x Abu Dhabi, UAEThursday 27 July 2017

Dubai expanding diamond trade

The chairman of the Dubai Diamond Exchange vows to boost imports of uncut gems from Africa using correct protocols.

Diamonds have become a huge business since the opening of the Dubal Diamond Exchange.
Diamonds have become a huge business since the opening of the Dubal Diamond Exchange.

DUBAI // The chairman of the Dubai Diamond Exchange has vowed to boost imports of uncut gems from Africa but stressed that the UAE will not become a haven for "conflict stones." Diamond trading has become a huge business in the UAE since the opening of the exchange in 2004. Although complete figures for 2008 were not available, deals in Dubai totalled more than US$8 billion (Dh29bn) in the first half of last year, compared with more than US$11 billion in the whole of 2007.

But global diamond markets have not escaped the worldwide economic downturn, with sales plummeting, triggering diamond-mining countries to cut production in an effort to buoy prices. "We are already in the top five rough diamond distributors in the world, and we are determined to grow even more," said the exchange chairman, Peter Meeus. "The demand for diamonds is down globally as a result of the financial crisis.

"Since October there has been a worldwide downturn in demand for diamonds and so diamond-producing countries such as Angola have taken measures to cut production." In an effort to help boost trade, Mr Meeus travelled to Angola. The country is the largest source of rough diamond imports for Dubai, with about US$800 million in sales in 2008. He also plans to visit Botswana and Namibia. He declined to reveal the exact nature of the talks with Angolan officials, but said there were no plans to buy foreign mines, only to increase the number of rough diamond purchases.

"We want to ensure that Dubai is a new diamond hub," said Mr Meeus. But as the exchange works to boost trade, Mr Meeus said officials are conscious of avoiding diamonds used to finance wars, commonly known as "blood diamonds". Angola, which produces approximately nine per cent of the world's diamonds, according to the World Diamond Council, is a signatory of the Kimberley Process, a protocol launched in 2003 to track diamonds' origins.

Conflict diamonds are no longer traded in the country, according to the council. "There is peace in Angola. The country is stable. The economy is growing and there is strong support for the Kimberley Process," Mr Meeus said. "Angola took a leadership role in organising African diamond-producing countries." Asked if he would provide an assurance that the new efforts to boost diamond trade with African producers would not lead to an influx of conflict diamonds, he replied: "Absolutely."

"I really think there is no danger of that," he said. "The trade has tackled most of that issue." Annie Dunnebacke, of the human rights group Global Witness, praised Dubai's commitment to the Kimberley Process, but said greater federal government involvement was needed. "From a technical perspective, the Kimberley Process system in Dubai is very good," she said. "However, there are aspects which concern us, such as the lack of federal government oversight.

"The groups which monitor the activities of the Dubai Kimberley Process are mandated by the Government, but we would like more direct federal government oversight. "In recent years Dubai has really grown as a rough diamond trade centre, but if it wants to grow even further and be taken seriously as an international hub, which is what I believe it aims to be, it needs more government oversight." She said a significant problem facing the Kimberley Process was how to stop diamonds from being smuggled out of countries operating under sanctions and into those without trade restrictions.

The stones then could gain legitimacy and be traded as originating in the second country. "We cannot entirely stop diamond smuggling - that is unrealistic - but we need to reduce it," Ms Dunnebacke added. "The KP and the governments have enough tools in the box to stop smuggling, but they are not necessarily using them in a quick and efficient way." The diamond council reported that the illegal diamond trade totalled more than three per cent of world sales by 1999, but that in 2004, it had been reduced to about one per cent.

Under the Kimberley Process, rough diamonds are sealed in tamper-resistant containers and must have forgery-resistant, conflict-free certificates with unique serial numbers each time they cross an international border. chamilton@thenational.ae