Global diamond business elites shape industry’s fate and future in Russia

The Russian capital cities of Moscow and St. Petersburg temporarily became the epicenters of the global diamond business activities for one week, when the elites of national and global precious metals markets gathered in July in Russia to hold their 34th session of the World Diamond Congress (WDC). 

The main issues on the agenda included a preliminary assessment of the results of the ongoing battle against the world economic crisis and its negative consequences on the diamond business, review of the current downbeat tendencies in the industry as a whole and the search for ways of lifting the industry from the crisis onto a new performance level in the post-crises era.

Present at the congress were about 80 CEOs of leading diamond companies from Austria, Belgium, the Great Britain, Israel, India, Italy, China, Namibia, the United Arab Emirates, Thailand, United States and South Africa. Russia, the host nation, was also represented by the ‘local superstars’ on the domestic diamond market, including the officials overseeing economic issues in the Russian government, members of the Russian Diamond Chamber (RDC) and Gokhran, the state’s special precious metals storage agency. Also gracing the occasion were the CEOs of leading Russian diamond corporations such as Alrosa and Choron Diamond. 

An unprecedented event for Russia

Commenting on the importance of this event for Russia, Sergei Ulin, the RDC president, who also doubles as the WDC deputy president, noted that the opportunity to host such a representative assembly of global diamond business leaders is a great honor for Russia and representatives of its diamond industry. “I’m glad that we were given this opportunity to organize such a high-profile event,” he added. “Our work is connected with beautiful and valuable items, whose image we ought to support and protect.” The same view was voiced by Choron Diamond CEO Rajesh Gandhi in an exclusive interview to the TRCW, noting, “Such a colorful assembly of leading global diamond business CEOs is an unprecedented event for Russia, as all the influential figures, representing ‘who's who’ in the global diamond industry, personally graced the occasion with their presence.”  

The main event on the agenda – holding a session of the WDC – took place in the Russian capital from July 11-13, after which the honorable guests moved to St. Petersburg, Russia’s northern capital city, where the second most important event on the agenda – the WDC’s seventh annual summit – took place from July 14-15. The key speakers at the official opening ceremony at the elite Ritz Carlton Hotel in Moscow included deputy prime minister and Finance Alexei Kudrin, WDC President Eli Izhakoff, International Diamond Manufacturers Association (IDMA) President Moti Ganz, World Federation of Diamond Bourses (WFDB) President Avi Paz, Alrosa President Fyodor Andreyev, Ulin and Gandhi, all of whom presented papers on the different aspects of the global and national diamond industries.

"Such a colorful assembly of leading global diamond business CEOs is an unprecedented event for Russia, as all the influential figures, representing ‘who's who’ in the global diamond industry, graced the occasion with their presence."

Almost all the key speakers portrayed their views of the industry in the light of the subdued activities in the global economy. For example, in his speech, Kudrin thanked his audience for taking timely measures to cushion the blow of the crisis on the diamond business and working out effective investment programs to overcome the negative fallouts from one the hardest economic depressions in modern history. Speaking about the specific measures taken by the Russian Cabinet, Kudrin noted that the government had to buy diamonds worth of $1bln from Alrosa to support the country’s main diamond mining company in particular, and the whole of the nation’s diamond market in general at the peak of the global economic crisis. “The WDC is an excellent platform for a dialog and Russia will do its best to provide a road to the future.”

Speaking at one of WDC sessions, the RDC president supported a proposal for diamond companies to publish annual reports on their corporate activities, a move that can help solve the issue of lack transparency in global diamond business as well as boost the sector’s overall attractiveness for potential investors. “We should create an annual book of record that will contain all statistic data, results of companies’ activities and steps made by companies in this industry. This way, we will be able to increase the transparency of global diamond business for investors,” he said. “Today people frequently speak about social responsibility of businesses, especially in those spheres, where diamonds are seen as a part of the economy. Today is such occasion, where businesses should demonstrate such responsibility in full force.”      

Other speakers, including the Alrosa president, focused their reports on the current stage of crisis, while the WFDB and IDMA president touched on issues that were widely discussed by the summiteers — legalization, including the so called “conflict” diamonds. Specifically, they called on the diamond trade to accept the report by Kimberley Process monitor for Zimbabwe Abbey Chikane to certify rough diamonds from Zimbabwe's Marange area. “By not allowing Marange diamonds to be traded legitimately, the industry was setting the scene for an untenable situation in the rough market,” he added. “We need to do this to better the lives of the people of Zimbabwe. We need to do so immediately because the release of the vast quantities of rough diamonds that are accumulating into the diamond pipeline all at once will cause a catastrophe in the market.”

The summiteers also spoke about the other current problems facing the world diamond business, and also worked out the priority development areas for the industry. Other issues, such as the holding of the working sessions of the WFDB and IDMA and joint plenary meetings, were also carried out, with the participation of representatives of global and national diamond businesses, top global scientific and research institutions, public organizations, etc.

The Russian market and recipe of success

Gandhi, Choron Diamond CEO, devoted his speech to the Russian diamond market and the business strategies that potential foreign investors should do adopt to succeed in this country. Thus, delivering his report, titled, “The Sweet Smell of Success,” Gandhi underscored the business aspects, which have made the modern Russian market unique for international investors, and the success recipe, which, when diligently followed, will inevitably enable strategic investors to attain positive results in this country. “I am not here today to talk about the current economic hardships in our industry, but the enormous opportunities and the great potential I still see in Russia today, as I did, 10 years ago, when I set up my business here,” he noted, adding, “even the current crisis has not been able to undermine these opportunities, as Russia was comparatively less severely hit by the meltdown than most other countries in the world.”

Besides, Russia, according to Gandhi, is one of the BRIC members expected to lead the economic rebound from the worst recession in decades, evident in the rapid growth of its GDP, an increase of its forex reserves by $22bln in the first half of 2010 to over $460bln, making it the

world’s third largest, after China and Japan. “All these unique features are what have made Russia “an investors’ dream haven, the biggest single market in Eastern Europe, a default destination for retailers’ of exclusive services and commodities, including jewelry goods.” 

Speaking about the breathtaking success of his business and his mostly ‘positive personal experience’ in Russia, Gandhi noted that he owes all these accomplishments to the three things that he has always followed with great diligence in life – a  strong will, sense of long term commitment to Russia and personal diplomacy.”

Speaking at the final press conference dedicated to the assessment of the Russian summit, the WDC president hailed the event as highly productive, specifically noting the various meetings and ‘brainstorming’ sessions that led to the formulation of the measures needed to move the global diamond business out of the economic depression and solve other pressing issues and problems facing the industry on both national and international markets. “Leading representatives of the global diamond business gathered at this assembly to reaffirm their commitment to the policy of fair trade, including the exclusion of the so-called “conflict” diamonds from the industry’s legal distribution outlets.”     

At the conclusion of the official part of the Moscow events, the WDC delegates were treated to a gala supper, sponsored by Choron Diamond, in a traditional Russian style at the Ballroom of the Ritz Carlton. On arrival, the honorable guests were received and greeted with the traditional bread and salt. In this informal and relaxed atmosphere, the pacesetters and policymakers in the global diamond businesses familiarized themselves with Russia’s national traditions, folk songs and dances. Some delegates participated in some national entertainments, tasted various types of the famous Russian vodkas, listened to folk songs and played national instruments.