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GIA PRESENTATION 2011

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In this updated presentation Steve presents for the GIA in August 2011 on the diamond value chain, from his 28 years of experience in the diamond industry, from the mine to market.

In this updated presentation Steve presents for the GIA in August 2011 on the diamond value chain, from his 28 years of experience in the diamond industry, from the mine to market.


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  • 1. Presented by Steve McClelland for GIA MUMBAI, 2011Director/Sales Manager Inspira Diamonds Pty Ltd Steve MClelland, Inspira Diamonds, for GIA, 2011 1
  • 2. introduction many hands
  • 3. outline 20111. 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 level4. To understand the value addition within the diamond chain5. To appreciate with new respect how diamonds reach us from the earth,6. and gain an understanding of the http://www.google.co.uk/images?hl=en-GB&rlz=1T4DAAU_en- human involvement in the process of GBAU273AU275&q=argyle+mine+images&um=1&ie=UTF- 8&source=univ&ei=rP_YTP- diamond value JHIfovQPxpbmkCg&sa=X&oi=image_result_group&ct=title&resnum=1&ved= 0CCgQsAQwAA Steve MClelland, Inspira Diamonds, for GIA, 2011 3
  • 4. the diamond jewellery value chain In US$ billionGLOBAL GLOBALROUGH PRODUCTIONproduction, The of finished Jewellery , diamond2010 value chain 2010$6.89 $60.17Source of data:http://www.idexonline.com/portal_FullNews.asp?TextSearch=&KeyMatch=1&id=35340,25/07/2011
  • 5. the diamond pipeline:2010year of recycling Source: IDEX Source:http://www.idexonline.com/portal_ FullNews.asp?TextSearch=&KeyMatch=1&id=35340, 25/07/2011 Steve MClelland, Inspira Diamonds, for GIA, 2011 5
  • 6. the diamond pipeline: 2009the worst year since WW2 Source: of data http://www.idexonline.com/pdf_files/2009- diamond_Pipeline_Poster.pdf, 10/11/2010 IDEX 2009 diamond pipeline Steve MClelland, Inspira Diamonds, for GIA, 2011 6
  • 7. the diamond pipeline:2006 Source: of data IDEX 2006 diamond pipeline http://www.idexonline.com/pdf_files/IDEX_Online- Pipeline_Poster_2006.pdf, 01/11/2010 Steve MClelland, Inspira Diamonds, for GIA, 2011 7
  • 8. Diamond Pipeline: from original value 100 115 127 133 166 320 % % % % % % mine sorting polished Jewellery polishing retail dealing manufacturingSource: of datahttp://www.duke.edu/web/soc142/team7/Diamond%20Global%20Value%20Chain.htm Steve MClelland, Inspira Diamonds, for GIA, 2011 8
  • 9. exploration and mining many hands
  • 10. global diamond mining Source- http://www.info-diamond.com/rough/world-production.html Steve MClelland, Inspira Diamonds, for GIA, 2011 10
  • 11. Global production values 2010 Rough Production Value in US$billion Australia Angola DRC Namibia Botswana South Africa Source of data: http://www.idexonline.com/portal_FullNews.asp?TextSearch=&KeyM atch=1&id=35340, Steve MClelland, Inspira Diamonds, for GIA, 2011 11
  • 12. Example at Argyle (RTD): open cut mining Currently in transition to undergroundhttp://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 Steve MClelland, Inspira Diamonds, for GIA, 2011 12
  • 13. formation of diamond Geological model of pressure and temperature needed for diamond materialArgyle fact: product formed atlower depth and higher pressurethan usual diamond materialSource: John Mann, Sorting & Valuation Projects, Federal Police training presentation, 2003 Steve MClelland, Inspira Diamonds, for GIA, 2011 13
  • 14. at the mine…..diamond recovery process Blasting Crushing of ore Scrubbing Heavy media separator Xray separator Steve MClelland, Inspira Diamonds, for GIA, 2011 14
  • 15. at the mine…..diamond concentrateDuring this part of the process the Caustic recoverydiamond product and non-diamond product are separatedand treated with responsible ACIDpractices. PH neutralise oreThe diamond concentrate isseparated by size and the pinks areseparated for processing in Responsible returnAustralia. of ore Steve MClelland, Inspira Diamonds, for GIA, 2011 15
  • 16. mine extractionThe process of extraction andseparation of the ore from itsKimberlite host, forms theproduction or output level of themine, which is measured in caratsper tonne of ore.250 tonnes of ore must bemined and processed toproduce 1 carat, depending onthe mine(Cited by Wall St Journal) http://www.slideshare.net/Platipus/diamond- ethical-supply-chain-deconstruction-2010 Steve MClelland, Inspira Diamonds, for GIA, 2011 16
  • 17. examples of rough diamond shapes Steve MClelland, Inspira Diamonds, for GIA, 2011 17
  • 18. rough diamond modelsmakeable sawable maccle Steve MClelland, Inspira Diamonds, for GIA, 2011 18
  • 19. rough sorting and rough trading many hands
  • 20. rough sorting…Apart from extraction of thediamond from the ore body,the first real value add ofdiamond product begins atthe sorting level. Steve MClelland, Inspira Diamonds, for GIA, 2011 20
  • 21. sorting…sorting and more sortingDiamonds are sorted andgraded on colour, size, andcarat weight by machine, andhand sorting (dependent onsize and value)With final sorting done by ahighly experienced team ofdiamond graders.Notice how the diamonds arelabelled and separated, which isthe beginnings of mine chain ofcustody. Steve MClelland, Inspira Diamonds, for GIA, 2011 21
  • 22. Rough sorting examples….. Steve MClelland, Inspira Diamonds, for GIA, 2011 22
  • 23. transparency to government andpublic…… Example KP certificate After recovery rough guaranteeing conflict free origins , diamonds are sent from the required for export/import rough minesite to office RTD in diamonds 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). Steve MClelland, Inspira Diamonds, for GIA, 2011 23
  • 24. and yet more rough sorting ……. Steve MClelland, Inspira Diamonds, for GIA, 2011 24
  • 25. rough sales preparation andpresentation…•Diamonds are also sorted intomeaningful assortments forpresentation to the customers ofRTD.•The Sales team presents the goodsat monthly interval sales, also called“sights”.•Prices are based on theextrapolation of what the polishedprice might achieve in themarketplace•Customers purchase their allocatedgoods, very often in millions ofcarats, or dollars, by merehandshake.•Most production will leave Antwerpfor manufacture overseas. Steve MClelland, Inspira Diamonds, for GIA, 2011 25
  • 26. Steve MClelland, Inspira Diamonds, for GIA, 2011 26
  • 27. polished manufacturing many hands
  • 28. Most of world’s polishing takes place inIndia :an estimated 1 million people areemployed by diamond industry in India http://www.diamondfacts.org/ Steve MClelland, Inspira Diamonds, for GIA, 2011 28
  • 29. value add…The diamond is forever altered intoits final polished state, via a planusually by a form of SARIN,combined with years of polishingexperience within the polishingteam, and its supervisor.The team try to maximise yield(commercial) whilst keeping inmind proportions/symmetry/cut(brilliance). Steve MClelland, Inspira Diamonds, for GIA, 2011 29
  • 30. polishing process•Sawing – the process of dividing a stone into two piecesusing either a blade or a laser.•Cleaving – a process where the rough stone is split intotwo pieces to improve the shape or the quality.•Bruting – a process which shape the stone in to thedesired shape.•Polishing – the process of applying facets to the surfaceof the stone. Steve MClelland, Inspira Diamonds, for GIA, 2011 30
  • 31. marking & cleavingby traditional methods Steve MClelland, Inspira Diamonds, for GIA, 2011 31
  • 32. Diamond has a grain structure. It can be sawn againstthe grain and cleaved with the grain. Sawing Grain Cleaving Grain Steve MClelland, Inspira Diamonds, for GIA, 2011 32
  • 33. Sawing for a Major and Minor stone Steve MClelland, Inspira Diamonds, for GIA, 2011 33
  • 34. Sawing
  • 35. 70% -30% 50% - 50%Steve MClelland, Inspira Diamonds, for GIA, 2011 35
  • 36. Examples of commercial decisionsSteve MClelland, Inspira Diamonds, for GIA, 2011 36
  • 37. Bruting Steve MClelland, Inspira Diamonds, for GIA, 2011 37
  • 38. Polishing Steve MClelland, Inspira Diamonds, for GIA, 2011 38
  • 39. safety in the polished manufacturingprocess…A combination of old traditionalhand method, or laser technologyis applied. Lasers assist in betterdiamond yield, and brilliance, andvery importantly are healthier forthe worker.Factories are now more efficient,cleaner, with better lighting andproduct output due to BEM andbest business practicerequirements driven by miningcompanies like RTD and BHP. Steve MClelland, Inspira Diamonds, for GIA, 2011 39
  • 40. 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. Steve MClelland, Inspira Diamonds, for GIA, 2011 40
  • 41. polished trading many hands
  • 42. 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 Steve MClelland, Inspira Diamonds, for GIA, 2011 42
  • 43. international trade participants wholesalers jewelleryjewellers retailers brokers/dealers manufacturers consumer Pawn brokers resale Steve MClelland, Inspira Diamonds, for GIA, 2011 43
  • 44. goods being sized and prepared for saleat a wholesaler Steve MClelland, Inspira Diamonds, for GIA, 2011 44
  • 45. other value addition many hands
  • 46. certification…more value add•In recent times (last 10 years)certification has become an importanttool, protecting the supplier and theconsumer, and providing consumerconfidence through consistent gradingstandards.•It also impacts significantly on thevalue addition of a diamond product.•A GIA graded stone, can commandmore than a lesser lab for example•And a stone that is uncertified iscommercially less than a stone that iscertified Steve MClelland, Inspira Diamonds, for GIA, 2011 46
  • 47. even shipping and customs addsvalue… Steve MClelland, Inspira Diamonds, for GIA, 2011 47
  • 48. branding , packaging and marketingadds further perceived value.. Steve MClelland, Inspira Diamonds, for GIA, 2011 48
  • 49. Jewellery manufacture Many hands
  • 50. jewellery design and manufacturing Probably the greatest impact on value addition…. Steve MClelland, Inspira Diamonds, for GIA, 2011 50
  • 51. 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 http://www.idexonline.com/pdf_files/2009- diamond_Pipeline_Poster.pdf“Land I love”: Rohan Jewellery, 2009,inspired by Australian diamonds Steve MClelland, Inspira Diamonds, for GIA, 2011 51
  • 52. conclusion & the future…. Many hands
  • 53. contraction of supply......•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 increaseIn the next decade as production willfail to meet demand from emerging BRIC economies(Brazil, Russia, India and China) http://www.businessweek.com/news/2010-10-06/rio-says-rough- Steve MClelland, Inspira Diamonds, for GIA, 2011 diamond-prices-to-extend-gains-as-supplies-fall.html 53
  • 54. 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 depletedhttp://www.idexonline.com/portal_FullNews.asp?TextSearch=&KeyMatch=1&id=35340,25/07/2011 Steve MClelland, Inspira Diamonds, for GIA, 2011 54
  • 55. 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 goldhttp://www.idexonline.com/portal_FullNews.asp?TextSearch=&KeyMatch=1&id=35340,25/07/2011 Steve MClelland, Inspira Diamonds, for GIA, 2011 55
  • 56. This presentation has shown a brief glimpseinto the many hands involved in the globaldiamond process.As consumers and business leaderswe must be aware of the cost tobring this “glamorous” product tothe market. And endeavour to leadthe world in ethical and respectfulpractices. Steve MClelland, Inspira Diamonds, for GIA, 2011 56
  • 57. Steve MClelland, Inspira Diamonds, for GIA, 2011 57
  • 58. Steve MClelland, Inspira Diamonds, for GIA, 2011 58
  • 59. Credits and thanksCredits Written by Charmaine Thane, Inspira Diamonds with John Mann, Macro Diamond photography for Steve McClelland, Inspira Diamonds at GIA AUG, 2011. Steve MClelland, Inspira Diamonds, for GIA, 2011 59
  • 60. references many hands
  • 61. http://www.google.com.au/imgres?imgurl=http://www.satimagingcorp.com/galleryimages/argyle_view_diamond_mine_3d-wide.jpg&imgrefurl=http://31/10/2010 Mann, John, Sorting & Valuation Projects,Federal Police training presentation, 2003 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.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 Steve MClelland, Inspira Diamonds, for GIA, 2011 61
  • 62. 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.diamondfacts.org/images/facts/quote_lines8_fact06.jpg, 01/11/2010 http://www.diamonds.net/news/NewsItem.aspx?ArticleID=32505, 01/11/2010 http://www.worlddiamondcouncil.com/, 01/11/2010 http://www.slideshare.net/Platipus/diamond-ethical-supply-chain-deconstruction-2010,01/11/2010 http://www.duke.edu/web/soc142/team7/Diamond%20Global%20Value%20Chain.htm,01/11/2010 Steve MClelland, Inspira Diamonds, for GIA, 2011 62
  • 63. 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 http://www.idexonline.com/pdf_files/2009-diamond_Pipeline_Poster.pdf, 10/11/2010 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 Steve MClelland, Inspira Diamonds, for GIA, 2011 63
  • 64. Sanghvi and Virani, July, 2010: Is Social marketing effectivein 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 Steve MClelland, Inspira Diamonds, for GIA, 2011 64
  • 65. 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