WFDB President Paz: Ask Producers to Reduce Rough Diamond Supply

An appeal to reduce rough diamond supplies was made over the weekend by Avi Paz, president of the World Federation of Diamond Bourses (WFDB). “In view of the global economic crisis,” Paz asked diamond mining companies to reduce the quota of rough diamonds they supply to the industry.

“In this period of economic uncertainty, the stability of the world diamond industry is of vital importance to the world economy and to the international banking system,” Paz said. “The quantity of rough diamonds that is marketed worldwide greatly affects the stability of the industry, and in particular the industry's global bank debt.

“The mining companies can enhance stability at this point in time by reducing the volume of rough diamonds they are supplying to the market. Such action is imperative and necessary not only for the diamond industry, but also the rough producing countries, the global banking system and the diamond mining companies themselves,” Paz added.

In recent months, the prices of rough diamonds continued to ascend, even at times when their selling price of polished diamonds did not rise. Producers such as De Beers and Harry Winston (formerly Aber) hiked prices as long as strong demand continued.

In the past couple of months, this demand dropped sharply. Paz is probably concerned that due to contractual obligations, buyers will continue to buy rough diamonds from producers, even if it does not fit the current global situation and price reductions.

While asking to curb rough supply, Paz also wants to see a rise in polished diamond consumption, suggesting it to be an attractive investment in the midst of a global economic storm.

“I appeal to the mining companies to exercise the utmost responsibility and prudence in this complex situation," Paz concluded.