Leviev: Miners Should Give Manufacturers Breathing Room with Credit

The second day of the World Diamond Conference in Tel Aviv was heavily attended, with many attendees gathering in anticipation for Lev Leviev’s speech. Known for his plain speaking and dislike of De Beers, the audience was not disappointed when he took the stand.

This time he took the perspective of the pressured diamond manufacturer, accusing diamond miners for pushing polishers to constantly seek cheaper labor, but not trusting their clients enough to give them credit. “They don’t ask for cash payment a day in advance, but four days before they get the rough. What, are they afraid the manufacturers will change their minds?” he said, the audience responding with laughter.

According to Leviev, manufacturers are the people that have saved the industry; supporting the producers on one end, and the retailers on the other. “The majors [the big jewelry retailers], who were bankrupt just a few years ago, now demand to know from the manufacturer how much gold is in the jewelry item, what is the cost of labor, and the cost of the diamonds, then tell you how much profit you can make, and then take the jewelry on consignment. But that is not enough, their ‘chutzpa’ [nerve] is when they return the unsold items, they expect the manufacturer to also take goods from other manufacturers – after all, you don’t want to loose your contract with the retailer,” he said to the cheering crowed.

Leviev scolded the jewelry retailers for their insistence on a limited range of colors - HIJ - for their programs. “No wonder the prices of rough are going up. Everybody is running to get the same goods.”

After attacking De Beers’ Supplier of Choice program and Sight system, and Rio Tinto’s three year/set price contract, Leviev had a few warm words for the banks that supplied credit and stand strong behind the industry.

His recommendation to resolve the problems in today’s diamond market is that producers supply manufacturers with credit that will allow them to finance their operations.

Reactions to his speech were split. DTC Sightholders flatly rejected what he said, noting that their supply is diverse and not identical, as Leviev claimed. They also noted that when you examine any business or industry on a five year basis – there are always ups and downs, but long term planning resolves financing issues.

The majority of the diamond community, on the other hand, found his speech entertaining at the very least, and often reflecting their personal sentiment – that they are being squeezed from both ends.