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Koin International

‘‘ Transparency & Accountability are the keywords for Sustaining Diamond Business ‘‘

In an exclusive with Mr.Adam Schulman, Chief Executive Officer, KOIN International DMCC, The New Jeweller bureau gets an insight about the services offered by the company in the global Diamond sector. In this exclusive Mr.Schulman also talks about the emerging Diamond destination, “Angola” and the company’s interest in the republic. Excerpts:

With economic volatility currently witnessed and rough supply being negatively affected especially due to the ongoing Russia Ukraine war, what is the future of the Diamond sector in terms of Rough supply and what should be the solution for continued supply of rough?

With current sanctions imposed on Russia, it is definitely having an impact on the supply of Russian rough diamonds in the market. All this against the backdrop of a deepening global economic crisis with increasing inflation and depreciating financial and investment markets. With respect to Russian sanctions and the impact on supply of rough goods, we are dealing with a volatile situation that quite literally can and does change month after month. There certainly was a decrease in Russian diamonds entering the market over the past few months, and in the initial period this did seem to create a surge in rough diamond prices. However, this effect seems to have been short lived, as there appears to be an increase in this rough supply again, facilitated via certain channels, with Alrosa reportedly back to around three quarters of their pre-war sales levels. Whether or not this comes with some unease, the market has by and large accounted for any shortfall there may have been, and we have seen rough diamond prices on a downward spiral since mid-July.

An additional factor contributing to this spiral, is the worsening global economic outlook. Increasing inflation, higher interest rates and falling financial markets, are all combining to create not only negative sentiment in consumers, but indeed hitting them in their pockets. Higher mortgage payments, monthly bills and fuel prices, less disposable income, etc. We are ultimately a luxury product, and it is understandable that therefore in the short term we will be impacted by reduced polished diamond sales and subsequently lower rough demand and pricing.

However we have seen these cycles before, and I am confident that as before we will ride this wave and come out better for it. We need to see the markets of China and Asia opening up again and increased retail demand in this region will help offset the current challenges.

I believe existing rough production will continue at roughly (excuse the pun) the same levels. These are not taps you close or start overnight. A new mine is a project of approximately 10 years’ planning, and has to project that cyclical events as we see now, will occur. Interestingly, the larger effect of reduced pricing is in the 2ct+ rough size, so while you generally expect your more marginal mines, which sell smaller sizes and cheaper by price, to suffer and be at risk of viability, this seems to possibly not be the situation right now.

Any new mid or larger mines, that can increase rough supply significantly, are still a few years away at best. If we can hopefully see an improvement in the global economic situation over the next 6 months, the opening of China and stronger retail demand, then I am quietly confident that polished sales will increase, bringing stability to demand and pricing in the medium to long term.

Like any business, we hope that rough producers are able to tighten their belts, manage their overheads and costs and survive the current market challenges. And while certain global socio-economic factors are beyond our industry’s control, I do hope that timely concerted efforts to promote polished diamonds continue to uphold consumer appeal and desire.

The 'Dubai Diamond Exchange' is providing an excellent platform for tendering and auctioning of rough. Your comments on the growth of Dubai for rough business and how do you look at the future?

To be a successful diamond hub like Dubai, doesn’t just happen overnight. It needs vision, planning, development and provision of significant infrastructure, facilities and services, and even then for all that to be offered in a highly efficient and professional manner. Finally like all things in life, it needs some luck as well, or perhaps given our industry I should say some ‘mazal’. With all the above in place, the catalysts that catapulted Dubai to the forefront as a trading hub for our industry, were the COVID pandemic, followed closely by the VAT-linked reverse charge mechanism on gold, diamonds and precious metals, and the historic signing of the Abraham Accord which has allowed for reciprocal representation in both the Ramat Gan and Dubai bourses.

Regarding the pandemic: the huge disruptions we saw globally, with global travel restrictions and many countries entering long periods of lockdown, made it near impossible to conduct business. But where other countries shut down, the approach of Dubai was to stay “open for business”. With consolidated infrastructure and services (banking, courier, legal, KP etc) already in place and running like a well-oiled machine, and central proximity to all markets-be they India, Africa, Israel, Europe and Asia, Dubai was perfectly poised to grab the rough diamond trading business and scale up on demand.

These factors made it relatively simple for many companies, including ourselves, to either open or further increase activities here, and in a short space of time we have seen the DDE and Dubai become the largest rough trading hub globally. The DDE has made it very efficient and productive to operate here. They have become the “hub of the bicycle wheel” - both geographically and operationally.

I must also mention that a key factor for me personally in seeing its current success and future vision, is the dynamic leadership of the DMCC/DDE led by Executive Chairman and CEO Ahmed Bin Sulayem and his team, who work tirelessly to ensure the success and growth of DMCC/DDE. There is a clear vision and energy to be innovative, relevant, dynamic and forwardthinking, and to ensure that companies like us have everything we need to be a success. They have an open door and are always ready to listen, engage and develop together. This is a key to their success, and alongside all the factors I’ve mentioned above, creates a highly stimulating and dynamic environment in which to operate.

Looking at Koin and our development in Dubai, we have had a tremendous last two years. In 2021 alone we held over 15 rough tenders and sold over 1.8 million carats. Already in 2022 we are well on our way to exceeding the number of tenders and carats sold in 2021, with almost 2 sales per month. In addition we have some very innovative and exciting developments coming in the second half of the year (supply, technological etc), which we are sure will further strengthen our leading position in Dubai as a leading global tender house. Watch this space!

Angola is slated to launch their state-of-the-art 'Angola Diamond Exchange' later this year. According to you, how will this impact the global Diamond sector and do you think Angola will become an important Diamond destination?

Angola is a very important and growing producer of rough diamonds to the global market. I believe we will see that position strengthen further, as new mining exploration and investment opportunities present themselves.

We have been marketing Angola and selling a tremendous volume of Angolan rough for several years, and we see that trend continuing in the future. Going forward we look forward to working even closer with Angola and its mines, and to successful marketing and sales of its productions by Koin.

The development of the Angola Diamond Exchange is an admirable undertaking, although not without its challenges. Like I mentioned above with reference to your question to the success of Dubai, to make a hub truly successful it needs many parts to come together: time, patience, broad consolidated infrastructure, investment, accessibility, and even after all that some ‘luck’. Strategic relationships with companies like Koin, and hubs like Dubai and the DDE, will be important to help make that goal a success-for them, and the diamond industry as a whole. Their success will be everyone in our industry’s success too.

'Koin International' today is a leading global diamond tender company. What are the key factors that have led the company to achieve this important status in the Industry?

Firstly thank you for the statement, it is always heart-warming for myself and the team to see the very hard work we all put in, acknowledged.

It has been an incredible and humbling journey, since the first Koin tender in 2015 to today where indeed we are a leading global tender house. This comes with many memorable moments, not least the opportunity to market and sell the 467ct Meya Prosperity - the 29th largest diamond ever found, and the 5th largest in Sierra Leone.

But the biggest privilege (and responsibility) is knowing that we don’t just facilitate the sale of a rough diamond from a mine, but we are entrusted with the responsibility of ensuring that thousands of people have jobs, and that they provide a home, food and education for themselves and their children. Every time we conclude a diamond sale-and our client’s purchase makes them a partner in this privilege-we ensure the welfare of and provide a future for thousands of people young and old. When you remember that, and the journey that our diamonds make from their origins to their final destination, the story that every diamond can tell, you stay humble and in awe. We are a very unique and special industry, that is a lot smaller and connected than we perhaps realize.

Like the development of our children, there are so many factors and influences that play their part, so it is quite hard to define the key factors in a few points, but these are the high points for me:

• Firstly, passion and drive: The combination of these two factors should never be underestimated. We love what we do! And we work very very hard to do what we do! We want to do the best we can for our customers, be they buyers or suppliers. It is as simple as that. This team puts in huge effort, literally hours of intellectual and emotional energy, into Koin and our clients. I am very hands-on and like to lead by example, and you will always see me on the tender floor doing any task from unpacking bottles, handing out goods, and of course interacting with clients. I like and expect my team to live and understand every aspect of the business. I believe that not only do we perform better for that, but our clients truly value that we listen to them and do our best to understand their needs.

• Secondly, ethos: We are an efficient hand-picked team where each member has that mix, plus the drive to continually improve. Because we are a close-knit team we are very flexible, and adapt to change and demand with ease and minimum disruption (COVID is a prime example). This makes us agile problem solvers, where everyone in the team has a voice and is heard. If somebody has a new idea, or suggestion on how to improve our existing systems, we listen, analyze and execute. We encourage critical thinking. I personally cannot praise my staff highly enough for the value they bring to our company. This ethos of collaboration and efficiency has been a big factor driving our growth.

• Thirdly, investment in our relationships: our customers-be they buyers or suppliers-are always put first. Every system we put in place is developed through a lens of how we can improve THEIR experience with Koin. We constantly strive to provide a better service, and a more efficient and enjoyable experience. We invest heavily in our systems, and our team. But, no systems can replace personal relationships, especially in rough trading where trust is key, and we really do excel in this area. This is a hallmark of the Koin brand, and what sets us apart.

• Lastly, Innovation. We are constantly looking at how we can do better. This ranges from something small like our packaging, to our marketing, how we interact with our clients online and offline, to our IT systems, which encompass not just the bidding platforms, but business intelligence and analysis. Not everything is obviously visible to clients, but innovation is key. By constantly looking for new and better ways to improve, we keep ourselves relevant and indeed staying the trail-blazers we are. On this note, watch us over the upcoming months for some exciting developments.

• These factors underpin our brand, and have combined to make Koin today the trusted name in diamond tenders, a privilege we take seriously.

In addition to the key points above, it has always been our focus to provide our services in multiple geographic locations (we have a presence and service capability in Dubai, Tel Aviv, Antwer, India and South Africa) which has helped us reach and service clients globally.

Lastly 'Sustainability' is key to the growth of this Industry. What would be your advice to the Industry to become sustainable for a progressive future?

This is very much the relevant issue and goal for our generation in general, regardless of the industry. Regardless of company size, in line with the UN 17 Sustainable Development Goals (SDGs), sustainability cannot be ignored by rough producers (whether natural or lab grown-I will touch on this later) or indeed the mid-pipeline manufacturers.

This is something which affects us all-no matter where we fall along the pipeline. We all have a responsibility to familiarize ourselves with the SDGs and look to where we can implement 48 them in our personal sphere, as well as undertaking our own corporate and company social responsibilities.

Consumers today demand more transparency and accountability, and this will only increase in the future. They are astute and discerning buyers, and we can expect that as Gen Z - who in 2019 accounted for 32% of world population-starts to assert more financial independence, the industry will be forced to evolve and accommodate higher awareness and demand for transparency. This doesn’t only impact buying habits; we can expect that Gen Zs will also make employment and investment choices which align with their values as well.

Our current and future “end users” are highly aware of climate change, well educated, socio-politically astute with a high degree of digital literacy and activism. They want to know more about their diamond. What country and what mine (large or small it doesn’t matter). Does that producer abide by the laws of the country. Whose hands did this diamond pass through all the way from mine to market. Can these stakeholders show that they are:

• Working to reduce environmental impact by reducing carbon emissions, conserving natural resources, protecting biodiversity, and rehabilitating mined areas?

• Investing in equipment and processes which are optimized to least damage the environment, reduce carbon footprints, energy consumption and greenhouse emissions?

• Engaged in ethical practices, regional development and local community beneficiation and skills training?

• Implementing systems to promote equal opportunity, inclusivity and diversity in their workplace?

• Actively pursuing regional development, beneficiation policies, and real investment and processes to better the lives of workers and their families, and the local communities in which they operate?

The additional challenge to our industry as a whole is how we manage this flow of information and communication from mine to end user. It will require coordination, buy-in, and no doubt investment in and implementation of technologies which can provide authenticity and transparency. Here I do want to point out that these issues very much also apply to lab-grown producers as well. While these have a legitimate place in our industry, lab-grown diamonds are often marketed somewhat misleadingly as “green”or “ethical” diamonds. It’s worth bearing in mind that while 160kg of greenhouse gases are emitted per carat of polished natural diamond, it takes 511kg of greenhouse emissions to produce one carat of polished labgrown diamond (for context, the average US household emits 48,000kg of greenhouse gases per year). Recreating the high pressures and temperatures required to produce a lab-grown diamond, uses great amounts of energy and resources, and this energy typically at present comes from fossil fuels and non-renewable energy sources. As such, lab-grown producers need to be held as accountable to sustainability and sustainability goals as natural diamond producers.

I posed the question of sustainability practices to the owner of the EKAPA Mine whom we represent, who responded with a tremendous point: “Sustainability will be underpinning the unique rarity and value of ethical natural diamonds. Discerning producers like EKAPA are committed to our communities, and to maintaining the pure natural diamond alive through competitive marketing.”

We do also need to recognize that the bringing of natural rough to market has the great potential to do good, transform the lives and economies of local communities at source, is the employer of thousands of individuals and families, and provides a livelihood to many in the developing world. I believe future marketing of natural diamonds should encompass and communicate these values-this can only serve us well.

Koin is only one step along the way in the journey of a diamond from source to final destination. In simple terms to me personally, “sustainability” means “always strive to be a caring, good, ethical and honest person or company”. If we all in our personal capacities and as an industry strive to abide by this simple sentence, as well as incorporate SDGs into our area of influence, we as people, an industry and world will be a better place.