Many banks are increasingly reluctant to fund the diamond industry, presenting a challenge to producers and traders of rough diamonds.
Ahmed bin Sulayem, executive chairman of the Dubai Multi Commodities Centre, told the World Diamond Congress in Dubai that the financial squeeze was damaging the global industry.
“Diamond financing remains a challenge,” he said. “Dubai is at the moment the only location in the diamond world where banks are willing to enter into rough diamonds financing. But many banks are still concerned about regulatory costs and high levels of debt among dealers – and remain reluctant to extend new financial resources. Long- term finance has to be transparent and viable if it is to sustain the global industry.”
Standard Chartered last month became the latest big bank to impose new, tougher conditions on would-be borrowers in the diamond trade in India and Belgium, the two biggest trading centres.
Banks in Dubai, which has moved into third place in the global diamond trading business, have moved to fill the gap left by the withdrawal of Antwerp Diamond Bank last year.
The 200 delegates at the congress – representing the biggest diamond producers and traders in the world – will consider other proposals for diamond finance during the three-day meeting at DMCC’s Almas Tower.
The congress kicks off “diamond two weeks” in Dubai, with a meeting next week of participants in the Kimberley Process (KP), the regulatory body aiming to control the flow of “conflict diamonds” on to the world’s markets.
Diamond experts will consider how to tackle the complex problem of getting a standard valuation of rough diamonds in different world markets.
Mr Bin Sulayem is chairman of the KP for 2016.
Diamond prices have been staging a “fragile recovery” this year after a “perfect storm” of trading pressures in 2016.
The congress also heard that the world “centre of gravity” of diamond trading was moving eastwards.
“We are gathered here as the global diamond industry is going through a historic transformation,” said Peter Meeus, chairman of the Dubai Diamond Exchange. “The traditional balance of power is changing and the diamond world is no exception to this general trend.”
Ernie Blom, president of the World Federation of Diamond Bourses, said: “I would like to emphasise the importance of the themes of our congress: transparency, responsibility and sustainability. These themes run through all the challenges that we are facing as a global industry and also show us the way forward.”
fkane@thenational.ae
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