2. THE BELGIAN DIAMOND MARKET

2.1. General positioning

Belgium is a diamond trade centre. More then 99% of all goods that are imported are exported again to other trading and manufacturing centres (rough) and to consumer countries (polished).

Antwerp is the largest World Diamond Centre with a turnover of more then 23 billion USD in 1999, hosting four (of the 23) diamond bourses, and 1.500 diamond companies.

Total Belgian diamond import/export in 1999 compared with 1998

IMPORT 1999 1998 % difference

1000 ct million $ 1000 ct million $ ct $

rough diamonds 149. 688 7.094,50 133.717 5.414,24 12 31

polished diamonds 7.344 4.281,64 7.542 4.246,95 -3 1

industrial diamonds 33.881 66,81 45.582 83,29 -25 -20

Total IMPORT 190.913 11.442,95 186.841 9.744,48 2 17

EXPORT 1999 1998 % difference

1000 ct million $ 1000 ct million $ 1000 ct million $

rough diamonds 173.257 6.914,35 166.113 5.127,34 4 35

polished diamonds 7.570 5.254,18 7.654 5.033,87 -1 4

industrial diamonds 8.250 42,79 20.639 55,44 -60 -23

Total EXPORT 189.077 12.211,32 194.406 10.216,65 -3 19

The diamond market is a fast changing market. Each of the main diamond centres (Antwerp, Tel Aviv, Mumbai, New York, Dubai, London, Switzerland,) tries to attract new diamantaires to its market.

Large manufacturing centres (India, UAE, Hong Kong, Thailand, China, Sri Lanka, Ukraine, Armenia, …) buy also directly from producers.

Diamonds sometimes go around the world, passing different trading centres, before finding their final consumer. They are then taken into account in the turnover of more then one trading centre. In that sense, 80% of all rough diamonds passes trough Antwerp in their quest for the end consumer.

The general market competition is an important fact when figures are analysed to understand what is going on since the UN adopted the embargo against Angola.

For 2000, rough imports are declining in Antwerp (in weight). Supplies from De Beers in London felt back to 26.5 million carat, representing a loss of 18% in weight.

Also smaller importers send 3.9 million carat less to Antwerp, a fall down of 38%.

On the other hand, there has been an important increase for goods coming from Tel Aviv (+ 3.9 million carat), Switzerland (+ 988.000 carat), Dubai (+ 1.2 million carat), USA (+ 312.000 carats) and South Africa (+ 210.000 carat).

On 31.07.00, the Democratic Republic of Congo concluded an agreement with IDI Diamonds, an Israeli-based company who will import the DRC’s entire rough diamond production, worth between 600 and 700 million USD a year.^[1] The influence of that agreement for the Antwerp market remains to be seen.

Import Rough Diamonds in Belgium

January - August 2000 January - August 1999 % difference

1000 ct million $ 1000 ct million $ ct $

UNITED KINGDOM 26.453 2.552 32.085 2.256 -18 13

ISRAEL 7.962 557 4.102 404 94 38

CONGO (DEM. REP) 13.574 513 15.647 506 -13 1

ANGOLA 1.417 386 1.205 309 18 25

SOUTH AFRIKA 459 249 237 101 94 147

AUSTRALIA 23.405 152 34.385 186 -32 -18

U.S.A. 1.018 110 706 106 44 4

SWITZERLAND 1.095 107 94 17 1.065 529

REP. GUINEA 507 105 366 92 39 14

CENTR. AFR. REP 836 104 670 107 25 -3

UNIT.ARAB.EM. 3.476 64 2.306 7 51 814

HONG KONG 2.404 63 2.039 42 18 50

OTHERS 6.473 387 10.366 542 -38 -29

TOTAL 89.079 5.349 104.208 4.675 -14 14

2.2. Angola

The HRD sent a first mission to Luanda in December 1999 in order to evaluate the local situation and investigate in which way assistance could be given to the legitimate government. One of the issues appeared to be forgeries of certificates.

Since 14.02.00, the Government of Angola introduced a new certificate of origin with additional safety measures that make forgeries extremely difficult. The Belgian government meanwhile increased controls.

On 29.03.00, the HRD signed a structural co-operation agreement with the Government of Angola in which parties agree upon the introduction of an import confirmation certificate, data exchange, technical assistance and research of characteristics on Angolan diamonds.

The imports from Angola increased ever since which provides additional tax revenues for the Angolan government. This evolution shows that the channels for illicit trade of Angolan diamonds are drying up.

Following the remarks of the Sanctions Committee, the Angolan government reformed the internal market into a single channel system. ASCORP became the only buying and exporting authority in Angola.

The 1999 production of Angola was 3.731.747 carat with a value of 614 million USD^[2].

An important part of the production is commercialised through Antwerp, accompanied with the new Certificate of Origin. In 1999, Antwerp imported 2.539.000 carat, representing 548 million USD.

The entire production of the Catoca mine however is now directly exported to Tel Aviv trough a joint venture of Alrosa, Odebrecht, Endiama and the Israeli financial group around Lev Leviev.

2.3. Other "sensitive" countries

The imports from other "sensitive" countries have been slowly decreasing a long time already. This decrease is accelerating in 2000.

Sierra Leone, Liberia and Ivory Coast represent only a marginal share in the imports.

On the other hand, new diamond exporters such as Rwanda or Burkina Faso do not bring their goods to the Antwerp market.

The strong position Belgian government and industry have taken in fighting conflict diamonds has without any doubt influenced this evolution.

One must be careful with conclusions exclusively based on differences between production capacity and export figures.

All diamond trade centres have huge exports without having any own extraction. Exporting without producing is not suspicious as such. Some smaller producers build out a local trade centre, like in Africa where a lot of small producers and buyers operate, as in Liberia for example.

Not the quantity but the quality is relevant to come to correct conclusions. The average price per carat gives an indication about the origin of diamonds exported by those local trade centres.

A comparison between the statistical information from Liberia and Sierra Leone shows that the reality is far more complex. Liberia has been exporting diamonds before Sierra Leone. The prices of Liberian goods fluctuate, although most of the time they have a significantly lower value than goods from Sierra Leone. The last two years tough, Liberian goods have a bigger value than the Sierra Leone exports.