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Panama, merchant of diamonds
For 15 years, the world federation of diamond bourses searched for a country in latin america to open a bourse. Panama’s advantages made it a favorable spot to open the world’s 28th diamond bourse. The initiative could become a reality in 2010.
Commercializers of diamonds, jewels and precious stones in latin america and the world will be able to buy and sell commodities in Panama.
“if a latin american merchant wants to buy a diamond he has to travel to the United States, Belgium, Tel Aviv, or China,” comments haviv aviad, executive director of the bolsa de diamantes de Panamá, or Panama diamond exchange (pde).
But in may of this year, Panama was chosen by the world federation of diamond bourses – an organization that represents more than 20 bourses around the world that commercialize uncut and polished diamonds and precious stones – to be the seat of the diamond bourse for latin america and last week its representatives made the official announcement in Panama.
Unlike other bourses where negotiations take place for papers, coins and goods, in the pde diamonds will be bought and sold between merchants from different parts of the world.
Panama had to compete with countries like argentina, brazil, mexico, colombia and chile, but factors such as economic stability, a solid banking system, geographic position, and the fact that it has an air hub that connects the entire region, were decisive enough that the federation had a unanimous vote in favor of Panama.
Behind this process was Erez Akerman, who is now the president of the pde and who was in charge of investigating and searching for the location of the 28th bourse in the world and the only one in latin america.
Akerman recounts that this is a job that took three years and after taking his proposal to the federation, it was put to a vote in the world diamond congress in shanghai in may of 2008, where Panama was finally chosen.
This choice involves the construction of a 52 story building with 300 offices with the largest and “best” companies involved in the commercial exchange of diamonds, jewels and precious stones, an exchange area for raw materials for all of latin america, restaurants, stores, banks, and currency exchange offices. All of this in an area of 10,000 square meters
“a building with an advanced security system,” adds aviad.
On one side of the exchange, a five star hotel will be erected, a shopping center with some of the most exclusive jewelry stores in the world.
The investment of this project, which will be located on the east coast, is 200 million dollars and it is hoped that it will be ready in 2010.
“the diamond exchange is not about building one building and starting work, but instead creating a diamond market organized for all of latin america,” he assures.
Business in Brazil and Venezuela, some of the largest producers of diamonds in the world, is out of control.
The world federation of diamond bourses this year made a call to boycott the distribution of diamonds proceeding from Venezuela for not cooperating in the fight against the illegal contraband of more than 150,000 carats of precious stones and for not following the kimberly process of the united nations that certifies the legal origin of raw materials.
When the federation decided to install a bourse in the region, it was with the objective of ordering the business in the region.
“the commerce has been conducted in a very informal manner and hasn’t been regulated by the state. There should be a system to import, export, register, determine how mines are exploited, and not illegitimate enterprises that want to make their own agenda above that of the country,” he details.
The volume of sales of diamonds in latin america is seven billion dollars annually. A market that includes 15,000 jewellers. “it’s a big market, but it’s not ordered. There needs to be more information about the industry in the region. We are virgins in this area,” he points out.
Exchange and regulation
The president of the pde emphasizes that the work of the exchange is not only to have a central point where merchants are gathered to buy and sell diamonds, but rather to regulate the market.
For this, in 2000 an intiative was created that was endorsed by the united nations, called the kimberly process, that creates a system of control that guarantees adecuate commerce of precious stones.
The diamond industry has 200 billion dollars of sales around the world, and in the year 2000, the so-called “blood diamonds” represented between 20 and 30 percent of the world’s production of the precious stone.
That is also the name for the stone that is sold to finance terrorist and illegal groups, or that which is exploits miners for the extraction of the material, or that which is extracted without caring for mineral resources.
The kimberly process was created so that each country would be responsible for its own production, to control and detain the blood diamonds, and would be implemented from production, and commercialization, to exportation and importation of the same.
“each country that produces diamonds can’t export them without an original kimberly processs certificate. If it doesn’t possess this certificate, it can’t commercialize them in the diamond bourses of the world, and the diamond will be rejected for the rest of its life.”
If Panama has been selected to install the diamond bourse for latin america, the country still needs to accept and implement the kimberly process as have 74 countries around the world.
“by doing so, Panama will accept not negotiating in blood diamonds,” he recognizes. When commercializers arrive on Panamanian terrotory, specifically the diamond bourse of Panama, they must be revised and controlled accoring to the kimberly process.
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