Welcome to edition 341 of WINC,
IDMA's Weekly Internet News Collection - March 14, 2021
Dear IDMA members and industry colleagues!

Welcome to this edition of the WINC. In the coming weeks and months. we'll publish a series of opinions and viewpoints that all share a single premise: to discuss the state of the diamond industry and offer constructive, innovative and sometimes disruptive suggestions in what direction our industry should be heading.

Below, our communications director Ya'akov Almor, who is always trying to think out of the box, is the first to throw you off balance.

We'd love to get your feedback!

Meanwhile, stay healthy, stay safe and stay tuned!

Ronnie VanderLinden,
Source over Size
How to save the Diamond Iceberg from melting down
By Ya’akov Almor
In March 2019, during my stint as Editor in Chief of IDEX Magazine, I published a cover story entitled “The Iceberg of Diamonds and Climate Change.” *
In the article, I compared the diamond industry and its production to an iceberg floating in the “luxury products ocean.” The bulk, roughly 90 percent of the annual 40+ million so carats of the rough diamonds mined and sold to diamond manufacturers, is cut into small and melee stones.

Is the iceberg a good metaphor to describe the diamond industry, I asked?
Yes, it is.
After all, according to the above statistic, nine out of every ten diamonds cut and polished is below 0.10 carats, and just like with a real iceberg, this colossal production remains almost invisible, with the majority, in carat terms, floating below “the surface.” What you do see above the waterline is the diamond jewelry with the larger stones, also called aspirational pieces.
For many, if not for all diamond mining companies, these smaller rough diamonds are their bread and butter. And as we have learned over the past years, a drop in prices of small rough can make or break the business model of these miners.
At the 2019 “Investing in Africa Mining Indaba” in South Africa, Paul Bosma, CEO of the junior diamond mining firm Firestone Diamond, said: “When will the [rough diamond] market recover? We have worked out that we have lost between $15 and $17 a carat because of the drop in the market.” Bosma went on to say that “…for now, we are OK … not great … but OK. The situation is so sensitive to the diamond price. At $85/carat, our cash position doubles. If the price sticks at $75/carat for another two years, then ourselves, Petra Diamonds, Stornoway, and Mountain Province are all going to be in deep trouble because we all have debt, and we are all just surviving at current prices…” These diamonds make up the bottom of the iceberg. Each individual diamond is unremarkable and relatively cheap but amassed together, they ARE the diamond industry!

The existential threat of synthetics
Meanwhile, there is another existential threat to the diamond industry. It’s the significant rise in market share of gem-quality synthetic diamonds and the danger they pose to the diamond supply pipeline’s survival.
In their latest report on the global diamond industry (February 2021), AWDC and Bain reported that continued advances in technology contributed to double-digit growth in production and lower retail prices for lab-grown diamonds in 2019 and 2020

The price differential between natural and lab-grown fancy color diamonds is particularly striking—up to 10 times. In addition to independent lab-grown manufacturers, major fashion jewelry retailers are adding lab-grown diamonds to their product offerings, further positioning the category into the fashion jewelry segment and making it accessible to a wider range of price-sensitive consumers.”
The report also noted that “consumers across key markets do not see substantial differences in sustainability between lab-grown and natural diamonds. LGDs are edging into the fashion category as interest is rising among price-conscious consumers.”
Note that the report only relates to the consumers’ position on LGDs and does not discuss the challenges LGDs present to the other players in the supply pipeline.
The Diamond Iceberg is in great danger
If this trend continues, and if the industry, particularly the Indian diamond manufacturers, will not end the salting of natural diamonds with synthetics, retailers may very well throw the towel in the ring. Soon, retailers, too, may not be motivated any longer to differentiate between natural and LGDs. Consequently, they will see no justification in paying more for diamond melee than LGDs of the same weight and size category. Worse, they will stop caring about it. 
When the downstream market loses its dependence on natural smaller diamonds, the effect on the entire diamond mining production process will be disastrous. Without its solid base – 90 percent of the annual rough diamond production – to support and balance the diamond iceberg, the whole structure may very well collapse and take the top 10 percent - the visible part of the iceberg - down with it as well.
The solution
The solution is simple but far-reaching. The industry must resolve to preserve the origin of small and melee diamonds throughout the diamond pipeline and include these diamonds in marketing campaigns and storytelling.
Of course, this is not the first time this solution was presented to the industry. When Indian manufacturers were asked about it in the past, they dismissed it out of hand as unpractical and cumbersome. The logistics, one manufacturer said, would require manufacturers to make unprecedented changes in their production methods and practices.
No-one, however, did say it cannot be done! 
We live in unprecedented times, and the “Next Normal” calls for distinctive, innovative thinking and solutions. Indeed, preserving the origin of mined small diamonds and melees throughout the production and sales processes will demand increased investments in organizational structures, demand changes in work practices, and call for effective marketing and sales methods.
At the same time, it will be beneficial for many more reasons: jewelry designers and retailers will love it. They will be given another opportunity to use a much more comprehensive range of polished goods to tell the consumer a compelling story, charge higher prices and achieve higher profits.
By preserving all diamonds' identity throughout the production and sales, the industry at large can effectively make origin and provenance, i.e., country branding of diamonds, part and parcel of its marketing and promotional activities. It will also offer both the market and the NGOs the full transparency they have demanded for a long time. Finally, by taking all the above steps and including small and melee diamonds in the storytelling, all these activities will create more added value and raise prices and profits throughout the entire supply pipeline.
The newly minted Natural Diamond Council (NDC), the former Diamond Producers Association (DPA), should have no problem aligning with this initiative. After the DPA wasted precious years and tremendous funds going after LGDs, awarding them more publicity than LGD producers could have ever wished for, the NDC is now singularly focused on promoting natural diamonds. This venture, therefore, should be right up its street!

* Unfortunately, the digital archive of IDEX’s magazines has been taken offline and therefore no link can be provided.
How to solve the diamond industry’s great rift?: The latest worry for those working with traditional, mined gems is the new kid on the block, the laboratory-grown or synthetic market. The more affordable alternative has seen impressive growth in recent years, and even claims to be a more ethical choice than its traditional counterpart. Carat* is a demi-fine jewellery brand that exclusively offers lab-grown gems. Founder and CEO Scott Thompson tells Professional Jeweller: “Despite [the pandemic], the lab-grown market has grown from an estimated $500 million (£360 million) in 2017 to around $2 billion (£1.4 billion) last year, or about 2% or 3 % of the total mined diamond market.
David Johnson, head of corporate communication, believes that there is room for both sides to flourish, and says that the industry needs to move “away from a situation where the two categories make negative generalised public statements about each other and create negative impacts on both sides”.
The software pirates of Surat: There's more than one way to get your diamonds scanned in Surat. Orthodox business practice is to buy a legitimate machine and license its software on a "pay as you go" basis. The alternative is to seek rough planning and inclusion mapping services elsewhere at a lower cost - using pirated software run on counterfeit machines. Diamond manufacturers in the cutting and polishing capital aren't so brazen as to actually have the technology on their premises. Instead, they send their diamonds, and very often their workers as well, to outside facilities with pools of machines to get them scanned. Sometimes they have specific machines set aside for their own use. The financial benefits are significant - using pirated software costs less than doing it legitimately - and the practice has caught on with quite a few polishers. 
The evolution of financing in the diamond industry: Over the last decade or so, traditional financing in the diamond industry has slowed, while other types of funding have come onstream. For a better understanding of the overall money situation in the diamond industry, Cynthia Unninayar talks with Erik Jens -- the former global head of ABN AMRO’s diamond and jewelry client division, and the founder of LuxuryFintech.
North Arrow and Naujaat’s fancy colored diamonds
Fancy diamonds fetch higher prices because the stones are rare and because they are beautiful. The presence of nitrogen, for example, is what gives a population of diamonds from North Arrow Minerals’ Naujaat project in Nunavut their vibrant orangey-yellow hue.
De Beers posts $550m second cycle diamond sales
“We saw the continuation of good rough diamond demand during our second sales cycle of 2021 on the back of positive consumer demand for diamond jewellery,” said Bruce Cleaver, CEO of De Beers.
Petra sells 299 carat diamond for US$12.18 million
This exceptional Type 11a white gem quality diamond mined from the Cullinan C-Cut adds to the most famous diamonds that have originated from this historic mine. The diamond achieved a price of US$40,701 per carat.
Russian diamond sales triple as demand recovers
Alrosa sold $361 million-worth of rough diamonds and $12 million-worth of polished gems in February. Its sales of rough diamonds rose by 5.5 percent compared to the same period a year ago.
Diamond traders warned about Central African Republic
Diamonds from CAR are currently the only diamonds that meet the official Kimberley Process (KP) definition of “conflict diamonds.” In 2013, the KP officially suspended the country from the certification scheme.
Angola seeks to boost diamond output
Angola plans to boost diamond mining and open a new large mine in the east, aiming to produce 5.7 million carats there in 2023, or more than half of its total output last year, Mineral Resources and Petroleum minister Diamantino Azevedo said.
Profits shine at Gem on higher diamond prices
The Letseng mine has weathered the challenges of 2020 and [Gem] is recommending a dividend of 2.5 cents a share. The mine continues to deliver large, high-value diamonds on a consistent basis.
Petra Diamonds completes restructuring
As part of the move, announced in October 2020, the miner has partially reinstated notes debt with holders of existing notes, contributing $30 million in new money.
Namibia moves to curb mining speculators, boost local ownership
Mines and Energy Minister Tom Alweendo told Reuters that effective April 1, Namibian mining exploration licence holders will be required by law to retain at least a 15% stake. “For a Namibian to sell their entire stake in an exploration licence means they are not interested in mining."
Firm hired to oversee final closure of De Beers mine site
Ontario’s first and only diamond mine is moving to the next phase of its closure plan with the appointment of Golder, a Canadian-owned engineering and environmental services consulting group, as the primary contractor who will oversee the remaining demolition and site rehabilitation.
Zimbabwe’s mining policies irk investors
Top mining investors in Zimbabwe, including JSE-listed Anglo American Platinum (Amplats), have raised the red flag over Zimbabwe’s new punitive tax regime, after the Reserve Bank of Zimbabwe hiked exporters’ retention thresholds to 40% from 30%.
De Beers appoints new human resources director
Joy Roman has been appointed the De Beers Group’s new executive head of human resources. She replaces Ann Cormack, who has held the role since 2017 and is leaving the job to “pursue new opportunities outside the business,” a statement said.
Zim government after diamond deposits in Chiredzi south
Presidential Spokesman George Charamba has publicly confirmed that the government is truly after diamonds in the Chiredzi South, contrary to the claim that the area’s 12,500 black citizens are being displaced to pave way for a white owned grass growing project.
Sarine back in the black despite pandemic
Sarine turned a $1.4m loss for 2019 into a $2.4m net profit for 2020, even though the pandemic saw revenue drop by a fifth. Sales of its diamond scanning machines and software were badly hit by four months of manufacturing lockdowns in India and nine months of restrictions on retail diamond sales globally.
Angola holds dialogue on wealth distribution in troubled Cafunfo region
The region's local official said that diamond mining has been at the center stage of the destruction of their villages and has further led to the diversion of rivers without any respect for the environment and the consent from the locals.
Sanctions are reimposed on Israeli billionaire
The Biden administration is now moving to reimpose those conditions, although Mr. Gertler is likely to have already moved at least some of the previously frozen money out of the United States.
Sarine to seek dual listing on Tel Aviv Stock Exchange
Sarine added that the dual listing would expose the company to a broader investing public, not just in Israel, but also in the US. This is because the time difference between Tel Aviv and the US is only seven hours, versus the 12-13 hour time difference to Singapore.
Larger trade shows set to resume overseas
On Wednesday, India’s Gem & Jewellery Export Promotion Council (GJEPC) announced that it is planning for IIJS Signature to happen in person from April 7-12 at the Bombay Exhibition Centre.
India may soon become a hub of lab-grown diamonds
India may soon become a major hub of lab-grown diamonds as the units in surat have started production, which will reduced dependence on Chien and Russia for imports of this category of diamonds.
Wall sees tanzanite revenue go higher
The fence has nearly stopped minerals smuggling denying the government much needed revenue, while security was enhanced for people conducting the gemstone trading.
Gemfields to restart ruby, emerald production this month
Auctions of emeralds and rubies, using the interim auction model, are scheduled to commence on March 15, the company said. The series of seven ruby auctions is expected to complete on April 8 and the series of five emerald auctions is expected to complete on April 17, it said.
Why no other luxury company compares to LVMH
What’s driving this all-time-high valuation is how the luxury group used 2020 better than other luxury houses and put itself in the pole position for when the markets come back. In short, their strategy execution is a masterpiece of extreme value creation from which other brands can learn.