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GIA PRESENTATION 2011
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Transcript of GIA PRESENTATION 2011
Presented by Steve McClelland for GIA MUMBAI, 2011
Director/Sales Manager Inspira Diamonds Pty Ltd
1 Steve MClelland, Inspira Diamonds, for GIA, 2011
introduction
many hands
outline 2011 1. This presentation is a brief glimpse
behind the apparently glamorous world
of diamonds:
2. to highlight what is meant by
“diamond pipeline” and diamond chain,
3. to outline who are the typical industry
participants, with insight into what
happens before the jeweller and
consumer level
4. To understand the value addition within
the diamond chain
5. To appreciate with new respect how
diamonds reach us from the earth,
6. and gain an understanding of the
human involvement in the process of
diamond value
http://www.google.co.uk/images?hl=en-GB&rlz=1T4DAAU_en-GBAU273AU275&q=argyle+mine+images&um=1&ie=UTF-8&source=univ&ei=rP_YTP-JHIfovQPxpbmkCg&sa=X&oi=image_result_group&ct=title&resnum=1&ved=0CCgQsAQwAA
3 Steve MClelland, Inspira Diamonds, for GIA, 2011
the diamond jewellery value chain
In US$ billion
The diamond
value chain
GLOBAL ROUGH production, 2010 $6.89
GLOBAL PRODUCTION of finished Jewellery , 2010 $60.17
Source of data :http://www.idexonline.com/portal_FullNews.asp?TextSearch=&KeyMatch=1&id=35340, 25/07/2011
the diamond pipeline:2010 year of recycling
Source: IDEX Source:http://www.idexonline.com/portal_ FullNews.asp?TextSearch=&KeyMatch=1&id=35340, 25/07/2011
5 Steve MClelland, Inspira Diamonds, for GIA, 2011
the diamond pipeline: 2009 the worst year since WW2
Source: of data http://www.idexonline.com/pdf_files/2009-diamond_Pipeline_Poster.pdf, 10/11/2010 IDEX 2009 diamond pipeline
6 Steve MClelland, Inspira Diamonds, for GIA, 2011
the diamond pipeline:2006
Source: of data IDEX 2006 diamond pipeline http://www.idexonline.com/pdf_files/IDEX_Online-Pipeline_Poster_2006.pdf, 01/11/2010
7 Steve MClelland, Inspira Diamonds, for GIA, 2011
8 Steve MClelland, Inspira Diamonds, for GIA, 2011
Diamond Pipeline: from original value
100%
115%
127%
133%
166%
320%
mine sorting polishing polished dealing
Jewellery manufacturing
retail
Source: of data http://www.duke.edu/web/soc142/team7/Diamond%20Global%20Value%20Chain.htm
exploration and mining
many hands
global diamond mining
Source- http://www.info-diamond.com/rough/world-production.html
10 Steve MClelland, Inspira Diamonds, for GIA, 2011
Global production values 2010
Steve MClelland, Inspira Diamonds, for GIA, 2011 11
Rough Production Value in US$billion
Australia
Angola
DRC
Namibia
Botswana
South Africa
Source of data: http://www.idexonline.com/portal_FullNews.asp?TextSearch=&KeyMatch=1&id=35340,
Example at Argyle (RTD): open cut mining Currently in transition to underground
http://www.google.co.uk/images?hl=en-GB&rlz=1T4DAAU_en-GBAU273AU275&q=argyle+mine+images&um=1&ie=UTF-8&source=univ&ei=rP_YTP-JHIfovQPxpbmkCg&sa=X&oi=image_result_group&ct=title&resnum=1&ved=0CCgQsAQwAA
12 Steve MClelland, Inspira Diamonds, for GIA, 2011
formation of diamond
Argyle fact: product formed at lower depth and higher pressure than usual diamond material
Geological model of pressure and temperature needed for diamond material
Source: John Mann, Sorting & Valuation Projects, Federal Police training presentation, 2003
13 Steve MClelland, Inspira Diamonds, for GIA, 2011
at the mine…..diamond recovery process
Crushing of ore
Blasting
Scrubbing
Heavy media separator
Xray separator
14 Steve MClelland, Inspira Diamonds, for GIA, 2011
at the mine…..diamond concentrate
During this part of the process the diamond product and non-diamond product are separated and treated with responsible practices.
The diamond concentrate is separated by size and the pinks are separated for processing in Australia.
ACID
Caustic recovery
PH neutralise ore
Responsible return of ore
15 Steve MClelland, Inspira Diamonds, for GIA, 2011
mine extraction The process of extraction and
separation of the ore from its Kimberlite host, forms the
production or output level of the
mine, which is measured in carats per tonne of ore.
250 tonnes of ore must be
mined and processed to
produce 1 carat, depending on
the mine
(Cited by Wall St Journal)
http://www.slideshare.net/Platipus/diamond-ethical-supply-chain-deconstruction-2010
16 Steve MClelland, Inspira Diamonds, for GIA, 2011
examples of rough diamond shapes
17 Steve MClelland, Inspira Diamonds, for GIA, 2011
rough diamond models
sawable makeable
maccle 18 Steve MClelland, Inspira Diamonds, for GIA, 2011
rough sorting and rough trading
many hands
rough sorting…
Apart from extraction of the diamond from the ore body, the first real value add of diamond product begins at the sorting level.
20 Steve MClelland, Inspira Diamonds, for GIA, 2011
sorting…sorting and more sorting
Diamonds are sorted and graded on colour, size, and carat weight by machine, and hand sorting (dependent on size and value)
With final sorting done by a highly experienced team of diamond graders.
Notice how the diamonds are labelled and separated, which is the beginnings of mine chain of custody.
21 Steve MClelland, Inspira Diamonds, for GIA, 2011
Rough sorting examples…..
22 Steve MClelland, Inspira Diamonds, for GIA, 2011
transparency to government and public……
Example KP certificate guaranteeing conflict free origins , required for export/import rough diamonds
After recovery rough diamonds are sent from the minesite to office RTD in Antwerp.
An estimate of value has been placed on the exported goods by an appointed RTD Royalty valuer and Government representatives, based on historical outputs
The goods are then approved for export, along with its KP certificate (non-conflict guarantee).
23 Steve MClelland, Inspira Diamonds, for GIA, 2011
and yet more rough sorting …….
24 Steve MClelland, Inspira Diamonds, for GIA, 2011
rough sales preparation and presentation…
•Diamonds are also sorted into meaningful assortments for presentation to the customers of RTD.
•The Sales team presents the goods at monthly interval sales, also called “sights”.
•Prices are based on the extrapolation of what the polished price might achieve in the marketplace
•Customers purchase their allocated goods, very often in millions of carats, or dollars, by mere handshake.
•Most production will leave Antwerp for manufacture overseas.
25 Steve MClelland, Inspira Diamonds, for GIA, 2011
26 Steve MClelland, Inspira Diamonds, for GIA, 2011
polished manufacturing
many hands
Most of world’s polishing takes place in India : an estimated 1 million people are employed by diamond industry in India
Steve MClelland, Inspira Diamonds, for GIA, 2011 28
http://www.diamondfacts.org/
value add…
The diamond is forever altered into its final polished state, via a plan usually by a form of SARIN, combined with years of polishing experience within the polishing team, and its supervisor.
The team try to maximise yield (commercial) whilst keeping in mind proportions/symmetry/cut (brilliance).
29 Steve MClelland, Inspira Diamonds, for GIA, 2011
•Sawing – the process of dividing a stone into two pieces using either a blade or a laser.
•Polishing – the process of applying facets to the surface of the stone.
•Bruting – a process which shape the stone in to the desired shape.
•Cleaving – a process where the rough stone is split into two pieces to improve the shape or the quality.
polishing process
30 Steve MClelland, Inspira Diamonds, for GIA, 2011
marking & cleaving by traditional methods
31 Steve MClelland, Inspira Diamonds, for GIA, 2011
Cleaving Grain
Sawing Grain
Diamond has a grain structure. It can be sawn against the grain and cleaved with the grain.
32 Steve MClelland, Inspira Diamonds, for GIA, 2011
Sawing for a Major and Minor stone
33 Steve MClelland, Inspira Diamonds, for GIA, 2011
Sawing
70% -30%
50% - 50%
35 Steve MClelland, Inspira Diamonds, for GIA, 2011
Examples of commercial decisions
36 Steve MClelland, Inspira Diamonds, for GIA, 2011
Bruting
37 Steve MClelland, Inspira Diamonds, for GIA, 2011
Polishing
38 Steve MClelland, Inspira Diamonds, for GIA, 2011
safety in the polished manufacturing process…
A combination of old traditional hand method, or laser technology is applied. Lasers assist in better diamond yield, and brilliance, and very importantly are healthier for the worker.
Factories are now more efficient, cleaner, with better lighting and product output due to BEM and best business practice requirements driven by mining companies like RTD and BHP.
39 Steve MClelland, Inspira Diamonds, for GIA, 2011
recent trends in value addition….
Trends to manufacturing to ideal proportions (known as triple EX), or hearts and arrows,
is an attempt by the industry to extract more value from the diamond product, whilst also satisfying consumer demand, since the ideal proportions are highly sought after and command higher prices.
40 Steve MClelland, Inspira Diamonds, for GIA, 2011
polished trading
many hands
diamond trade:
Diamonds are traded at 28 registered diamond bourses worldwide
Antwerp being the major recognised world diamond center
The move to standardisation with Rappaport lists, and certification makes diamond trade more transparent
At this stage most diamonds above 30-50pts will be sent to a lab for certification, where the 4c’s will be applied, the stone will be plotted and graded
42 Steve MClelland, Inspira Diamonds, for GIA, 2011
international trade participants
wholesalers
jewellers retailers brokers/dealers jewellery
manufacturers
consumer
Pawn brokers resale
43 Steve MClelland, Inspira Diamonds, for GIA, 2011
goods being sized and prepared for sale at a wholesaler
44 Steve MClelland, Inspira Diamonds, for GIA, 2011
other value addition
many hands
certification…more value add
•In recent times (last 10 years) certification has become an important tool, protecting the supplier and the consumer, and providing consumer confidence through consistent grading standards.
•It also impacts significantly on the value addition of a diamond product.
•A GIA graded stone, can command more than a lesser lab for example
•And a stone that is uncertified is commercially less than a stone that is
certified
46 Steve MClelland, Inspira Diamonds, for GIA, 2011
even shipping and customs adds value…
47 Steve MClelland, Inspira Diamonds, for GIA, 2011
branding , packaging and marketing adds further perceived value..
48 Steve MClelland, Inspira Diamonds, for GIA, 2011
Jewellery manufacture
Many hands
jewellery design and manufacturing
Probably the greatest impact on value addition….
50 Steve MClelland, Inspira Diamonds, for GIA, 2011
finished jewellery product
IDEX estimated a mere 27% of the value of a finished piece of jewellery is attributed to diamond product, the rest being manufacture, design, gold and marketing
“Land I love”: Rohan Jewellery, 2009, inspired by Australian diamonds
51 Steve MClelland, Inspira Diamonds, for GIA, 2011
http://www.idexonline.com/pdf_files/2009-diamond_Pipeline_Poster.pdf
conclusion & the future….
Many hands
Steve MClelland, Inspira Diamonds, for GIA, 2011
53
•2011 world production to plateau to 48 m carats •No new diamond deposits •De Beers warn contracted supply will force prices up next 15 years •Rio tinto warns rough-diamond prices will increase In the next decade as production will fail to meet demand from emerging BRIC economies (Brazil, Russia, India and China)
http://www.businessweek.com/news/2010-10-06/rio-says-rough-
diamond-prices-to-extend-gains-as-supplies-fall.html
contraction of supply......
consumption changes…
Consumption growth: India and China
Share of US market continues to decline, but still high in diamond content of jewellery
Emergence of “investment” diamonds
Reserves of mine production becoming depleted
Steve MClelland, Inspira Diamonds, for GIA, 2011 54
http://www.idexonline.com/portal_FullNews.asp? TextSearch=&KeyMatch=1&id=35340, 25/07/2011
recycling as the “new mine”….
“2010:market value of global diamond recycling estimated at $6 billion “
Recycling tipped as the :”new mine”
Secondary market picks up : bought at most 80% off Rappaport , recycled and re-sold.
Increasing price of gold
Steve MClelland, Inspira Diamonds, for GIA, 2011 55
http://www.idexonline.com/portal_FullNews.asp? TextSearch=&KeyMatch=1&id=35340, 25/07/2011
This presentation has shown a brief glimpse into the many hands involved in the global diamond process.
As consumers and business leaders we must be aware of the cost to bring this “glamorous” product to the market. And endeavour to lead the world in ethical and respectful practices.
56 Steve MClelland, Inspira Diamonds, for GIA, 2011
57 Steve MClelland, Inspira Diamonds, for GIA, 2011
58 Steve MClelland, Inspira Diamonds, for GIA, 2011
Credits and thanks
Credits
Written by Charmaine Thane, Inspira Diamonds with John Mann, Macro Diamond photography
for Steve McClelland, Inspira Diamonds at GIA AUG, 2011.
59 Steve MClelland, Inspira Diamonds, for GIA, 2011
references
many hands
http://www.businessweek.com/news/2010-10-06/rio-says-rough-diamond-prices-to-extend-gains-as-supplies-fall.html, 01/11/2010
http://www.cibjo.org/index.php?option=com_content&view=article&id=268:luxury-companies-must-satisfy-consumers-deeper-social-conscience-states-report-released-at-cibjos-csr-session-at-shanghai-expo&catid=4:news&Itemid=19, Oct-Nov, 2010
http://www.cibjo.org/index.php?option=com_content&view=article&id=235&Itemid=45, Oct-Nov, 2010
http://www.idexonline.com/pdf_files/IDEX_Online-Pipeline_Poster_2006.pdf, 01/11/2010
http://www.google.com.au/imgres?imgurl=http://www.satimagingcorp.com/galleryimages/argyle_view_diamond_mine_3d-wide.jpg&imgrefurl=http://31/10/2010
61 Steve MClelland, Inspira Diamonds, for GIA, 2011
Mann, John, Sorting & Valuation Projects, Federal Police training presentation, 2003
http://www.diamonds.net/news/NewsItem.aspx?ArticleID=32505, 01/11/2010
http://www.worlddiamondcouncil.com/, 01/11/2010
http://www.google.co.uk/search?sourceid=navclient&aq=0h&oq=kimberley+pr&hl=en-GB&ie=UTF-8&rlz=1T4DAAU_en-GBAU273AU275&q=kimberley+process+certificate, 01/11/2010
http://www.duke.edu/web/soc142/team7/Diamond%20Global%20Value%20Chain.htm, 01/11/2010
http://www.diamondfacts.org/images/facts/quote_lines8_fact06.jpg, 01/11/2010
http://www.slideshare.net/Platipus/diamond-ethical-supply-chain-deconstruction-2010, 01/11/2010
62 Steve MClelland, Inspira Diamonds, for GIA, 2011
http://www.google.co.uk/images?hl=en-GB&rlz=1T4DAAU_en-GBAU273AU275&q=argyle+mine+images&um=1&ie=UTF-8&source=univ&ei=rP_YTP-JHIfovQPxpbmkCg&sa=X&oi=image_result_group&ct=title&resnum=1&ved=0CCgQsAQwA, 01/11/2010
http://www.info-diamond.com/rough/world-production.html, 01/11/2010
63 Steve MClelland, Inspira Diamonds, for GIA, 2011
http://www.investmentinternational.com/news/alternative-investments/diamond-prices-set-to-rise-after-mining-giant-de-beers-announces-cut-in-production-to-preserve-stocks-3524.html, 10/11/2010
http://www.idexonline.com/pdf_files/2009-diamond_Pipeline_Poster.pdf, 10/11/2010
Steve MClelland, Inspira Diamonds, for GIA, 2011 64
Sanghvi and Virani, July, 2010: Is Social marketing effective in the diamond industry? Dissertation CASS Business School, City University London
http://www.idexonline.com/portal_FullNews.asp? TextSearch=&KeyMatch=1&id=35340, 25/07/2011
http://www.diamondworld.net/contentview.aspx?item=6109, 26, Jul, 2011 http://www.diamondintelligence.com/magazine/default.aspx?SubCatId=64,
26 Jul, 2011
copyright issues
©Copyright of author : Charmaine Thane, 2011.
Where no photo source is cited the Photos appear courtesy of John Mann, Macro Diamond Photography
This presentation has been provided for the use of the GIA, and other non-profit educational institutions, for the purpose of instruction and education, provided that the copyright of the author, all cited articles and all images are observed.
Steve MClelland, Inspira Diamonds, for GIA, 2011 65