Diamond World (DW) May - June 2020

SPECIAL REPORT
If this voluntary ban
is not supported,
diamond prices are
likely to fall sharply.
In order to avoid this
scenario, it is important
that the whole diamond
industry curtails import
of roughs and also
does not allow overflooding
of market with
diamond inventory.
We have to maintain a
healthy demand and
supply ratio – only then
the prices of diamonds
can be maintained
Vipul Sutariya,
Dharmanandan
Diamonds Pvt Ltd
Leading diamond mines cut
supplies
The moratorium has prompted De Beers,
one of the largest rough diamond miners
in the world that contributes around 20
per cent of the total supply, to cut its
production estimates to 25-27 million
carats for the calendar year 2020, from
32-34 million carats earlier.
Other global miners, including
ALROSA and Rio Tinto, too, have
revised their production forecast for 2020
to avoid inventory building and distress
selling. Diamond processors, which had
stored their imported rough diamonds at
their factories abroad, including Dubai,
are now bringing their stock to India.
GJEPC had reported a year-on-year
decline of 11 per cent in the country’s
rough diamond import to 146.4 million
carats (worth $12.7 million) for the
financial year 2019-20. This figure was
165 million carats (worth $15.7 million)
in the previous year.
Labour scarcity affects
manufacturing
“Workers have returned to their
hometown. Hence, diamond processing
factories are witnessing an acute shortage
of karigars. Since the possibility of their
immediate return seems remote, the
voluntary moratorium not only should be
made compulsory but also extended. The
consensus and the anecdotal reference
from coordinated efforts multiple times
over the last decades - when the Global
diamond demand recovered from the
demand shocks, both in volumes and
price terms - dictates that the most
effective solution has been to curtail
the supply, as it fundamentally creates
buoyancy for sustainable future demand
for the retailers, manufacturers and the
miners,” said Dinesh Lakhani, of Kiran
Gems.
This voluntary ban will help diamond
manufacturers to manage the current
lockdown-induced crisis and meet the
banking sector’s reluctance to finance the
sector confidently.
On an average, rough diamonds worth
over $1 billion are imported every
month, and a month’s restraint will allow
processing units to tide over the current
situation at least partially. These units
are also under severe financial stress and
aren’t in a position to restart despite the
NO GAIN HERE
Budget 2020 raised the
BCD (basic customs duty)
on rough coloured like
rubies, sapphires, emerald
and others to 0.5 per cent
from nil
GJEPC said that given
the relatively low value
of imports the levy
would hardly yield the
government any revenue
Imports of semi-precious
stones totalled $571.32
million in FY19
84 | may-june 2020 | DiamonD WorlD