A message from the President - London Diamond Bourse
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May 2021 MEMBER BRIEFING No.3 A message from the President Welcome to the third LDB Briefing. I’d like to start by mentioning from all of this? I can best answer by quoting that famous line from a few housekeeping matters: the film All the President’s Men: ‘Follow the money.’ The Money, as it were, has clearly now become obsessed with environmental, social • Our AGM will be held on Thursday 3rd June at 2.30pm. Due to and corporate responsibility (ESG). Moreover, it has woken up to the pandemic, we are going to have to hold this virtually and live the fact that our sector is, like the curate’s egg, only good in parts. in the bourse – so please let us know if you plan to attend. The one We can see this change of attitude (let’s face it, until very recently advantage of live streaming is that it allows Members who might no one really knew or cared much about the jewellery supply chain) not otherwise be able to attend, to do so. Anyway, please put it as a threat, a nuisance or an opportunity. For my own part I see only in your diary as it is the one occasion in the year when we all get potential. If consumers are happy to pay a higher price for an ethical, together. fully traceable product then I am delighted to source it. The more so as it is clearly – from a moral perspective – the right thing to do. • The World Federation of Diamond Bourses has launched Diamond Aid – to raise funds for medical care in India. We have all read Which brings me, in a roundabout way, to one of the World Diamond about the situation there and all donations will be put to excellent Council’s recent News Updates, which ran under the headline: ‘Eight use. Further details below. words and a set of foundational conventions that expand the scope of the WDC system of warranties.’ The story began as follows: • We are very keen to recruit new Members. We have established a working party, which has all sorts of plans. In the interim, Only eight words separate the declarations made on B2B invoices however, please consider who amongst your contacts could and memos by those members of the trade who have adopted the be interested in joining us. World Diamond Council’s New System of Warranties (SoW), from industry members still using the old SoW. But, while seemingly innocuous, those words are massively significant, for they greatly The Bharat Diamond Bourse expand the scope of the system. Whereas in the original declaration is leading a campaign the seller of diamonds guaranteed that the merchandise is conflict to provide medical care free, ‘based on personal knowledge and/or written guarantees in India. Please give provided by the supplier of these diamonds,’ in the new SoW the generously. seller guarantees that the diamonds are conflict free “and confirms adherence to the WDC SoW Guidelines. Now, in the words of Monty Python, for something completely The SoW Guidelines document, which is now an integral component different. Would you spend £1.35m on a Jaeger-LeCoultre Reverso of the SoW commitment, states that buyers and sellers of diamonds Quadriptyque watch? Or $3m on a 38.04 carat diamond and platinum must observe the implementation of the KPCS, as it is expressed ring? Or, for that matter, CH500,000 on a sapphire parure that once in the KPCS Core Document, KP Administrative Decisions and KP belonged to Napoleon’s daughter? Financial Times readers would Guiding Documents. But it also states that buyers and sellers of and do. Which is why, twice a year, the newspaper publishes a diamonds understand and voluntarily implement a set of universally Watches & Jewellery Special Report – a comprehensive round-up accepted principles on human and labour rights, AML and of the most important industry stories. I find it a fantastic way anticorruption measures. More specifically, it references a set to keep up to date with what is (and isn’t important) to luxury of seminal good-governance documents. None of these documents consumers. Three headlines in the April issue struck me as are what you would call a light read but the fact remains that we all particularly significant: need to be aware of them and what they contain, which is why we have included a summary in this Briefing. The New SoW, incidentally, • ‘Myanmar sanctions take the shine off Burmese rubies’ will become mandatory over the next three years for rough diamonds – essentially a piece about how the country’s military coup and over the next five years for polished diamonds. An online toolkit and mining conditions are deterring Western buyers. is being tested at the moment. • ‘Consumers doubts over re-cycled gold melt away’ – a feature Alan Cohen - President on how rising demand from younger consumers is driving ethical jewellery making. Alan, taken exactly five years • ‘Industry makes slow progress on responsible supply chains’ ago, with the 1,109 carat – all about how activists remain concerned at human rights Lesedi La Rona from the and environmental issues. Karowe mine, Botswana. Purchased by Graff Many of the other articles also included passing references to for US$53m. sustainability, human rights and the environment. What do I conclude We are all aware of the dire situation facing India in fighting the Diamond Aid Corona virus. The pandemic is raging and the Indian healthcare system is being overwhelmed by the sheer numbers of the infected and an enormous shortage of essential supplies. The international – please give diamond and jewellery industry is a close-knit community, actually a family, made up of members from around the globe, many of whom live or originate in India. Therefore, the World Federation of Diamond Bourses has launched Diamond Aid, a fundraising programme, in generously association with the Bharat Diamond Bourse, to purchase specific medications and equipment so desperately needed in hospitals in Surat and Mumbai. You can make a donation here: https://campaign.wfdb.com
Responsible Sourcing Made Easy Take advantage of the Hatton Garden CIBJO, the World Jewellery Confederation, has launched an online Toolkit designed to enable all members of the jewellery and gem sector to conduct responsible sourcing due diligence on their supply Business Improvement District chains. The digital files of which the toolkit is comprised can be Business Improvement Districts are designed to maintain and • Advertise/feature your business in the shop directory downloaded at no cost from a dedicated mini-website, located at regenerate an area. Their aim is to bring economic prosperity and at https://www.hatton-garden.london/hatton-garden-jewellers www.cibjo.org/rs-toolkit. The CIBJO Responsible Sourcing Toolkit services which complement statutory duties provided by the council supports the CIBJO Responsible Sourcing Book, which provides and police. As well as improving the area, BIDs are seen as powerful • Businesses in the area have an opportunity to be part of the Meet companies in the jewellery supply chain with a framework and business alliances which unite the business community, owners and the Neighbours section of our website, where we feature interviews guidance for due diligence for the responsible sourcing of gem occupiers and the public authorities to join forces for the good of the with representatives from Hatton Garden’s local businesses. As well materials and precious metals. The Toolkit was developed for CIBJO specific destinations. BIDs are continuing to grow in importance, with as being featured on our website, the interview will be published in by the Coloured Gemstone Working Group, which is a forum of more than 320 across the UK and 66 in London, they are more vital our monthly newsletter which is sent out to over leading gem and jewellery companies dedicated to helping businesses than ever for the UK’s economic recovery. 1,000 people. in the coloured gemstones supply chain be more sustainable, and WHAT DOES THE HATTON GARDEN BID DO? making responsible sourcing part of the way they operate. The • Businesses can also be featured on the Hatton Garden BID’s social Toolkit comprises nine modules, each one of which relates to a The Hatton Garden Business Improvement District (BID) was media platforms. We can promote any positive news stories or Responsible sourcing specific section of the Responsible Sourcing Blue Book. Each module established in 2016 and has since provided a collective voice for useful information on our Facebook page, Instagram or Twitter, has just been made the business community, playing a vital role in the enhancement of where we have a combined audience of over 3,500. All of the easier thanks to the provides a detailed explanation of that section, and also a number of downloadable files, in MS Word or PDF format, which can be used to the area to preserve its special assets and celebrate its uniqueness BID’s social media platforms have experienced a huge increase in World Jewellery do the due diligence described. They include templates, forms, sample as a destination. It has brought much positive change to this very followers over the past year. Confederation declarations and additional information. unique and historical area through public realm strategies, numerous networking opportunities and an increased focus on the security and • Businesses can be part of our monthly newsletter and promote safety of the area. offerings, business events or stories. Five hours reading in five minutes BENEFITS OFFERED BY BID The BID can offer numerous marketing and promotional • The Hatton Garden BID will be developing a world class seasonal event programme for all our local businesses and visitors to the opportunities for our levy paying businesses, including the following: area to enjoy. Included in the programme are a range of networking The World Diamond Council System of Warranties (SoW) – see growth alone is not enough to ensure equity, social progress and the opportunities and business training and information workshops. Alan’s article on the front cover – is linked to a number of important eradication of poverty. • The Garden Card - this is a luxurious privilege card for the area, documents. Doubtless you plan to read them all from cover to cover, which gives businesses an opportunity to promote themselves and For more information please visits https://www.hatton-garden. but in the interim here is a quick summary. UN CONVENTION AGAINST CORRUPTION is also used to attract new and repeat customers to the area. Since london, where you can subscribe to the newsletter and apply for The its launch in September 2018, over 2,000 cards have now been Garden Card. If you would like to take advantage of any of the benefits UN GUIDING PRINCIPLES ON BUSINESS The UN Convention Against Corruption is a landmark, international issued. mentioned, or if you have any questions, please speak to Stacey in the AND HUMAN RIGHTS anti-corruption treaty that was adopted by the UN General Assembly office or email stacey@londondiamondbourse.com in October 2003. It is exceptional not only in its worldwide Endorsed unanimously by the United Nations Human Rights Council coverage but also in the extent of its provisions, which recognize the in 2011, the UN Guiding Principles on Business and Human Rights A country free from corruption importance of both protective and punitive measures. articulates 31 essential principles, outlining a state’s responsibility both to protect human rights and offer access to remedies in the event FAFT RECOMMENDATIONS ON MONEY LAUNDERING that those rights are not respected. It also addresses the business FOR DEALERS IN PRECIOUS METALS AND STONES sector’s obligation to do due diligence so as to avoid infringing on the rights of others and to address any negative impacts. The structure have only been interested in developing a fair system of taxation The Financial Action Task Force (FATF) is an inter-governmental prescribed by the UN Guiding Principles on Business and Human and royalties for mining companies, backed up by transparent watchdog body, which sets international standards to prevent The author at work Rights forms the basis of a number of conventions that today are independent valuations of the rough diamond production prior money laundering and terrorist financing, as well as the financing of widely observed and implemented in the diamond and jewellery to export from Canada. Importantly, the valuations are based on activities leading to the proliferation of weapons of mass destruction. sectors. These include the Responsible Jewellery Council’s Code of objective current market prices, rather than on judging a production Recommendation 22 and Recommendation 23 of the FATF Practices, CIBJO’s Responsible Sourcing Blue Book and the OECD against a so-called ‘master sample’ diamond parcel, created by the document identifies dealers in precious metals and precious stones Due Diligence Guidance for Responsible Mineral Supply Chains. producer, where the assortments (and therefore value) only change as ‘designated non-financial businesses and professionals,’ stating that they also should be subject to stringent anti-money laundering periodically, and to the producing company’s advantage. To the ILO DECLARATION ON FUNDAMENTAL Canadian government’s credit and despite intense lobbying, it opted (AML) and anti-terrorist financing measures. It should be noted that PRINCIPLES AND RIGHTS AT WORK for the market-based approach which has lasted well for almost a the specific practices that need to be implemented by any diamond or jewellery company will depend on the laws applied in the country or quarter of a century. The International Labour Organization (ILO) was founded in 1919 region in which it is located. More often than not, these will comply on a belief that universal and lasting peace can only be accomplished Richard Wake-Walker is the co-founder of WWW International Corruption is something that plagues the gem sector. Canada comes with the FATF guidelines. only if it is based on social justice. It recognizes that economic Diamond Consultants. He left De Beers in 1994 having successfully out at number 11 in world corruption indices (one being the least set up their first Moscow office, and previously spent eight years as corrupt), equal with the UK. Surprisingly, and erroneously in my a key member of the De Beers sales department, where at various experience, Botswana is the second least corrupt major diamond We are being watched Human Rights Watch (HRW) recently published: Sparkling Jewels, Opaque Supply Chains: Jewellery Companies, Changing Sourcing times he was responsible for rough diamond sales to all the main cutting centres. producing country at 35 (the same as Israel). Then Namibia at 57, South Africa at 69, Russia at 129 (Russia is the lowest of all European countries, placed even below Sierra Leone). Angola and DRC are well Practices and Covid-19. In the report, HRW studied fifteen of the I had a distant cousin who emigrated to Canada in the 1920s. He was towards the bottom of the list, along with the likes of Iran, Iraq and world’s largest jewellery and watch companies, which between them forced to become a hobo in Vancouver during the Great Depression Afghanistan. Belgium, again far too high in my view, is 15 while India generate more than $40bn in annual revenue and representing a and wrote a book on his experiences. His life on the streets also is half way down the list at 86. staggering 15 per cent of global jewellery sales. These companies moved him to go into local British Columbian politics where he was were then ranked on their responsible sourcing. None were deemed mildly successful. Later in the 1980s he published a polemic called Canadians, even Quebecois, always say that Quebec is the most ‘excellent’, but Tiffany & Co and Pandora were ranked ‘strong’ for Conning the Canadians. This was not, as you might expect, about corrupt province in Canada. The provincial legislature has even had to taking significant steps towards responsible sourcing. Three other multi-national mining companies operating in the Canadian Arctic pass its own local anti-corruption laws. When applying for a contract firms – Bulgari, Cartier and Signet – were considered ‘moderate’, but Quebec’s attempts to secede from the Federation. My cousin there a few years back, we were informed that if our bid was too low it whilst Boodles, Chopard and Harry Winston were rated ‘fair’. Two also maintained that the French government was secretly financing would be assumed we were bribing bureaucrats. When querying why firms – Chow Tai Fook, Christ and Tanishq – were ranked as ‘weak’ Quebec’s policies, but that is a separate story. we then did not win the contract, we were told our bid was ‘far too and four – Kalyan, Mikimoto, Rolex and TBZ – could not be ranked high’. Enough said. Cousin Victor would have been amused by all this. at all due to their opaque nature. Interestingly, five of the companies Anyway, after a diamond career dealing with Africa and Russia, it was Today he would be investigating whether the title of his polemic still (Chopard, Harry Winston, Tanishq, Pandora and Boodles) have risen a relief to get involved with a civilised country from 1998 onwards. holds good, although he wrote another book called: Let Quebec go!, up the rankings since 2018. Overall, HRW found 11 of the companies By civilised I am referring to the lack of corruption in Canada, still a which perhaps underlined his true standpoint. Victor died 16 years Tiffany, Pandora, Bulgari, Cartier and Signet had taken steps to improve their human rights due diligence since relatively new diamond producer which quickly became, and still is, ago, like Prince Philip, just a few weeks short of his centenary. received muted praise from Human Rights Watch 2018. Bulgari, Cartier and Pandora have increased their use of the third largest diamond mining country by value. The civil servants recycled gold and Chopard is sourcing gold from Fairtrade mines. and politicians I have dealt with in Ottawa, Sudbury and Yellowknife By Richard Wake-Walker
Please remember… We have lost three much valued Members over the last year. adventures), her sister in Canada and relatives all over the world. Her daughter-in-law, Vanessa showed an interest in the trade, and joined Elias (Eli) Schreiber Marcie regularly in Hatton Garden to help out. It all sadly came to an Elias (Eli) Schreiber was born in Rumania in 1934. end last year when Marcie caught Covid-19 and passed away. Sadly, He arrived in the UK in 1962 and became a member her husband passed away several years ago. She is survived by her of the Diamond Bourse in 1977. Eli was a deeply son, Marc, Vanessa and their two children. Marcie was a wonderful religious man. He was kind, patient and never lost friend and is greatly missed. Trevor Sigsworth his temper. Whenever and wherever you met him, he exuded a peaceful and serene aura – one of those Henry Isaacs people who was loved by all who knew him. Tragically, after seeming With the passing of the late Henry Isaacs, the to overcome Covid-19, he passed away. He is survived by his wife, five London Diamond Bourse lost one of the pillars of children and many grandchildren. He is greatly missed. Alan Cohen its foundation. Henry had been a much-loved and appreciated Member since 1977, and his presence Marcelle Saad on the trading hall always lightened up the room. Marcie was born in Lebanon and moved with her One could always rely on Henry for useful information on a host of family, at an early age, to South Africa. After school topics, and it was always a pleasure to have a conversation with him. she got a job with a Diamond Dealer in South He served on the Council and as our Social Welfare Officer for many Africa and this was the start of a life-long passion years and was our dedicated representative at many occasions. In for the business. She moved to the U.K. with her later years, health concerns forced him to take a step back from public husband, where she started a family. As time went duties, but he remained a Member, and came in on a regular basis, by the opportunity came to travel. She especially loved visiting the ably assisted by his daughter. Henry passed away – as he lived his life Kruger National Park, (resulting in many birdwatching and big cat – quietly. He is missed by us all. Menachem Prager Precious Metals in the Gemstone Market Without their overriding end use in cosmetic jewellery, gemstones jewellery industry offtake is c. 1700 tonnes per year, thus over 80 would be just another commodity. The development of chemically years theoretical availability from reserves. New annual production and physically identical synthetics of ruby (for lasers) and diamonds is c. 3200 tonnes, so – arithmetically at least – there is no prospect (for cutting, polishing, grinding), reinforces this. To become jewellery, of a shortage, other than by external influences. The position with gemstones need to be enwrapped in precious metals. Of these we silver is even less acute. Surface supplies are vast and jewellery offtake recognise the big three: gold, silver, platinum and, to a lesser extent, is less than 20% of annual mined supply. Platinum and palladium palladium. Yet in pricing an item we tend to weigh the gem value would hardly be missed. The two major producers, RSA and Russia, and the mounting design, rather than the metals cost. So, is the accounting for over 80% of annual output, are, by economic necessity, choice of metal consequential? A $50,000 diamond solitaire, in a ready sellers. full three-ounce gold setting, has a gem-to-metal ratio of ten-to-one. Hardly a deal breaker. Yet the dynamics are changing, and we need So what will influence the precious metals prices? If immediate to understand how this might affect the price and supply of precious supply-demand factors are minimal then it has to be economic/ metals to the jewellery industry. By annual mixed volume financial factors and their impact on gold. As ever, the others will the disparity is acute: then follow suit. The ratios (see above) have changed significantly in the past decade. For platinum and palladium there were overriding Annual production* Used in jewellery industrial reasons, in the auto catalyst industry mostly. This is the Silver 25,000 17% major end use for both metals but with diesel fuel being effectively Gold 3200 52% barred on environmental grounds, Pt lost out to Pd with massive swings in the price deferential, as shown. This matters little to the Platinum 160 21% jewellery market. The key is the perception of gold as a store of value. Palladium 200 7% *tonnes per year What is driving the gold price? Investments and jewellery account Visual appearance is paramount. Gold, then to an extent silver, for over 820 tonnes (c.25%) of annual mined output and have been are instantly recognisable. The PGMs could pass for a base metal. rising steadily. Personal investment, much in bullion and coins, is So how does price affect choice? also rising, but central bank holdings have been relatively static. The two overriding drivers would be international political and economic The Price of Precious Metals (US $ Per Ounce) and Ratios uncertainty. Neither is currently of major concern. Silver Gold Platinum Palladium Price end 2010 30.4 1408 1745 17% In conclusion: 1. The supply of precious metals is critical to the retail gemstones Ratio to Gold 1.0:50.7 1.0:10 1.0:1.2 52% industry. Price April 2021 25 1750 1180 21% 2. Gold dominates and will continue to do so, with 52% absorbed by Ratio to Gold 1:70.0 1.0:1.0 1.0:1.48 7% jewellery. 3. Its price ratio to silver and platinum continues to increase but this The price changes in a decade are explainable in industrial terms is only of investor impact with low-cost items. but not significant to their choice in jewellery. Note the metal-to-gem- 4. There is unlikely to be any supply shortage of meaningful duration, ratio above. Gold occupies a unique place in society. It is instantly given the abundance of surface stocks and the diversity of mined recognisable and possesses extreme physical and chemical properties. sources. These include density, malleability and resistance to corrosion. It can 5. The huge swing in the palladium price is explained by its overriding also lean back on over 4000 years of history as a ‘store of value’, the end use in the auto catalyst industry and the changes wrought by first coinage being recorded in Lydia (now Turkey) around 640BC. the climate war. It is of little concern to the gemstone industry. This is unlikely to change. For the foreseeable future, the gemstone trade need not concern itself SUPPLY AND DEMAND FACTORS FOR THE BIG THREE about the availability of precious metals; there is lots to go round. Neither will the metal be a determinant, other than at the low end On a relatively short-term basis (3-5 years) these are of little of the mass market. consequence to the gemstones industry. Example: Above – ground gold reserves are estimated at c. 150,00 tonnes in all forms, of which David Hargreaves is a mining engineer over 40,000 tonnes are held in government stockpiles. Now the and founder of Fair Trade Gems. This LDB Member Briefing was produced by Kathy Chappell, Alan Cohen, David Hargreaves and Jonathan Self.
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