26th Feb 2024


Recession hits diamond capital Antwerp

  • Only the bigger and more valuable diamonds are cut in Antwerp, the rest are processed in India and China (Photo: EUobserver)

Diamond trading, certification and polishing businesses in the Belgian city of Antwerp have reduced activities and temporarily laid off staff due to the economic crisis, as the industry is dependant on the cash-strapped banks to finance it.

A handful of old men with typical black hats and long grey beards sit scattered across an immense hall, some playing chess, others simply chatting with each other. The impression is of a social centre or a retirement home.

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In fact, it is the trading floor of one of the world's most prestigious diamond bourses, established in 1904 by the local Jewish community.

Once an exclusive club of the black-clad orthodox Jews, the bourse now also serves vegan food along with traditional kosher menus to accommodate the growing Indian community in the trading business.

Both communities have been hit equally hard by the crisis, with diamond sales down 15-20 percent in the first months of the year and big mining companies such as De Beers even shutting down production amid the slump.

"There was a sharp decrease of supply of diamonds due to the financial crisis, with banks unwilling to finance mining companies anymore," said Freddy Hanard, head of the Antwerp-based Diamond Center (AWDC) in charge of certifying and controlling all the diamonds traded in the city.

Himself a former banker for 30 years, Mr Hanard explained that the industry is very much dependant on the banking system, not only for mining companies to finance their activities, but also for trading worth €30 billion a year.

Under anti-money laundering legislation in Belgium, any purchase of uncut or polished diamonds has to be credited by one of the five specialised banks in town. However, the process is lengthy and it can take banks up to 120 days until they actually make the payment.

The current rules also prohibit banks from financing diamond stocks, making it even more difficult for traders to purchase stones without the firm guarantee of finding a customer.

Banks crediting the industry have now said they are willing to inject €1 billion into the market, provided the Belgian authorities approve state guarantees of €200 million.

Diamond too refined for easy investment

The diamond sector's pain could be seen as the gold market's gain, with people choosing the precious metal as a favourite safe investment amid the economic slump.

BullionVault, which says it looks after more gold than many of the world's central banks, reported a 43 percent growth in its clients' physical holdings of the metal in the first half of 2009 to more than 18 tonnes. A German company even installed gold bar and coin vending machines in airports and railway stations, in a bid to make a profit from the country's temporary gold rush.

"The difference between gold and diamonds is transformation – you can always get gold out of gold," Ari Epstein, deputy head of AWDC told EUobserver.

"As a consumer you need a certificate to know the exact value of the diamond – is it a white colour diamond or a slightly coloured diamond – and that affects the price very much. Evaluating the quality of the diamond cannot be done by everyone, but for gold, once you know if its 18 or 24 carats, you have enough information and you can read in the newspapers what the price is," he explained.

Diamond prices went down 90 percent in January for rough stones and 20 percent for polished diamonds compared to the same period in the previous year, Mr Epstein, himself the son of a diamond trader said. Now prices are down 15 percent for both rough and polished gems, compared to last year.

Fewer jobs for cutters

Once home to between 25,000 and 30,000 diamond polishers, Antwerp currently employs only around 1,000 of these craftsmen, out of which 200 to 250 have been laid off due to the crisis.

"Here we only cut the biggest and most valuable of the stones, because we have the know-how and the respectability," said Philip Claes, spokesman for the World Diamond Center, a non-profit organisation promoting the interests of the industry.

India meanwhile has become the largest manufacturing centre, employing some 600,000 diamond cutters, half of which have lost their jobs since the beginning of the year. China is also on the rise with 25,000 workers.

"They polish even what here we would consider diamond dust," Mr Claes said, noting that the quality criteria strictly upheld in Antwerp are not as important in Asia, where "they set everything into a jewel."

Diamond experts in Antwerp, issuing quality certificates for every stone traded there, were also temporarily laid off in a similar proportion to the cutters.

Saying 'mazal'

Looking at these trends, the head of the Diamond office, Mr Hanard, expressed his frustration over what he called unfair competition from new trading centres like Mumbai.

"We are transparent and heavily controlled, but the new centres are not," he said, suggesting that stones certified elsewhere risked being misevaluated on purpose. "Our experts are employed under oath and very strict integrity criteria."

Amongst traders, however, suspicions towards Indians are gradually on the wane, as one Belgian diamond worker told this website. "They have learned how to say 'mazal' (the Yiddish expression used when sealing a diamond deal) and people now start to trust them."


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