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Antwerp hosts emergency diamond talks amid slump

Antwerp hosts emergency diamond talks amid slump

More ads, less gems: Top producers crafted emergency plans Monday to make sure that diamonds remain a girl's best friend this Christmas, despite the economic gloom.
Traders, cutters, polishers and producers from the world's top diamond hubs _ including India, Israel, Dubai and China _ held crisis talks in this Belgian city to keep the shine on their multibillion-dollar business.
Industry leaders De Beers Group and Russian mining giant Alrosa announced plans to cut production of rough diamonds and to launch a massive media blitz in the United States to lure consumers back to jewelers and prevent a panicky markdown in prices.
Still, industry experts warned of a possible 15 percent drop in sales in North America next year, a 10 percent sales drop in Europe and a five percent drop in Japan.
The gloomy forecasts added to an already dismal situation for the industry, which only recently had been riding the luxury boom amid good times in China, the U.S. and Russia.
All that changed when the banking credit crunch hit, drying up regular loans from banks to cover purchases of rough gems.
"The market situation is unprecedented, we are in the midst of a global economic crisis," said Freddy Hannard, head of the Antwerp World Diamond Center, which organized Monday's talks. "All of us have felt the pressure ... no market, no liquidity, no demand and worse of all no confidence."
The drop in sales also means less demand for rough gems, which are expected to fall by 35 percent next year. Sales for rough diamonds are estimated to be worth $14.5 billion (euro11.5 billion) this year.
Vasant Mehta, head of India's gem and jewelry export promotion council, called the situation "alarming" and said India was suspending all imports of rough stones for a month in December because of lower-than-expected demand. India is the world's largest center for cutting rough diamonds.
"The diamond industry has taken a beating," he said, adding that 800,000 jobs in India were at stake.
Sergey Vybornov, the president of Alrosa, Russia's state diamond monopoly, said his company was looking to cut production up to 40 percent to ease the glut of rough stones now on the market.
And De Beers Group managing director Gareth Penny, whose company controls 40 percent of the global diamond trade, said De Beers was launching a massive ad campaign in the United States this Christmas to boost sales.
"Clearly, these are very difficult and challenging economic times," he said. "We feel, however, we have an extraordinary product in the diamond."
He said company research showed that diamonds remained the most popular gift at Christmas in the U.S. market _ which represents 43 percent of all worldwide sales.
"All our research shows that the consumer, particularly in America, wants diamonds more this Christmas than our research has ever shown, for us that's very encouraging," said Penny.
He suggested the best way for the industry to survive was to better coordinate marketing, not cut prices.
"They (women) won't want it if the message going out from this room ... is that somehow this is disposable," Penny said. "We are all panicking about it and we don't understand the value of what we are selling."