IDMA: tenders are a threat to diamond supply

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Moti Ganz calls on large diamond producers to return to direct supply.

Moti Ganz, president of the International Diamond Manufacturers Association (IDMA) has released an article warning large-scale diamond producers that by selling their production through tenders, they are risking the sustainability of the diamond industry at large.

The article appeared in last month’s HaYahalom, the Israel diamond industry magazine that is published by the Israel Diamond Institute. Ganz said in the article: "There are so many tenders that the trend is threatening to interfere with our lives. And if the rough producers don’t wake up in time, it won’t be a mere interference, but a blow to our very existence, capabilities and survival.”

However Ganz did make clear that he was completely against tenders – meetings where large rough diamonds are marketed and sold. "When the large rough producers add a tender here and there, as a window to the market, to sell especially large goods or for other special reasons, everyone can continue to breathe normally,” he said.

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“But when the tender becomes a method in its own right, when it becomes the central marketing channel, increasingly pushing regular supply to the margins, it’s time to put a foot on the brakes – and the sooner the better.”

Ganz believes tenders make sense in a world where they are one of many instruments of supply, but not when all or most supply is based on them.

"It’s true that we have seen manufacturers collapse after losing their sight, but on the flipside, we haven’t yet seen any manufacturer open a factory on the strength of its participation in tenders – for if you don’t win tomorrow’s tender, what will you do? Who will pay the workers’ wages? Who will pay the taxes, electricity, water and all the other bills?"

He argued that manufacturers who only buy rough diamonds occasionally may find tenders accommodate their needs, but it is those who are producing the large quantity of rough who will dominate tenders and push prices to higher levels that many cannot reach.

"When we examine these aspects of tenders, we realize that they weaken each and every link along the diamond value chain,” said Ganz.

He issued a word of warning to the larger diamond producers to not get complacent while enjoying the profits gained from tenders. “The most prominent victims are manufacturers and retailers. However, there is also another victim – the rough producer, so dazed by the hefty profits that it doesn’t notice the danger lurking around the corner."
 

 

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