Antwerp battles to stay world diamond capital
By Elizabeth Fullerton
ANTWERP (Reuters) – In Antwerp, the world’s diamond
capital, traders seal multi-million-dollar gem deals with a
simple handshake and the Yiddish word “mazel,” meaning “luck,”
just as they have done for the past 600 years.
Trust is such an integral part of life at Antwerp’s four
diamond exchanges that members post notices for lost and found
stones on a notice board.
But times are changing fast.
Such quaint customs belie an industry struggling to keep
pace and fend off competition from centers like Dubai, which
last year exported $1 billion in uncut diamonds to Antwerp and
offers investors big tax incentives.
Antwerp’s supporters point to the extensive infrastructure,
expertise and quality of life that benefit diamond traders.
“Having said that, everything can be repeated elsewhere. We
shouldn’t be complacent,” said Dilip Mehta, chief executive of
the Indian diamond company Rosy Blue, which has 15,000 workers
globally. It is based in Antwerp but has also opened an office
Antwerp’s diamond business had a turnover of $36 billion
last year and accounted for 7 percent of Belgian exports.
Antwerp’s diamond landscape has already undergone enormous
change in the past 30 years. Trade was dominated by Jews from
the 15th century until the 1970s, when Indians began arriving.
Today, Indian diamantaires have at least 60 percent of the
market, leaving the Jews with around 30 percent.
And 90 percent of diamond manufacturing — the cutting and
polishing of rough stones — has moved to India where labor
costs are up to six times cheaper. Just 1,700 highly
specialized polishers remain in Antwerp, compared with 25,000
three decades ago.
Eight out of 10 uncut diamonds traded in the world and one
in two polished stones still pass through the Belgian port
But hubs such as Dubai and Hong Kong are well-positioned to
snatch more share, given their proximity to India and China –
the world’s fastest growing consumer markets for diamonds as
economic growth spawns a swelling middle class.
BRAVE NEW WORLD
Rival hubs are not the only worries for players in
Antwerp’s “diamond mile” — two pedestrian-only streets that
are home to most of the diamond companies, diamond banks,
security firms, diamond exchanges and a synagogue, all under
heavy camera surveillance.
As former colonial master of the Congo, Belgium long had
special ties with Africa’s diamond-producing countries, but
these now want to reap more value from their gems.
South Africa has talked about regulating diamond exports
and developing a cutting and polishing industry at home.
Threatened with a potentially drastic reduction in the
number of rough diamonds passing through Antwerp, the Diamond
High Council, representing the city’s 1,600 diamond companies,
is responding with plans to expand to jewelry distribution.
The idea is that jewellers could pick their diamonds and
have them cut or set, or buy ready-made jewelry in Antwerp.
“We want to create a one-stop shop for jewels,” said Youri
Steverlynck, the council’s marketing director.
Some traders, such as Rosy Blue, are getting involved in
the whole process, from mining gems to selling them in jewelry.
The need for adaptability in this industry has been
underscored by recent major changes in the way De Beers, the
South African mining giant that supplies 55 percent of
Antwerp’s diamonds, does business.
De Beers, 45 percent owned by Anglo American, has slashed
the number of its so-called sightholders, or dealers allowed to
buy its prestigious gems, leaving many small- and medium-sized
businesses out in the cold.
Hasidic Jews in their dark hats, overcoats and side curls
haggle and joke with Indians in smart suits — a sign of the
apparently successful coexistence of old and new in Antwerp.
But in today’s tough environment, many young Jews are
finding new professions rather than taking over family diamond
businesses handed down over several generations.
Many Indian dealers, however, see a future in Antwerp and
are passing the baton on to their children.
“This is a market where the fittest will survive,” said
Bharat Shah, founder of Diampex. His son will shortly join the
company, which has an annual turnover of about $80 million.
To help traders who are not De Beers sightholders and to
promote the city, the diamond council last year launched the
Antwerp brand guaranteeing the quality of gems sold there.
It is also negotiating with the Belgian government to make
the import-export process smoother for diamond dealers.
But critics say Antwerp has reacted too slowly to defend
its gem trade.
“I’m afraid people are waking up now and we hope it’s not
too late,” said Eli Ringer, who has a medium-sized business.
There are now 24 diamond exchanges in the world compared
with just four in 1950, when all were in Antwerp.
“In future, Antwerp will be one of a number of diamond
centers, I doubt it will be the diamond center in the world,”
said one long-time industry insider.
But even that reduced role could become vulnerable if
Antwerp can’t hold onto some of its most important players.
“All that has to happen is one or two major mining groups
taking their headquarters away from here, which will be
followed by the leaders of the industry and then it can become
a ghost town,” Rosy Blue’s Mehta said.