to any destination in the G7, including the US, would have to go through Belgium?  

I don’t think it’s possible. They [the EU] want to do it, but I think they cannot do it.  

What is the bourse’s position on importing Russian goods into Israel?  

We follow the rules [from] the G7. We are not allowed to get diamonds from Russia. Also, the bank is not [willing] to pay. We need to sign about every shipment [that comes in that] it’s not Russian goods.  

But is there any reason why you can’t import from Russia to Israel now and sell to India or China? 

You cannot import from Russia because the bank [will not be willing] to get money or to send money if it’s Russian diamonds.  

Okay, so not because of Israel, but because of the American banks?  

Yes.  

So, there are essentially no Russian diamonds coming into Israel at the moment?  

Yes.  

What’s your personal view on the possible sale of De Beers and how that’s going to affect the market?  

I don’t think this is going to happen. And if it’s going to happen, it’s going to take a very long time, because I don’t think anybody knows what the value of De Beers is now.  

Do you feel bourse members are worried about what’s happening with De Beers?  

No. One more thing I want to tell you about synthetic diamonds. I saw what’s happening with synthetic diamonds is exactly what I [predicted] five years ago: The price is going to come down. In my opinion, in two years nobody [will] want to touch synthetic diamonds, because the price now is around $120 per carat. And when the price is going to be like $50, nobody is going to buy it, because I don’t think anyone wants to get a present that’s worth [as much as] a bubble gum. The price on the market is very, very cheap, but the customer pays very [high prices]. They don’t know [this] yet. So, in my opinion, we need to [carry out] advertising to show the world the price of synthetics is so cheap, [that] it’s $100 per carat and it’s going to be less and less. And [in] the next two years it’s going to be maybe $20. It’s going to be Swarovski.  

What will the bourse do to promote that?  

I am going to do the best we can do to help the industry to kill this business, because I think it’s fake.  

What are the rules on bringing synthetics into the bourse? 

You cannot deal in the bourse [trading floor] in this, but in your office you can do whatever you like. Nobody can tell you what to do. 

Main image: Nissim Zuaretz. (Nissim Zuaretz)