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DIAMDEL MOVE LEAVES UNANSWERED QUESTIONS
Is De Beers existing Antwerp because it has been burned by the EU's anti-monopoly rulings and lawsuits? Do they plan to quietly scale back rough supply to open market in order to give its clients more? Will the Israeli industry have an edge now - especially since Alrosa and Aber plan to move in as well? Wholesale moonstone Jewellery

One of the ore surprising announcements made at the time of the World Diamond Congress in Tel Aviv in June was that Diamdel, the rough diamond trading subsidiary of De Beers which suppies the secondary market, is moving its central operations to Tel Aviv from Antwerp. Although the leaders of the Israeli diamond industry were delighted with the fanfare of media coverage following the announcement by Diamond Trading Company managing director Varda Shine, a more sober analysis of the implications shows that the profit and loss for the centres involved does not extend far beyond the column marked 'prestige'.

Originally established in Antwerp in 1964, Diamdel aims to satisfy its secondary market. traditionally, Diamdel supply from the DTC, which comprises the vast majority of its intake, has been split at the point of sale in London and shipped to each of the Diamdel's seven outlying offices in Antwerp, Hong Kong, Namibia, Shanghai, Johannesburg, Mumbai and Israel.

Shine said that in future, all supply received from the DTC will be sorted, valued and prepared for export by a Centgral Processing Operation (CPO) based in Ramat Gan. Set to be operational from January 2007, Diamdel said its decision to locate the CPO in Israel followed a "strategic assessment of the means by which the long-established company can better meet the diverse needs of its global customer base of over 500 non-DTC clinents.

Taking the explanation a step further, Frank Auger, managing director of Diamdel NV said: "Diamdel Israel benefits considerably from its global positioning and highly experienced staff base of 13 local employees and one expatriate. All staff have an integral understanding of rough diamonds and similarly market dynamics at both a local and global level. The establishment of a CPO for diamdel will not, under any circumstances, affect the company's dedication to satisfying, where possible, client requirements in other diamond centres, on the contrary it is intended to enhance our ability to ensure th timely appropriate and efficient supply of goods". Wholesale turquoise Jewellery Diamdel Israel supplied more than $ 145 million of rough goods to the Israel industry in 2005 during which time Diamdel Israels client base rose to 100 from 85. Interestingly, Diamdel stressed that the location of the CPO would nt "impact the level of Diamdel supply offered to the Israeli market".

That raises several questions, such as what is the benefit to the Israeli centre if it does not receive an increased supply. S for the move itself, why would Diamdel take such a drastic step and move from the world's main rough diamond market to Israel. Despite the rise in foreign buyers, following the fall in violence that broke out with the start of the intifada, or uprising, in late 2000 the bloody conflict with Lebanese terror group Hazbollah in mid-July illustrated well that the country is still subject to periods of severe instability - the enemy of investors and the business community.
Israeli diamond controller Shmuel Mordechai, the government official responsible for overseeing the trade, sees the Diamdel move as an important step in increasing the amount of goods that will come to the coutry. His optimistic worlds are echoed by Avi Paz, the president of the Israel Diamond Exchange, who also believes it will raise the amount ofrough goods coming to Israel although he was unable to explain precisely how this will happen. "Israeli traders will see the goods more quickly and that is already an advantage", he said. Paz believes the move will be of benefit to the younger generation of diamond manufacturers, since it will give them a source of goods and overall provide wider range of stones.

"I divide the world's diamond manufacturing into two categories", he explained."There are the diamonds that are produced by mass production in India, China and other low labour cost countries. The other centres, such ass Israel, Belgium and the United States, cannot compete with thee countries. Then there are other goods that are higher quality, larger stones which can and are manufactured in Israel. We will get more of those stones due to the Diamdel move, along with the announcements by Alrosa and Aber Corporation that they are going to open rough sales offices here".

As for Diamdel's move from Antwerp, could this be due to a fear by De Beers that it might be vulnerable to antimonopoly rulings and lawsuits from the European Union (EU) following the latter's ruling that De Beers must phase out its purchases from Alrosa? Could the EU have dictated exactly how much should be sold on the open market? Was the move aimed at damping down some of the anti-De Beers feelings in the EU? Some diamantaires have even gone so far as to suggest the move might be aimed at quietly scaling back the amount of goods sold on the secondary market and making increased amounts available to sightholders.

Not surprisingly, Diamdel dismisses the suggestions, with communications management James Nicholson saying such questions "real too much into the reasoning behind Diamdel locating the CPO in Israel Diamdel has been proud to operate from Antwerp since 1964 and will continue to do so into the foreseeable future. Wholesale gemstone Jewellery The decision to locate Diamdel's Central Processing Office in Israel follows a strategic assessment of the means by which the company can better meet the diverse global needs of its clients. It will not, under any circumstances, affect the company's dedication to satisfying where possible client requirements in other diamond centres be they Antwerp, Tex Aviv, Hong Kong or other.

"In 2005 alone, Diamdel Antwerp supplied in the region of 100 clients approximately $ 200 million of rough. Figures for 2006 are likely to be very similar. We are, and will remain deeply committed to serving the needs of any small, visionary and developing business as well as more well-established operation within the Antwerp market", Nicholson added.

While the diamdel comments are to be expected, their view is not shared by all in the Antwerp diamond community. One well-known figure in the city's diamond trade said it was "transparenty clear" that the dispute with the U and the fear of further clashes was behind De Beers' decision to move. "De Beers does not want to place all its eggs in one basket," the Antwerp diamantaire explained. "It has been burned by the EU and early wants to move to a base where it will not be over-regulated".