The Diamond Bourse of Canada wants to encourage secondary industry while enhancing our global stature
by Greg Klein
Canada produces about 15% of the world’s diamond supply, ranks third globally for production by value and enjoys a reputation for high-quality stones that are mined ethically. But talk to David Gavin, president of the Diamond Bourse of Canada, and you get the impression this country’s industry has yet to achieve its rightful stature internationally—or domestically, for that matter. He hopes the association will help change that.
An exchange that brings together buyers and sellers, the bourse has 74 members, mostly diamond wholesalers but also representatives of Canada’s “very small” manufacturing sector, which cuts and polishes rough diamonds for jewelry.
With 90% of Canadian-mined diamonds being sent overseas for that purpose, the bourse “unfortunately” has a membership largely restricted to handling diamonds cut and polished abroad. Gavin wants Canada to develop a stronger secondary industry.
“I’m trying to open up channels of communication” with two of the diamond miners currently operating in Canada, Dominion Diamond TSX:DDC and De Beers, Gavin says. “But the problem is they already have these mature channels of distribution. They have a lot more buyers than merchandise. But markets change over time. South Africa was once the powerhouse in terms of diamond business. They have a very small manufacturing community left.”
Botswana, on the other hand, “really forced De Beers’ hand and made them move from London to Botswana. That created more of a secondary industry which we’d love to see in Canada.”
Although Anglo American owns an 85% stake in De Beers, Botswana’s government holds the rest. In 2012, following negotiations prompted by the government, De Beers started moved its sorting and sales operations to the capital city of Gaborone.
Then last month Rapaport News reported that Namibia hopes to break its dependency on De Beers and “develop its diamond industry beyond mining to enable job creation in cutting and polishing and now trading.”
Still, Canada’s industry is young, having started with the Ekati mine in 1998. “Compare that with South Africa, where it’s well over 100 years old,” Gavin points out. “Our diamond bourse itself is only five years old. Compare that to Antwerp, with its storied past of about 500 years.”
Gavin himself goes back a ways. “I was born into the industry,” he says. His grandfather was an Amsterdam diamond cutter who learned his trade in Antwerp. In 1926 he took a job at a Cape Town diamond cutting factory before opening his own in Johannesburg. “Dad went into the business and I went into the business. We go back 100 years and I’ve been in the business 33 years.”
Although a nation-wide association, the bourse traces its source to Ontario’s provincial government. “When the Victor diamond mine was about to open the Ontario government considered the diamond mining industry as uncharted waters,” Gavin recalls. “They felt there had to be some kind of representation from an industry standpoint.” The province encouraged stakeholders to form an association which eventually evolved into the national exchange.
With offices in downtown Toronto, the bourse holds special sales and regular Wednesday afternoon trading events. The facility also features viewing rooms and an appraisal lab, while the bourse maintains a bonded warehouse. An additional line of communication connects buyers and sellers through IBOURSE, an online trading platform. “It has 5,000 stones currently listed. Obviously the internet will play a big part in our future.”
Apart from practical services the association “gives members a voice and a point of reference of what’s happening worldwide with the diamond markets,” he adds. Last month’s entry into the World Federation of Diamond Bourses “raises our profile both internally and externally. We’re now part and parcel of the world diamond community, which is going to open up markets for some of our diamond sellers and new markets for people outside Canada.”
Of course the country already enjoys considerable global stature. That was cleverly expressed by MDL Diamonds last month when the manufacturing and brokerage firm unveiled its new Arcticmark brand by adding to the four Cs of diamonds: “Cut, colour, clarity, carat and now Canadian. This is the new definition of outstanding quality of diamonds.”
Canada’s most important distinction “is responsible mining,” Gavin points out. “There’s a chain of custody that’s very transparent from extraction to marketplace. Not just with diamonds but in general with any product, people want to know there’s social responsibility in how these goods are procured. It’s very easy to track Canadian diamonds from mine to market.”
That applies to diamonds from Canada that are cut and polished abroad. “They are of Canadian origin and adhere to the Kimberley Process,” he says. “They are easily identifiable as Canadian.”
Then there’s the quality, Gavin adds. De Beers, for example, calls Victor “one of the highest-quality producing diamond mines in the world,” surpassing even the renown of Northwest Territories mines.
“The gem quality of the rough that’s coming out of Canada is high. Compare that to South Africa, where there’s a certain percentage that’s gem quality and the rest of it’s industrial.”
Among other goals, he would like the bourse to form closer relations with mining companies. “We can offer some insight into a different aspect of the business.”
Gavin also wants to raise awareness of Canada’s diamond industry within Canada itself. “If more people knew the industry benefits all Canadians, maybe they would want to keep more diamonds in the country and expand the secondary industry here.”