Everlon: Boost or Bust?

By Ben Janowski — JCK Online, November 1, 2009

Ads for the new De Beers program, using the brand name Everlon, broke in the consumer press in September. I suppose we must pay attention to any De Beers program, since their advertising and marketing budgets are the largest in the industry. But I don’t get this one.

De Beers’ programs have changed radically. At one time, De Beers would allocate $200 million or so each year for image-building promotions they developed. That was fine when De Beers controlled 75 percent or more of all rough output. As that declined, De Beers became determined that the benefits of the advertising accrued mostly to them and their clients. Even so, as programs were developed with specific product themes and characteristics, the market as a whole emulated the concepts.

These “beacons,” as De Beers calls them, enjoyed varying degrees of success. Many years ago, the Anniversary ring was successful, as were studs, the tennis bracelet, and the three-stone ring. Others were far less successful, but at least the ad programs got attention and provided something to pitch.

De Beers generally went with simple, generic pieces—the idea is to sell diamonds, not fancy jewelry—which made it easy for the trade to participate in or mimic.

But economic times have changed. De Beers is reluctant to back off from its programs entirely, even though other mining companies spend very sparingly on image advertising. A new plan is in the works, which has all major producers contributing to a global diamond campaign. It is as yet unimplemented, and the decline in diamond prices and production may impede the program. De Beers, however, is under unusual financial stress, with some $3 billion in debt maturing over the next year-and-a-half.

So this new “brand,” Everlon, is designed to meet two objectives: offer a line of jewelry available only at De Beers’ downstream stake-holders, and share the cost of the program among both sightholders and participating retailers. The central theme is a knot, a Herculean knot, of sorts.

On the plus side, the design is simple, easy to understand, and uses classic lines the public will probably accept. The pieces use a range of stone sizes (more or less fifths to 1.00 ct., in middle qualities) that De Beers has in excess supply. The design fits well with target customers, mostly chains.

But De Beers has burdened its clients with heavy participation costs. Sightholders work on thin margins when selling to chains, so the added costs for sightholders and retailers could make these basic pieces uncompetitive. De Beers counters, I’m sure, that the advertising and branding more than offset this aspect. But it takes years to build a real brand, and the public may not pick up on it in the four months that it will be promoted before Christmas. And can a brand be built on a long-used design? Does the design even warrant heavy promotion?

Other manufacturers and retailers will “emulate” the pieces. Even if some make straight knockoffs, I doubt any copyrights will stick (assuming De Beers copyrights the designs). This scenario looks like a price war, but with De Beers’ sightholders and their participating retailers on the short end. The retailers, who compete against each other in many markets, will face off with identical items that are branded—the very thing they have long avoided in diamond jewelry. And the competition will have a real price advantage.

As of now, only four sightholders are involved. At the London preview, De Beers refused to show the designs. I presume they feared knockoffs. It was suggested to me that it took some arm-twisting to get this far. Considering the product and the costs, it’s understandable that sightholders and retailers were reluctant. Some major retailers have said they won’t get into this program. Other comments I heard related to the essence of the product. People don’t believe larger diamonds will sell in such designs; some say it will quickly degrade to cheap, smaller diamonds; others say the ring won’t work because the diamond is off-center; nobody I spoke with was excited by the designs. The ads refer the reader to www.adiamondisforever.com to find participating retailers. I tried several times, on different days, and couldn’t get through.

If there was ever a time when innovative and cost-effective programs were needed, it’s now. But this program is a dud.

“If De Beers thinks that tying a knot in a noose that is already around their neck is going to get them out of their $3 billion mess, then I guess they have not met The Hangman, the consumer!” –Fred Cuellar

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Diamond Industry Makeover Sends Fifth Avenue to Africa


MOGODITSHANE, Botswana — Tiffany & Co.’s iconic blue boxes have long cradled some of the world’s most expensive diamonds. Now, an increasing number contain stones cut by some of the industry’s least-experienced hands.


In a windowless factory in this African village, Tiffany is teaching more than 80 workers to transform raw diamonds into gems for Tiffany engagement rings. As novices recently pressed pea-size stones against whirling blades, a visiting Tiffany executive spied a problem.


“You don’t try to save money by using cheap architect and building a castle on sand!”–Fred Cuellar


Tiffany & Co.’s iconic blue boxes have long cradled some of the world’s most expensive diamonds. Now, an increasing number contain stones cut by some of the industry’s least-experienced hands.


“You can see the polishing lines!” said Mark Hanna, an Antwerp, Belgium-based vice president of Tiffany’s diamond unit. “Tiffany diamonds can’t have polishing lines.”


Tiffany is one of the largest diamond retailers making a play in Botswana to cut and polish its own diamonds . But other firms are setting up shop there, too. Vanessa O’Connell takes a tour inside a new factory in Gaborone which produces polished gems for Graff Diamonds.


Such are the risks for the New York-based retailer as it strives to transform its diamond business amid a decade of industry boom and bust. Tiffany has decided that to preserve and expand its $2.9 billion-a-year enterprise, it needs this factory — with its high labor costs, low productivity and workers who staged a two-day sit-in this month.


Tiffany’s is an extreme example of an industry shift that started during the recent luxury boom. Like most other diamond retailers, Tiffany long bought the vast majority of its diamonds pre-cut and pre-polished from industry middlemen. But with global diamond-jewelry sales soaring earlier this decade, Tiffany and others worried they would soon be fighting over dwindling supplies.


“There are no shortage of commercial grade diamonds; just non-commercial grade.” –Fred Cuellar


So Tiffany began venturing into an end of the diamond business it spent much of its 172-year history avoiding — sourcing, cutting and polishing its own diamonds. “We decided to move backward” in the supply chain, says Chief Executive Michael Kowalski.


The retailer invested in mine operators, and in 2002 it began opening cutting-and-polishing plants in Canada, Belgium, South Africa and Vietnam. In the past two years it added similar operations in China and Mauritius. The in-house unit Tiffany founded in 2002 to run these plants, Laurelton Diamonds, now employs 1,100 workers, or 14% of the company’s work force. It will supply more than 50% of Tiffany’s diamonds this year — up from 40% last year and none in 2003.


“Does that mean 1 out of 2 diamonds now will be subpar? You might as well flip a coin to see what you’ll get there.” –Fred Cuellar


Others have made similar bets. Privately held retailer Graff Diamonds International owns a majority stake in a South African diamond wholesaler and polisher with facilities from Antwerp and New York to Botswana. Suppliers have made incursions on retailers’ turf. Mining giant De Beers Group operates retail stores in a joint venture with LVMH Moët Hennessy Louis Vuitton SA. Canadian miner Aber Diamond bought a controlling interest in retailer Harry Winston in 2004. Indian jewelry manufacturer Gitanjali Gems Ltd. transformed itself into a global retailer starting in 2006, buying U.S.-based Samuels and Rogers jewelry chains.


Some industry analysts see risk in running operations that span from mining and manufacturing to high-end retailing and marketing. “[They’re] all totally different types of activity — and one needs tremendous expertise, skills, infrastructure to be truly competitive” in each, says Chaim Even-Zohar, principal of Tacy Ltd., a Tel Aviv-based industry consultant.


Such companies may miss out on savings that result from competition in these specialized areas, Mr. Even-Zohar adds, and may risk using some parts of their supply chain to subsidize others. “Vertical integration sounds great from a promotion and marketing perspective. But more often than not it doesn’t make economic sense.”


“The key to selling diamonds isn’t to treat them as coal but as work of art. If you cut out the master craftsmen, you’re back to coal! If you screw someone over to try to increase quick profits, the long term dollars disappear.” –Fred Cuellar


The stakes are especially high now that tight diamond supply has given way to slack demand. The global retail market for diamond jewelry is expected to fall 16% this year, to $65 billion. The U.S. will lose an estimated 900 specialty jewelry stores this year alone, following 1,500 closures last year. Industry players have retrenched: Signet Jewelers Ltd., the parent company of retailers Kay Jewelers and Sterling Jewelers, recently stopped buying rough diamonds and polishing them on contract in India, an initiative it started in 2005. A spokesman said the program broke even.


Tiffany is also feeling the pressure. Its inventory has swelled to $1.54 billion this year, up from $1 billion in early 2005. For the first time in recent memory, Tiffany says, it has lowered its prices for diamonds. The engagement rings it sells in the U.S. are priced 10% lower than last year. In all, the company expects a “high teens” decline in sales this year at U.S. stores open at least a year.


Tiffany acknowledges its lack of mining expertise. Although it reaped a large financial gain from its 2004 sale of a minority stake in the 40%-owner of a Canadian mine, it recently disclosed that it wrote off a $12.4 million investment in a small mining project in Sierra Leone. It also has written off loans of about $44 million to a former supplier whose mine has ceased operations. “I think we want to let the miners do the mining,” said Chief Financial Officer James Fernandez.


“By the time it’s over 84% of ‘spam’ jewelers will be gone!” — Fred Cuellar


A Diamond’s Path


But Tiffany says its cutting-and-polishing strategy is solid. In slow markets, the company says, it can rein in purchases from outside suppliers. When demand returns, it says, it will have guaranteed, lower-cost stocks. “There were many in the industry who thought we were foolhardy,” Mr. Kowalski says, but the diamond-cutting operations “have exceeded our expectations.”


If there’s a weak link in Tiffany’s global diamond chain, it’s the polishing plant in Botswana. A glimpse into this secretive end of the diamond business shows the high costs, tricky logistics and labor unrest Tiffany is willing to shoulder to maintain its diamond pipeline.


“Dynamiting the pond always exceeds your expectations but only for a moment! You can fool some of the people some of the time, but don’t come between a woman and her best friend.” — Fred Cuellar


Fancy Goods


Founded in 1837 as a New York stationery and “fancy goods” emporium, Tiffany bought large jewelry collections from French aristocrats fleeing revolution, and in 1878 paid $18,000 — the equivalent today of $400,000 or more — to buy the Tiffany Yellow Diamond in Paris. Co-founder Charles Lewis Tiffany gained the nickname “the King of Diamonds.”


Even so, by 1991, diamonds accounted for only 17% of Tiffany’s sales. To boost profits, the company began pushing diamond jewelry and opening new stores in Europe, Asia and the U.S.
In early 1999, Tiffany’s new CEO, Mr. Kowalski, feared surging global diamond demand could hinder the company’s efforts to stock its expanding retail network. That July, Tiffany purchased a minority stake in the 40%-owner of a mine in Canada’s Northwest Territories.


Tiffany soon saw other openings. De Beers, which long controlled the world’s rough-diamond supply, was paring back after years of sparring with European and U.S. antitrust regulators. When De Beers closed its high-tech diamond-sawing and -polishing operation in Belgium, Tiffany bought some of its machinery and hired former workers including Mr. Hanna, now Laurelton’s vice president.


The new Laurelton unit built a cutting-and-polishing factory in Canada, bought a majority stake in a Johannesburg plant and acquired what would become its largest plant, a 570-person polishing operation in Vietnam.


But the elusive prize was Botswana, the world’s largest producer of gem-quality diamonds since the 1980s. Its Jwaneng Diamond Mine is the world’s richest by value of recovered diamonds. Botswana is also among Africa’s least-corrupt countries, according to an index by nonprofit Transparency International. Securing a supply of stones here would help Tiffany allay mounting consumer concerns over “conflict diamonds,” sold to fund wars or produced under unethical labor conditions.


Tiffany executives made their first reconnaissance trip to Botswana’s capital, Gaborone, in 2004. “Do we need to be in Botswana?” Mr. Hanna recalls asking at the time. “We said, ‘Yes, but we aren’t quite sure how to do it.'”


“Really? That’s the goal? ‘Least corrupt’? Don’t do what you don’t know how to do just becuase you are desperate.” — Fred Cuellar


Sparsely populated and AIDS-ravaged, Botswana has minimal manufacturing infrastructure and few direct flights beyond the continent. Tiffany faced further roadblocks. It couldn’t get into mining, which was controlled by a 50-50 partnership between De Beers and the Botswana government. It couldn’t buy rough diamonds locally, because the state mining venture sold its production only through De Beers’ sales offices in the U.K. and South Africa.


Botswana’s cutting operations were also unattractive: A parcel of diamonds polished here costs about $100 per carat, compared with $30 in India, according to industry estimates.


The calculation changed in 2006. Renegotiating its mining deal with De Beers that year, Botswana announced it would license 16 international cutting firms willing to build factories here. In return for training locals to polish diamonds, the government said, these firms would eventually gain the right to buy rough diamonds in Botswana.


Tiffany jumped. It took a majority stake in one of these firms, Rand Diamonds. Rand set up shop in an unmarked factory amid the used-car dealerships and military barracks of Mogoditshane, a former cattle post at the edge of the capital’s urban sprawl.


With few Batswana versed in diamond polishing, the company put an ad in the Botswana Guardian newspaper for English-speaking applicants with a high-school-level education. To help winnow its 300 hopefuls, Tiffany/Rand screened for math aptitude. It gave candidates tweezers and timed how fast they could place 40 tiny metal sticks into holes set in a board.


When the factory opened in early 2007, its new hires worked on small and low-cost brown diamonds, overseen by experienced cutters imported on short contracts from India and Mauritius. “We are literally parachuting people in from one operation to the other,” Mr. Hanna said.


“Very simple: You get what you paid for!” –Fred Cuellar


Bruters and Polishers


Sitting at workstations arranged by task, bruters round the diamond pieces. Polishers add top and bottom facets, looking at magnified images of their diamonds captured by a lens near the whirring polishing wheel.


On the factory floor on a recent afternoon, a worker learning to make facets walked over to a Laurelton-designed training machine to double-check an angle. When he set the diamond in the protractor, a display flashed 35.2 degrees. Over the whir of grinding wheels, Mr. Hanna nodded in approval.


Trainees who learn such basics of bruting and faceting become “qualified” workers in four to six months, Tiffany says. About 30% fail. The rest start handling gem-quality stones, working at a pace of up to one polished diamond a day. Tiffany expects their pace to increase considerably.
For now, the plant’s expatriate and local workers produce about 250 finished gems each week, primarily “round brilliant” stones, with 57 light-reflecting facets, for Tiffany engagement rings. About 85% of the stones are deemed “Tiffany qualified,” and are forwarded to a Tiffany office in Pelham, N.Y., for grading.


“Is this anything like an AIG stamp of approval?” –Fred Cuellar


Tiffany doesn’t tell its customers where individual diamonds are mined or polished, and declined to say how much of its overall inventory is now sourced and polished in Botswana. “We really want the focus…to be on the quality of the diamond ring, not how it came to be,” said Mr. Kowalski, the CEO.


Tiffany’s payout came in April 2008, when approved cutting firms gained access to about 15% of the country’s raw diamonds, in local sales valued at an estimated $550 million annually by the end of 2010. De Beers began to sell natural diamonds from various mines 10 times a year at bulk sales in Gaborone, where Tiffany’s Mr. Hanna is a frequent buyer. Diamond merchandise now represents 47% of Tiffany’s sales.


But tensions at the Mogoditshane plant are high. Local workers and managers, whose names were provided by a factory partner, said in interviews that the plant’s expat supervisors do too much of the work themselves, slowing Batswanas’ advancement.


Complaint Letter


“We are eager to learn about diamonds — about cutting and polishing and the valuation and stuff like that…[But] it seems certain people are scared [about] sharing information with the locals,” said one local who works in a management position. “It’s a bit of a clash of cultures.”


Workers aired many complaints in an Oct. 7 letter to the plant’s managers, reviewed by The Wall Street Journal. Identifying themselves as “local staff,” they wrote they hadn’t qualified for performance-based raises, but that managers wouldn’t show them the data on which those pay decisions were based. They called their work environment “prisonlike,” writing that they had been threatened by a Belgian production manager they characterized as “corrupt, racist, vulgar, abusive, bully[ing]” and “not professional.”


The next day, all but about five local laborers gathered in the facility’s reception hall, refusing to work until the plant’s director addressed their concerns, according to the plant’s human-resources manager, Meshack Lejuta. The director sent Mr. Lejuta to address the workers. The sit-in stopped in the middle of the next day, Mr. Lejuta says, when he warned his fellow Batswana they could be fired because their strike was unlawful.


Responding to the letter and strike, Tiffany said workers expressed concerns as part of a union organizing effort. It said it intends to address grievances with a union representative, including “any tensions, wrongly characterized as racist, that may have arisen because skilled workers from other African nations and from Asia have been engaged for training purposes.”


Mr. Hanna said Tiffany wants local workers to take over diamond cutting, key decisions and training of other locals. Foreign supervisors, whose numbers once nearly equaled those of the factory’s local workers, now account for about one in five positions.


The Botswana government is pleased with Tiffany’s commitment to train residents, says Akolang Tombale, a government adviser and recently retired secretary of Botswana’s minerals department. Other polishing plants are experiencing strikes and slow training initiatives, Dr. Tombale says.
Tiffany, meanwhile, is pushing ahead. While buying raw diamonds in Gaborone’s diamond district recently, Mr. Hanna looked out a window and pointed to an area of bush. Tiffany plans to begin clearing land there this year to build a 20,000-square-foot factory. Set to open in 2011, it will employ as many as 275 workers.


“The tarnish on Tiffany isn’t just tarnish anymore it’s rusted through.” –Fred Cuellar


Click here for original article.

The Health of Your Jeweler

In the last two and a half years one out of every seven jewelers has gone out of business! Generations of jewelers have been wiped off the face of the map because they were ill-prepared for the next tidal wave of consumerism—Twitter, text message, Facebook, etc. connected consumers that don’t care what the old way to do business is because they want to buy their way on their schedule! Jewelers who had legions of fans have been left in the Sahara Desert as their fast track-spending baby boomers are off searching for the meaning of life and have put away their pocket books and wallets! Of the remaining jewelers, half are on life support betting on Christmas! If Santa appears, they may squeak by with their lives. If not? It’s Sayonara! Arrivederci! After the next 3 months, we will have a pretty good idea of which jewelers are going to survive and which ones will join the Tyrannosaurus Rex!

As a consumer here is what you have to be on the look out for:

1) Promises that seem too good to be true! If the jeweler keeps lowering the price until you buy he’s not going to be around tomorrow!

2) The lack of non-bonded diamonds; the bonding of commercial diamonds. If the jeweler is offering a lifetime buyback guarantee on crummy diamonds, it’s because they are just dynamiting the pond to get the most money in their pocket before they go out of business. Of course, they don’t have to worry about keeping a promise if they close up and leave town after the sale.

3) Over-stocked Cases! Desperate jewelers bring in a lot of jewelry on consignment that they haven’t paid for yet hoping to make a quick sale! If they sell it to you and they go out of business with out paying their bills you are in possession of stolen merchandise!

4) How long the jeweler has been in business now is irrelevant! Legacy jewelers are dropping like flies. Look for the little things like small repairs that haven’t been made, lights out in cases or outdoor signs that haven’t been replaced. Out of date décor. Does the place have a current minimalism look or old fashion iron stands behind the cases approach?

5) Look at the age of the jewelers. If everyone serving you is older than dirt there is a good chance there is a hole in the desert six feet deep that the company is going to be dropped into.

Are the sales people a little eager like their life depends on it or do they give you room to breathe? If they crowd you it’s because they are missing the crowds!

6) Flat out ask them if their diamonds come with “certificates” guaranteeing the diamond? If they say yes run for the hills! The FTC has deregulated lab reports to not be responsible for the exact accuracy of their grades as long as disclaimers are present! If the jeweler is telling you a piece of paper stands behind their diamonds and not the jeweler himself, you are talking to a dinosaur.

7) Does the jeweler have a social media director? If they don’t they are in the dark ages and will soon be left in the dark.

8) Do they try to make the sale today vs. giving you time to make your decision? If they’re rushing you they are hunting for cash.

9) And finally, who do you know of your friends that have recently bought from the jeweler? If you can’t quickly Facebook your friends and find at least a half a dozen happy customers it’s because they don’t have any!

The health of the “business as usual” jeweler is critical. They are on life support and if they are on life support, how are they going to be around to support you?

by Fred Cuellar, author of the best-selling book “How to Buy a Diamond.” More questions? Ask the Diamond Guy®

Don’t Force It! (Pre Fab Isn’t Fab)

Ninety percent of all jewelry sold in the United States is prefabricated. Let’s see what Webster has to say. Merriam-Webster Dictionary defines the word Prefabricate as follows:

Function: transition verb

Date: 1932

1: to fabricate the parts of at a factory so that construction consists mainly of assembling and uniting standardized parts.

2: to produce artificially

Think about it! Ninety percent of all the settings that hold our diamonds and gemstones are manufactured PRIOR to knowing what diamonds or gemstones are going to go in it! That’s life in the 21st century—picking out a frame for a newly discovered DaVinci without bothering to ask the exact dimensions. That’s Crazy! But, I’ll keep going! All this Prefab jewelry is mass produced in such great quantities, (#1 goal being profit) that any decent quality control to insure against under-carating of the quality of the gold or precious metal is thrown out with the baby and the bath water! Prongs that should be hand rolled for durability and strength are plucked out of an assembly line machine losing an incredible amount of tensile strength (that’s what keeps your rocks in place)! Of course even under the most optimal conditions, using a Master Craftsman & Master Stone Setter, damage is possible but why would we want to increase the odds of an accident by over twenty times?! We might as well text and drive with an open container in the car! All right, don’t get me started! Here are the facts:

1) Prefab jewelry is a lot less expensive upfront but will cost you more on the back side with costly repairs.

2) Prefab jewelry is ordered out of a catalog so you may get it quick and fast but you aren’t buying something meant to last.

3) Prefab jewelry serves a place in our society the same way a place holder does. It’s a good band-aid until you know exactly what you want your dream piece of jewelry to look like.

4) Custom made jewelry is more expensive (but not unaffordable like some jewelers want you to believe) but will more than pay for itself when it lasts generations not

Here’s how you protect yourself:

1) Ask the jeweler if the ring was Prefabricated by him or anyone else.

2) If the ring was Prefabricated and you are willing to roll the dice with prongs that have been FORCED out of place to fit stones that were jammed into them, what guarantees does the jeweler provide when the little sparkly beauties start jumping ship?

3) If they say the ring is custom made will they put it in writing and guarantee any stone loss (Large main stones must be covered under a personal floater policy) as long as you bring it in for scheduled maintenance?

4) Did the jeweler attempt to show and sell you a setting first and then ask you to pick out the main stone? * Never put the cart before the horse!

5) And finally, how long did the process take from start to finish? If it took days and not weeks with several visits, I’m sorry my friend, you just bought a Prefabricated piece of jewelry and as the story goes “Prefab aint Fab!”

by Fred Cuellar, author of the best-selling book “How to Buy a Diamond.” More questions? Ask the Diamond Guy®

The ‘Post-Cartel’ Diamond World Faces Its First Crisis

Rob Bates, Senior Editor — JCK Online, 8/31/2009 6:22:51 PM

In a 1998 interview, Nicky Oppenheimer told JCK: “In good times, people often say, ‘We don’t need De Beers,’ and it’s true; in good times, you don’t. It’s in bad times that people recognize the benefit of the CSO [Central Selling Organisation].”

The past year fits anyone’s definition of “bad times.” It saw the steepest drop in diamond demand in more than 50 years. It saw banks refusing to lend, business come to a standstill, and a jaw-dropping string of retailer and manufacturer bankruptcies.

And the CSO is just a memory.

De Beers, of course, is still around. But it’s a remade company that is forbidden from cartel-like activities-such as stockpiling diamond production or buying up “distressed” goods-by agreement with the European Union. And the fact is, even if it tried to manage the diamond market, it likely wouldn’t be able to. Today, De Beers controls 40 percent of the market, a far cry from the 80 percent to 90 percent it did when Oppenheimer made the statement above. It now competes with other players in the rough market, which use a variety of sales mechanisms including BHP’s tenders and systems that resemble sights.

How did the diamond industry manage through the economic crisis? Not always well; the market is still reeling and will feel the pinch of this downturn for a long time. But at press time, there are tentative signs that the U.S. economy is in recovery mode, and a tinge of optimism is in the air. De Beers’ sights are up-recent ones were triple those at the beginning of the year-and rough prices are increasing.

Here are the main lessons from this downturn:

Cutting production arguably has the same effect as stockpiling. As previously mentioned, De Beers can no longer stockpile goods. So it made what might be a better business move: It stopped producing diamonds.

De Beers broker Mark Boston, chairman of H Goldie, in London, notes that stopping production is a “similar mechanism” to stockpiling “but perhaps more effective, and more transparent. When they tried to manipulate the market in the past it was actually not very easy. It was pretty frustrating for them.”

De Beers Group director of external and corporate affairs Stephen Lussier says the production halt was a matter of simple economics. “When there was very little appetite for new rough diamonds, we didn’t want to produce more than our clients needed, because then you would be deflating the price,” he explains.

The company’s mines in Botswana, Canada, and Namibia all went on “extended production holidays.” There was a precedent for this: During the Great Depression, De Beers closed two of its mines for two years. In all, the company’s output fell a staggering 90 percent in the first quarter of this year, allowing second-place miner Alrosa, which produced and stockpiled diamonds through the crisis, to claim (temporarily) the mantle of “world’s largest diamond producer.”

At press time, the mines are back in production. Even so, De Beers likely will produce only 40 percent of its standard output this year.

De Beers was not alone. Many mines, including the main ones in Canada, either halted or cut production in response to the crisis. Other parts of the pipeline also tried to put on the brakes. India’s Gem and Jewellery Promotion Council instituted a voluntary one-month halt on imports. But producers objected and it wasn’t extended.

Price volatility is now a fact of life in the diamond industry. Once the magnitude of the financial crisis became apparent, miner BHP spooked the market when prices at its tender were a reported 30 percent to 40 percent less than those charged by De Beers. Charles Wyndham noted on his Web site that prices at the Lesotho tender, which his company administers, were down a similar amount. Polished prices were down a third to a half for certain items, although it was difficult to get accurate price information since there was so little activity in the market.

All of which left De Beers in a quandary. It couldn’t sell its diamonds for 30 percent more than competitors, because no one would buy them. But it didn’t want to shake the market or hurt consumer perception of diamond value at the same time it was launching an ad campaign trumpeting the “value” concept.

In the end, De Beers did lower prices, but to a limited extent. “DTC prices have come down from their peaks,” says Lussier. “But we did not want to see deep discounts. And the reality is that diamond prices didn’t decline that much. It was a very short-term thing.”

Lussier stresses that, with demand growing in emerging markets like China and India, and with few new mines coming on stream, the long-range outlook is for diamond prices to rise. Still, what this crisis drives home is that diamond prices now fluctuate, like the prices of any other commodity. The tenders, in particular, are widely watched and have an impact on rough prices.

The “old” De Beers is dead and gone. Although many diamond companies have suffered during this recession, few thought De Beers would be one of them. But as one veteran De Beers watcher put it, the company is now “in the business of self-preservation, like everyone else.” For the first time, the company seemed financially stressed. Its first sight of 2009 came in at around $100 million, a stunning $500 million drop from the year before. Other sights had similar numbers.

The company reacted to this downturn like so many others-by drastically slashing expenses. It laid off 25 percent of its staff in London, and new ventures, like its Washington corporate affairs office, were scuttled. Even so, De Beers had to borrow $800 million (interest free) from its trio of owners to pay off its debt, and it recently renegotiated its loan covenants.

De Beers also made unprecedented moves to boost sales. It talked openly of selling diamonds to non-sightholders and investment funds, but in the end those plans went nowhere. There were no “significant” sales to investors, Lussier admits, and the plan to sell to non-sightholders raised such a fuss it was quickly dropped. But De Beers did institute one new mechanism that was more successful: “Second-week sights,” which allowed clients to get a crack at goods other companies had rejected.

“We wanted to make sure we maximized every available sales opportunity,” Lussier explains. “We didn’t want to create demand where it didn’t exist, but we didn’t want to feel we had lost sales. And we did find instances where we created opportunities.”

Despite all the talk of the company’s change in stature, it remains an important player in the industry, as evidenced by how much of this article is devoted it.

“De Beers lost the dominant position in the way they once had it, but regardless, people still look to them as a leader,” says Boston. “They really can’t escape their history-and perhaps it’s their destiny-of leading the market.”

The diamond industry needs a generic marketing mechanism. Problems were compounded by the fact that, for most of 2008 and 2009, virtually no one was doing any significant generic diamond advertising. De Beers, sensing bad times were coming, slashed its marketing budget at the beginning of 2008. It later reversed itself, starting the “Enduring Value” campaign in the fourth quarter of last year and planning a new “big idea” for Christmas 2009.

And yet De Beers has long maintained it can’t shoulder the marketing burden for the entire industry, especially now that it no longer has an endless pile of cash to draw from. At a meeting on the crisis last year, the major players agreed to start an industrywide entity to handle generic marketing. That entity is now called the International Diamond Board (or IDB) and is searching for a chief executive officer. Its budget has been estimated at $70 million to $100 million, a far cry from the $200 million a year De Beers used to spend. But if it works, the IDB may be one of the few positive results to emerge from this recession.

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Petra Unearths Diamond the Size of a Chicken Egg

By Thomas Biesheuvel

Sept. 29 (Bloomberg) — Petra Diamonds Ltd., a miner of the stones in Africa, said it unearthed a gem the size of a chicken egg at the Cullinan mine that may be among the 20 largest “high quality” rough diamonds discovered.

“Initial indications are that it is of exceptional color and clarity, which suggest extraordinary potential for its polished yield,” Chief Executive Officer Johan Dippenaar said in a statement today.

The 507.6-carat stone, weighing more than 100 grams (3.53 ounces), may sell for more than $20 million, Brock Salier, an analyst at Ambrian Partners Ltd. in London, wrote in a note. “That would probably be a guide,” Dippenaar said, when asked about the estimate on a conference call. “We certainly hope it’s not that little.”

The world’s biggest certified diamond is the 3,106-carat Cullinan, found at the mine near Pretoria, South Africa in 1905. It was cut to form the Great Star of Africa and the Lesser Star of Africa, set in the Crown Jewels of Britain. Petra sold a 7.03-carat blue diamond, cut from a 26.58-carat rough stone found at the mine, for $9.48 million in May.

Petra rose 5 pence, or 7.9 percent, to 68 pence in London after it unveiled the latest find, which spokeswoman Cathy Roberts said was the size of a medium chicken egg. The stock has more than doubled in the past six months.

St. Helier, Jersey-based Petra also found three other “special” white stones weighing 168 carats, 58.50 carats and 53.30 carats, it said. A carat equals 0.2 gram. The three stones may fetch more than $10 million, according to Salier.

Reports Loss

Rough diamond prices are rebounding after falling as much as 65 percent from September last year to March, according to Ambrian, as the global economic slump slashed demand for luxury goods. Petra today reported its full-year loss widened to $90.9 million after the price slump and as it wrote down the value of some mines and exited exploration projects in the first half.

The figure compares with a $7.2 million loss a year earlier. Sales slipped 10 percent to $69.3 million.

“We remain cautiously optimistic that we have seen a bottom of the market,” Petra said in a statement. Diamonds are still selling at prices 30 percent to 35 percent lower than averages achieved for the year though June 2008, it added.

De Beers, the world’s largest supplier, has restarted operations in Botswana and Namibia after cutting first-half output by 73 percent. ZAO Alrosa, the Russian state-run diamond monopoly, resumed sales in May as demand improved.

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Smithsonian Offers Public Rare View of the Hope Diamond

By Jacqueline Trescott

Washington Post Staff Writer

Wednesday, September 23, 2009; 3:17 PM

The famous blue stone now stands alone.

This morning, for the first time in its 50-year residence at the Smithsonian Institution, the Hope Diamond was taken out of its setting, giving the public a rare look at its bare beauty.

The famous blue gem now rests on a discreet bracket in a custom-made display case and vault. The public got its first look at the naked stone at 10 a.m. in the Hall of Geology, Gems and Minerals at the National Museum of Natural History.

At a morning press conference, with the doors locked and security personnel glaring, a jeweler wheeled a trolley out from a workroom. Atop it was the Hope Diamond covered with a white cloth; the cloth was taken off with a flourish by museum director Cristián Samper. “This is a new chapter in the history of the Hope Diamond,” said Samper, facing a lineup of camera crews. “We wanted to celebrate this legacy by giving people a look at the Hope Diamond in a new way.”

The 45.52-carat gem, which was donated to the Smithsonian on Nov. 10, 1958, by the firm of Harry Winston Inc., has been one of the most visited objects at the Smithsonian. More than 5 million people a year peer into its enclosure. “This is the world’s most famous gemstone,” said Jeffrey Post, the curator of the gem and mineral collection.

To observe its 50th year at the museum, the Smithsonian Channel is producing a documentary called “Mystery of the Hope Diamond.” In addition, the show’s producers sponsored an online contest to select a new temporary setting for the gem from among three patterns proposed by the Winston firm.

The winner of this unique publicity gimmick — as if the diamond needed more notoriety — was also announced this morning. Members of the public — or at least 45,000 of the 100,000 who cast votes — chose a setting called “Embracing Hope.” It is a necklace of a ribbon of diamonds with the Hope sitting in a cluster of diamonds in a teardrop shape. The Hope will be displayed briefly in its temporary setting next spring, the museum said. The diamond will be returned to its original setting, a pendant circled by diamonds, on a diamond necklace.

Participating in the documentary and seeing the gem out of its setting is giving the Smithsonian’s staff new opportunities to study the stone. “Because blue diamonds are so rare, you don’t get a chance to examine them,” said Post. “This is a unique product of the Earth and by studying it we can learn more about all diamonds.”

The diamond has had an unusual history. Mined in India, it was sold to King Louis XIV of France in 1668. After several owners, it was purchased in 1911 by Evalyn Walsh McLean, who was a prominent hostess in Washington. She owned it until her death in 1947 the Winston firm bought her entire jewelry collection in 1949.

Throughout its history, the diamond has also been associated with a so-called curse. “It has brought us good luck in the last 50 years,” joked Samper.

After the unveiling of the bare stone, the diamond was taken back to a secure room until the display area was cleared of cameras, press and staff.

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Diamond mining is not forever, SAfrica learns

By Fran Blandy (AFP)

KLEINZEE, South Africa — The glittering diamonds are almost gone and as the lustre fades on South Africa’s Diamond Coast, desperate ghost towns are left clinging to the last signs of life.

The heyday of diamond mining may be over, but the restoration of a once-pristine landscape along the country’s west coast should turn this wasteland of scarred earth into a tourist paradise.

Isolated under strict security for 80 years of mining, towering mine dumps reach hundreds of metres into the air along the coast, the site of one of the most ambitious mining restoration projects to date.

It’s hard to believe it by looking at the area now. The sole customer in a supermarket on a recent day in one of the mining towns, Kleinzee, said the industry has left it looking as if a “nuclear bomb was dropped on it.”

Since 2007 the world’s leading diamond company De Beers has drastically cut operations at its Namaqualand mines as the precious gem runs out, reducing staff from about 3,000 to 250.

Globally, known diamond reserves are expected to run out in 30 years.

Kleinzee, located about 600 kilometres (370 miles) north of Cape Town in the country’s biggest and most sparsely populated province of Northern Cape, is entirely owned by the diamond giant.

Schools, recreation centres and houses stand mostly empty.

Its mine has already shut down and residents wait desperately for officials to proclaim an end to its life as a privately owned mining town so individuals can buy homes themselves and try to breathe life back into business.

“All my friends lost their jobs. This is a mining town, what must they do here?” said local supermarket owner Ann Engelbrecht, whose sales have dropped 60 percent with only a trickle of tourists and locals sustaining her.

She took over the Spar in 2007 after working for De Beers since 1984, and says she has already had two heart attacks from the stress, making opening hours ever later and shutting down completely over weekends.

“It is just not worth it anymore. Business is so bad but I really believe if the town is proclaimed it will get better.”

De Beers, grappling with how to leave the town, is partnering with conservationists to reinvigorate the area through tourism, fish farming and other industries.

The project highlights increasing concerns about the environmental footprint left by mining and the responsibility of companies to mitigate it.

Gert Klopper, De Beers Namaqualand spokesman, says the company hopes the project will improve the image of the diamond industry, long blighted by conflict and violence.

“I think it’s the first time anywhere in the world that it (restoration) has taken place on such a large scale,” he tells AFP of the 463 million rand (56 million dollar, 40 million euro) project.

De Beers owns some 10 percent of South Africa’s 2,500-kilometre coastline, much of which has been extensively mined.

Conservation experts are now busy filling gaping holes and transplanting sensitive plant species to restore the vast plains to their former glory.

“The succulent Karoo is one of only two arid hotspots in the world with more than 4,500 plant species. The whole of Europe doesn’t have the same number of plant species,” says environmental officer Werner Nel.

Klopper notes that while some 10,000 hectares (25,000 acres) have been mined, a total of 90,000 hectares were restricted from the public for decades, meaning “huge tracts of land have been pristinely preserved.”

Thick and varied vegetation which comes alive with wildflowers in spring stretches for miles to sandy white dunes and idyllic beaches ideal for surfing.

With the rest of South Africa’s coast overdeveloped, it is hoped a new tourist attraction will be created along with hundreds of jobs in the most isolated corner of the country.

Sea water pumps designed for mining are now helping fill the pits, which are being turned into oyster and abalone farms.

Already exposed bedrock is being eyed for nearly 100 wind turbines along the wind-blown coastline — to create much needed renewable energy in the power-strapped country.

Other plans are underway to create land art, a marina, seawater greenhouses and hiking trails, and even to turn one massive pit into a concert venue.

“It will take 10, 20, 30 years to get to the point that you can’t see mining happened here,” says Andre Meyer of the Nurture, Restore, Innovate project which is restoring the land for De Beers.

Copyright © 2009 AFP. All rights reserved.

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Vol. 8.8 Money Changes Everything

It’s August 15, 2009. I’d like to share with you a short story from Bits & Pieces’ August 2009 issue by Rick Beyer.

“When Rick Beyer was eight years old, he accompanied his mother and grandmother on a shopping trip. Afterward, they stopped by a fancy hotel for lunch. Beyer ordered Salisbury steak which was served with a side of peas.

Beyer didn’t like peas. And he never ate them whenever or wherever they were served. His grandmother noticed that he was avoiding them and said “Eat your peas.”

To which his mother responded, “Oh, leave him alone. He doesn’t like peas.”

But his grandmother wouldn’t let it go and offered her grandson a deal, “I’ll give you five dollars if you eat all of your peas.”

Now this thoroughly outraged Beyer’s mother. She never forced her son to eat things he did not like-and she probably didn’t appreciate her mother’s interference. But to a young boy-oblivious to the nuances of parenthood and usurped authority-the promise of five dollars outweighed an aversion for certain vegetables. Beyer accepted the bribe. He choked down the peas as his grandmother glared at him, and his mother glared at both of them.

Weeks later, Beyer’s grandmother left to visit with other family members and, more likely, muscle in on uncharted parental territory there. That night, Beyer’s mom fixed one of his favorite meals-meat loaf and mashed potatoes. She also served a huge, steaming bowl of peas. She spooned a generous portion of peas onto his plate and said” You ate them for money. You can eat them for love.”

There was nothing he could say to defend his dislike for peas. That five-dollar deal completely lacked any of the brilliance it had on the day it was made. The fact that the money was long gone only made matters worse.

And so the moral of this story is: Don’t do for money what you won’t do for love. But there’s another equally important lesson to be learned here and that is: Mom always wins.

Now that Beyer is grown he swears he still hates peas, but doesn’t dare say anything to his mother when she serves them.”



Vol. 8.7 Jail Bird Rocks

It’s July 2009. I’d like to share a little story that one of our clients recently shared with us. By the end of it, I think you see that sometimes a bird in the hand is NOT better than two in the bush and to what lengths the world will go through to get their hands/beaks on a Diamond Cutters International diamond.

Jail Bird Rocks

"We were in the Dominican Republic for the wedding of my college friends. It was a lovely morning, and we decided to start the day off with a hot stone massage at the resort’s spa. Outside of the spa were two beautiful parrots, one male, one female, who attracted the local tourists with their calls of “Hola” and their spirited giggles. As we took time to observe the birds, another spectator mentioned that one of them was looking for someone’s arm to climb upon. Erica, being adventurous, decided that it was only right for her to offer her arm to one of the parrots. Little did she know what this bird really had in mind! The parrot slowly made his way up her arm. As he found a comfortable spot on her arm, a voice in the background said, “Wow, she’s the brave one!” It seemed as if the parrot became restless, because it wasn’t long before he was pacing up and down Erica’s arm. He finally made his way back down her arm and relaxed, or so we thought. Turns out, the parrot only wanted to be closer to the shiny bling on her finger… yes, he had his eyes on the diamond! Thinking that the parrot was ready to climb off her arm, everyone was laughing and enjoying the scene until seconds later when the parrot suddenly grabbed and began clutching and squeezing the diamond of Erica’s engagement ring in its beak. (Yes, that hurt!) With all the excitement, a crowd started to make its way to the action. After about 20 minutes of struggling, pleading, and attempting to trick the parrot in any way imaginable, Erica found a way to release her finger from its diamond death grip. Happy that she had finally gotten her finger away from the parrot, she was relieved… until she actually took a look at her finger. The band of her engagement ring was still there, but… the diamond was gone! Yes! The diamond was gone! Absolutely shocked, Erica let out a scream… OH MY GOD! The diamond is gone! At that time, I felt my jaws drop to the ground as I made my way towards the parrot for dissection! Freaking out, we were all trying to figure out how to get the diamond out of this parrot’s mouth before he dropped it, or heaven forbid, swallowed it. I put my hand towards the parrot’s mouth and he bit me twice! He was busy trying to chew the diamond, as if it was birdseed! At that point, I began to feel as if it was the end of the VS! By then, it was absolute panic! One of the local workers came over to assist by distracting the parrot with a stick. Needless to say, their trick didn’t work. The women inside the spa also came out to provide their assistance which only ruffled the parrot’s feathers even more. At this time, the female parrot began to become very protective of her male counterpart as he was trying to crack the diamond in his mouth. The only sign of hope was the fact that we could see the parrot rolling the diamond in his mouth around as he continued to try to crack it open. With a distractive move, someone somehow made the parrot turn his head in the opposite direction quickly causing the diamond to drop out of his mouth. Whew! Big sigh of relief! But all was not well! Satisfied that the diamond was no longer in danger of being swallowed, problem #2 was right around the corner! The diamond had fallen right into the crack of a coral reef textured water basin that the birds were sitting on. After even more mayhem with people attempting to remove the diamond with lovely objects such as screwdrivers and ink pens, the ladies from the spa provided us with tweezers to carefully retrieve the diamond out of the crevice. Finally the diamond was back in our hands, with much relief and satisfaction. And after all that stress, it was only right that we had one of the best massages ever!"

Love, Fred

Divorce hurts health even after remarriage

Study: Finding a new partner isn’t enough to reverse physical, mental toll

By Jeanna Bryner


updated 1:56 p.m. CT, Mon., July 27, 2009

Divorce can wreak havoc on a person’s health, even after remarriage, a new study finds.

Scientists have known that marriage can boost a man’s health and augment a women’s purse. The new study shows that divorce or losing a spouse to death can exact an immediate and long-lasting toll on those mental and physical gains.

“That period during the time that this event is taking place is extremely stressful,” said study researcher Linda Waite, a sociologist and director of the Center on Aging at the National Opinion Research Center at the University of Chicago. “People ignore their health; they’re stressed, which is itself a health risk; they’re less likely to go to the doctor; they’re less likely to exercise; they’re sleeping poorly.”

It turns out, once you have tarnished your health, it’s hard to snap back, even if you tie the knot again.

“Remarriage helps. It puts you back on a healthy trajectory,” Waite told LiveScience. “But it puts you back on a healthy trajectory from a lower point, because you didn’t take care of yourself for a year.”

Finding that divorce and spousal death had similar impacts on a person’s health suggests divorce operates like a traumatic event in one’s life, according to Waite.

Mark Hayward of the University of Texas at Austin, who was not involved in the study, agreed.

“The acuteness of stress surrounding a divorce could operate a lot like a trauma as opposed to years and years of low-grade stress,” said Hayward, who is also the director of the university’s Population Research Center.

The new study “suggests much of health can be altered by these major turning points in one’s life, like divorce, from which one doesn’t recover,” Hayward said.

Divorce prognosis

Waite and Mary Elizabeth Hughes of the Johns Hopkins Bloomberg School of Public Health in Maryland analyzed data collected from nearly 9,000 adults ages 51 to 61 who took part in the nationally representative Health and Retirement Study.

Overall, about 20 percent of the participants were remarried, meaning they had previously been divorced or widowed, the researchers will report in the September issue of the Journal of Health and Social Behavior. And nearly 22 percent had previously been married but hadn’t remarried. Less than 4 percent were never married.

Results showed that those who had been divorced or widowed suffered from 20 percent more chronic health conditions, such as heart disease, diabetes or cancer, compared with individuals who were currently married.

Other findings included:

People who never married reported 12 percent more mobility limitations, such as trouble walking or climbing stairs, than married individuals.

People who never married were 13 percent more likely to show signs of depression than their married counterparts.

Individuals who remarried reported an average of 12 percent more chronic conditions and 19 percent more physical limitations compared with the continuously married. No difference in depression was found between these two groups.

“Some health situations, like depression, seem to respond both quickly and strongly to changes in current conditions,” Waite said. “In contrast, conditions such as diabetes and heart disease develop slowly over a substantial period and show the impact of past experiences, which is why health is undermined by divorce or widowhood, even when a person remarries.”

What’s a couple to do?

The results don’t mean spouses should stick together even when the going gets really tough. But during a divorce or after the death of a spouse, people need to make sure to focus on their health, Waite said.

Hayward notes, however, that the results give averages and that some divorces may do a body good.

“If you have a high-conflict, abusive marriage, divorce can be a relief,” he said during a telephone interview. “I would never recommend that people in high-conflict, abusive marriages stay in them.”

Rather, support during divorce might be key to better health outcomes.

“I’m just suggesting that if there is any room for policy it is to make [divorce] less adversarial and provide more support for those going through the divorce process,” Hayward said.

Click here for original article.

Christie’s to sell Annenberg’s 32-carat diamond

NEW YORK (Reuters Life!) – A giant gem will hit the auction block in New York this autumn with the sale of the 32-carat emerald-cut Annenberg diamond, which is expected to fetch as much at $5 million, Christie’s said on Wednesday.

The flawless ring-mounted diamond, owned by philanthropist Lee Annenberg, widow of publishing magnate Walter Annenberg, leads the auction house’s magnificent jewels sale on October 21.

“Gems of this size are extremely rare, and their presence on the market is always an important event in the world of diamonds,” said Rahul Kadakia, Christie’s head of jewelry.

“This gem’s impeccable color, clarity, and polish as well as its prestigious provenance will attract jewelry collectors from all over the world.”

Annenberg, who died in March aged 91, served as chairman and president of the Annenberg Foundation after the death of her husband, a one-time U.S. ambassador to Britain who started the foundation to fund nonprofits, education and the arts.

Annenberg also served a chief of protocol during the first term of President Ronald Reagan.

The gem will go on tour ahead of the sale with stops in Geneva, London, Hong Kong, Los Angeles and New York.

In December the 35.6-carat Wittelsbach blue diamond smashed expectations and sold for $24.3 million, which experts said was consistent with rare and colossal diamonds fetching especially strong prices during times of economic woe.

(Reporting by Chris Michaud, editing by Michelle Nichols and Patricia Reaney)

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New crackdown on Zimbabwe diamond miners

By KITSEPILE NYATHI, NATION CorrespondentPosted Wednesday, July 15 2009 at 12:41

HARARE, Wednesday

Zimbabwe is preparing to re-launch a military crackdown on illegal diamond miners in the eastern part of the country, risking an international ban on its precious stones.

Only a fortnight ago, the Kimberly Process (KP) the international diamond certification group gave the Zimbabwean government up to next week to demilitarise the area.

A KP team led by Liberian deputy mines minister Mr Kpandel Fiya dispatched to investigate reports of human rights abuses at the Chiadzwa diamond fields concluded that security forces were looting diamonds and committing atrocities against civilians.

The team, which will release its final report this month end, also recommended that the soldiers must be withdrawn immediately.

But state media reported: Operation Hakudzokwi (You don’t return) which was jointly carried by security personnel to restore sanity at Chiadzwa diamond fields is bouncing back bigger and more re-invigorated to deal once and for all with illegal diamond dealers and panners, says the governor and resident minister for Manicaland province, Cde Chris Mushowe.

Mr Mushowe who is a strong President Robert Mugabe ally was said to have given a strong warning to illegal diamond dealers and panners to stop forthwith their unlawful activities as they will have no-one but themselves to blame when the operation is reinvigorated.

At the height of the operation that began in August last year and claimed hundreds of lives according to human rights groups, Mr Mugabe’s spokesman Mr George Charamba said the troops were employing shock therapy.

Last month, the New York based Human Rights Watch said 800 soldiers were deployed and villagers were forced to reclaim gullies with their bare hands. The injured were denied medical care and victims were reportedly buried in mass graves.

The government said there was no evidence to back the claims. Mr Fiya told Zimbabwe’s Mines Minister, Mr Obert Mpofu at the end of the KPs mission that villagers recounted tales of senseless violence.

Our team was able to interview and document the stories of victims, observe their wounds, scars from dog bites and batons, tears and on going psychological trauma, Mr Fiya said.

“I am from Liberia Sir, I was in Liberia through out the 15 years of civil war and I have experienced too much senseless violence in my lifetime, especially connected to diamonds.

“In speaking with some of these people, Minister, I had to leave the room. This has to be acknowledged and it has to stop.”

University of Zimbabwe political scientist Mr Eldred Masunungure said the military was not likely to leave the diamond fields because influential people from Mr Mugabe’s previous administration were benefiting from the disorder.

It is a political minefield because there are powerful forces that are being touched, he said.

The Reserve Bank of Zimbabwe says if properly the Chiadzwa diamonds can generate up to US$200 million a month for the bankrupt government.

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‘Organic’ label’s integrity under fire

By Kimberly Kindy and Lyndsey Layton

The Washington Post

updated 4:20 a.m. CT, Fri., July 3, 2009

WASHINGTON – Three years ago, U.S. Department of Agriculture employees determined that synthetic additives in organic baby formula violated federal standards and should be banned from a product carrying the federal organic label. Today the same additives, purported to boost brainpower and vision, can be found in 90 percent of organic baby formula.

The government’s turnaround, from prohibition to permission, came after a USDA program manager was lobbied by the formula makers and overruled her staff. That decision and others by a handful of USDA employees, along with an advisory board’s approval of a growing list of non-organic ingredients, have helped numerous companies win a coveted green-and-white “USDA Organic” seal on an array of products.

Grated organic cheese, for example, contains wood starch to prevent clumping. Organic beer can be made from non-organic hops. Organic mock duck contains a synthetic ingredient that gives it an authentic, stringy texture.

Relaxation of the federal standards, and an explosion of consumer demand, have helped push the organics market into a $23 billion-a-year business, the fastest growing segment of the food industry. Half of the country’s adults say they buy organic food often or sometimes, according to a survey last year by the Harvard School of Public Health.

Expanding market

But the USDA program’s shortcomings mean that consumers, who at times must pay twice as much for organic products, are not always getting what they expect: foods without pesticides and other chemicals, produced in a way that is gentle to the environment.

The market’s expansion is fueling tension over whether the federal program should be governed by a strict interpretation of “organic” or broadened to include more products by allowing trace elements of non-organic substances. The argument is not over whether the non-organics pose a health threat, but whether they weaken the integrity of the federal organic label.

Agriculture Secretary Tom Vilsack has pledged to protect the label, even as he acknowledged the pressure to lower standards to let more products in.

In response to complaints, the USDA inspector general’s office has widened an investigation of whether products carrying the label meet national standards. The probe is also looking into the department’s oversight of private certifiers who are hired by farmers and food producers and inspect products to determine whether they can use the label.

Some consumer groups and members of Congress say they worry that the program’s lax standards are undermining the federal program and the law itself.

“It will unravel everything we’ve done if the standards can no longer be trusted,” said Sen. Patrick J. Leahy (D-Vt.), who sponsored the federal organics legislation. “If we don’t protect the brand, the organic label, the program is finished. It could disappear overnight.”

Organic advocates and food marketing experts said the introduction this month of new “natural” products by an organics division of Dean Foods is the latest sign that the value of the USDA label has eroded. The yogurt and milk products will be distributed under the Horizon label and marketed as a lower-priced alternative to organic products.

Congress adopted the organics law after farmers and consumers demanded uniform standards for produce, dairy and meat. The law banned synthetics, pesticides and genetic engineering from foods that would bear a federal organic label. It also required annual testing for pesticides. And it was aimed at preventing producers from falsely claiming their foods were organic.

Corporate firepower

The USDA created the National Organic Program in 2002 to implement the law. By then, major food companies had bought up most small, independent organic companies. Kraft Foods, for example, owns Boca Foods. Kellogg owns Morningstar Farms, and Coca-Cola owns 40 percent of Honest Tea, maker of the organic beverage favored by President Obama.

That corporate firepower has added to pressure on the government to expand the definition of what is organic, in part because processed foods offered by big industry often require ingredients, additives or processing agents that either do not exist in organic form or are not available in large enough quantities for mass production.

Under the original organics law, 5 percent of a USDA-certified organic product can consist of non-organic substances, provided they are approved by the National Organic Standards Board. That list has grown from 77 to 245 substances since it was created in 2002. Companies must appeal to the board every five years to keep a substance on the list, explaining why an organic alternative has not been found. The goal was to shrink the list over time, but only one item has been removed so far.

The original law’s mandate for annual pesticide testing was also never implemented — the agency left that optional.

From the beginning, farmers and consumer advocates were concerned about safeguarding the organic label. In 2003, Arthur Harvey, who grows organic blueberries in Maine, successfully sued the USDA, arguing that the fledgling National Organic Program had violated federal law by allowing synthetic additives.

“The big boys like Kraft realized they could really cash in by filling the shelves with products with the organics seal,” Harvey said. “But they were sort of inhibited by the original law that said no synthetic ingredients.”

His victory was short-lived. The Organic Trade Association, which represents corporations such as Kraft, Dole and Dean Foods, lobbied for and received language in a 2006 appropriations bill allowing certain synthetic food substances in the preparation, processing and packaging of organic foods, creating conditions for a flood of processed organic foods.

Tom Harding, a Pennsylvania-based consultant for small local farmers and big producers, including Kraft, said that broadening the law has helped meet demand by multiplying the number of organic products and greatly expanded the amount of agricultural land that is being managed organically.

“We don’t want to eliminate anyone who wants to be a part of the organic community,” Harding said. “The growth we’ve seen has helped the entire organic food chain.”

Today, labels on organic infant formula boast that they include DHA and ARA, synthetic fatty acids that some studies suggest can help neural development. But according to agency records, when the issue came before the USDA in 2006, agency staff members concluded that the fatty acids could not be added to organic baby formula because they are synthetics that are not on the standards board’s approved list.

The fatty acids in formula are often produced using a potential neurotoxin known as hexane, prompting many organics advocates to conclude that the board would not approve their use if it took up the matter.

In a rare move, Barbara Robinson, who administers the organics program and is a deputy USDA administrator, overruled the staff decision after a telephone call and an e-mail exchange with William J. Friedman, a lawyer who represents the formula makers.

“I called [Robinson] up,” Friedman said. “I wrote an e-mail. It was a simple matter.” The back-and-forth, he said, was nothing more than part of the routine process that sets policy in Washington.

In an interview, Robinson said she agreed with Friedman’s argument that fatty acids were not permitted because of an oversight. Vitamins and minerals are allowed, but “accessory nutrients” — the category that describes fatty acids — are not specifically named.

As for hexane, Robinson said the law bans its use in processing organic food, but she does not believe the ban extends to the processing of synthetic additives.

“We don’t attempt to say how synthetic products can be produced,” she said.

Manufacturers say the fatty acids are safe and provide health benefits to infants.

“We test every lot that comes out for hexane, and there is no residue,” said David Abramson, president of Maryland-based Martek Biosciences, which produces the fatty acids used by formula companies.

‘Illegal rulemaking’

Several groups have filed complaints with the USDA saying they think that the inclusion of the fatty acids in organic products violates federal rules and laws. And they say that Robinson did not have the authority to make the decision on her own.

“This is illegal rulemaking — a complete violation of the process that is supposed to protect the public,” said Gary Cox, a lawyer with the Cornucopia Institute, an organics advocacy group.

Cox and others make the same argument about other decisions by Robinson and several members of her staff.

In 2004, Robinson issued a directive allowing farmers and certifiers to use pesticides on organic crops if “after a reasonable effort” they could not determine whether the pesticide contained chemicals prohibited by the organics law.

The same year, Robinson determined that farmers could feed organic livestock non-organic fish meal, which can contain mercury and PCBs. The law requires that animals that produce organic meat be raised entirely on organic feed.

After sharp protests from Leahy, Consumers Union and other groups, Ann Veneman, then agriculture secretary, rescinded these and two other directives issued by Robinson.

The orders were signed by a staff member, but Robinson took responsibility, saying she had made the decisions unwisely without consulting organics experts, certifiers or the standards board.

“I failed, and take this as a learning experience and do not want it to happen again,” she told board members in 2004.


Earlier this year, however, Robinson issued a series of directives without consulting experts, certifiers or the board. She said that because the issues were urgent, including one on food safety, she had to act quickly.

In an interview, Robinson said she believes the federal program’s main purpose is to “grow the industry,” and she dismissed controversies over synthetics in organic foods as “mostly ridiculous.”

Joe Smillie, a board member, said he thinks that advocates for the most restrictive standards are unrealistic and are inhibiting the growth of organics.

“People are really hung up on regulations,” said Smillie, who is also vice president of the certifying firm Quality Assurance International, which is involved in certifying 65 percent of organic products found on supermarket shelves. “I say, ‘Let’s find a way to bend that one, because it’s not important.’ . . . What are we selling? Are we selling health food? No. Consumers, they expect organic food to be growing in a greenhouse on Pluto. Hello? We live in a polluted world. It isn’t pure. We are doing the best we can.”

Under Robinson, the National Organic Program has repeatedly opted not to issue standards spelling out how organic food must be grown, treated or produced. In 65 instances since 2002, the standards board has made recommendations that have not been acted upon, creating a haphazard system in which the private certifiers have set their own standards for what products can carry the federal label.

The agency has not acted, for example, on a 2002 board recommendation that would answer a critical question for organic dairy farmers: how to interpret the law requiring that their cows have “access to pasture,” rather than be crowded onto feedlots. The result has been that some dairy farms have been selling milk as organic from cows that spend little if any time grazing in open spaces.

“This is really a case of ‘justice delayed is justice denied,’ ” said Alexis Baden-Mayer, national political director for the Organic Consumers Association. “The truly organic dairy farmers, who have their cows out in the pasture all year round, are at a huge competitive disadvantage compared to the big confinement dairies.”

Robinson has blamed the delays on the program’s small staff, saying that “we have to prioritize.”

Without specific standards, the wide discretion given to certifiers has invited producers and farmers to shop around for the certifiers most likely to approve their product, consumer groups say.

Liquid fertilizers

Sam Welsch, president of the Nebraska-based OneCert, said his company this year has lost as many as a dozen fruit and vegetable farmers seeking other certifiers that allow the use of certain liquid fertilizers, which most organics experts believe are prohibited by organics laws because they are unnaturally spiked with high levels of nitrogen.

“The rules should be clear enough that there is just one right answer,” Welsch said.

Consumer groups and organics advocates are hopeful that the Obama administration will bolster the program. In his proposed budget, the president has doubled resources devoted to organics and installed USDA leaders who support change.

Vilsack’s deputy, organics expert Kathleen A. Merrigan, told consumer groups three weeks ago that she intends to heighten enforcement. Merrigan helped write the original organics law and get the federal program off the ground in 2002.

And Vilsack said he wants to protect the organic label. “That term, ‘organic,’ needs to be pure,” he said in an interview. “You can’t allow the definition to be eroded to where it means nothing. . . . We have to fight against that kind of pressure.”

Still, at the standards board’s meeting last month, Chairman Jeff Moyer noted the growing tension. “As the organic industry matures, it is becoming increasingly more difficult to find a balance between the integrity of the word ‘organic’ and the desire for the industry to grow.”

Click here for original article.

Who Am I, Really?

Remove everything you think you know about me, because that’s not who I am underneath it all.

Take away all the labels and jargon, and all the things that I do. Take away what I look like and all my physical attributes, and what is left?  ME.  The ‘me’ of my soul. My spirit. The part of me that was, before I physically became all those labels and jargon and things that I do. The part of me that had a physical beginning, but will know no spiritual end.


But how do I find and recognize that?


First I must get myself alone and simply observe. No labels or physical attributes allowed. No jargon, no likes or dislikes, no attitudes or pre-conceived notions. No expectations or societal demands.


Then I have to keep removing layer upon layer of descriptors and explanations and experiences that have covered up the core of my non-physical identity.


What is at the core? ME


But… Who am I?


I am love, and energy, and creativity. I am pure, blinding, compulsive joy that knows no bounds and spreads far and wide.


Simultaneously infinitesimally small, and beyond comprehensibly vast, who I am has no container if you remove my physical, societal confines.


And when “I” meets “You”

and love meets love

and energy meets energy

and creativity meets creativity

and joy meets joy


in that chemistry

ME becomes WE


So who are WE?  


WE are an explosive force to be reckoned with, and the more WE pool together, our influence sets off such a cacophony of incredibly positive energy that its chain reaction reaches farther than we will likely ever know.


~Donna R. Carter

Busting Our ‘Buts’

by Donna R. Carter

When thinking about what you want to do, and what you are capable of doing, does your inner voice whine with all the reasons why you can’t?


“But… You don’t understand…”


We all learned how to whine at a very early age. Just think about the numerous toddler temper tantrums you’ve no doubt encountered at one time or another in the checkout lane at the grocery store!


Older kids whine about homework. Or having to do chores and take on additional responsibilities around the house. “Do I have to??? and they’re always so good at finding something else to do – some “valid” excuse – to avoid what needs to be done.


Whining extends into adulthood when we complain about all the things we don’t like about our jobs, our home situation, where we live. We bemoan our fates. Why can’t we do what we want to do, or be what we want to be, or live where we want to live? 


Well? Why can’t we?  I’m sure we can all come up with some classic excuses.


“But…  I have health issues… It’s unrealistic. It’s too hard. Too ‘pie in the sky’.”


            Nick was born with no arms and no legs – just a little flipper-like foot at the base of his torso – and yet he is a motivational speaker! He chose not to live dictated to and intimidated by his disabilities.  He chose to use those very disabilities to make his life work, and to enhance the lives of others.

Cancer had emaciated Judi, in her mid-fifties. Even a slight cough was sufficient to break a rib and cause desperate pain. She was dying. And yet she didn’t let that stop her from taking her little toddler granddaughter to Disney World, or dancing for her as she played piano in their living room. She chose to get past cancer’s obstacles with love and unselfishness, leaving a legacy of incredibly positive inspirational memories behind when her body did, finally, succumb to her illness. She is not remembered for giving in, or for being sick. She is remembered for what she overcame despite the odds.


            Joni was your normal, active, athletic teenage girl when she had a diving accident that made her a quadriplegic. Though she struggled desperately and suffered through some deep depression, she learned how to make do with what she had.  She became an author, and an artist – holding her pen, drawing or painting implements in her mouth and directing them with her tongue.


            Forbes magazine tells us that almost two-thirds of the world’s 946 billionaires made their fortunes from scratch, relying on grit and determination, and not good genes.  So what makes some people thrive while others wallow seemingly helplessly in the mire? Why do some people seem to have caught the proverbial brass ring, while others have to get off the ride and go back to the end of the line again?


It’s a matter of mind set. It’s all in the attitude.  Do you really want to succeed in being the best you can be? 


I’m sure it would have been simpler for Nick to stay behind the scenes and never venture out. He had to face the very real possibility of ridicule and rejection, and the potential for failure at every turn. Judi could have much more easily allowed herself to be overwhelmed by the pain of her cancer and shut herself off from the world. Joni could have capitulated to the temptation of sinking into and dying of self pity.


“But… I’m too old. I’m not pretty enough. I don’t have the right background. Life isn’t fair: Why set myself up for disappointment?  I’m not good enough.”


In early April, the internet was all abuzz with Susan, who was never before really given the chance to let her voice shine. People thought she was ‘too old…’ ‘too frumpy…’ She sounded ‘too  backwoods’ when she talked. She lacked social skills. Surely she had nothing to offer?  Susan  didn’t let the judgment of others redirect her. She boldly stepped into the spotlight and let her light shine: Her beautiful voice reduced the world to tears. She just relentlessly followed her dream. Because of that choice, Susan is now not only seeing that dream fulfilled, she’s inspired millions of people, and taught millions more that one should never, ever judge a book by its cover.


“But…  It’s all who you know. I’m not in the right circles… “


Who you know may know someone who knows someone else. It has been said that everyone in the world is separated by only six people.  Who you know is good – and you can always get to know more people. If you just sit at home and whine about it, how are you going to meet anyone at all?


But it’s more than who you know. It’s who you are. It’s about what you do with who you are. It’s about being true to yourself.  It’s about finding your passion and letting yourself burn with the fuel it gives you. If you’re on fire – if you’re passionate – you’ll gather a crowd, and in that crowd, or the next… or the one after that… there will be someone in that circle you want to be in who will catch that fire, and the connection will be made.


But… I don’t have TIME...


Time is never on your side. Every moment you don’t move forward in your lives, is a moment wasted.  Every whine is a misused opportunity that you can never get back.


            Evan was so bogged down with the responsibilities he felt he had to fulfill -just to get by-  that he escaped, for emotional and stress relief, by playing computer games. At any given time during the day, he could be found at his desk, playing computer games. If it was brought to his attention, however, he justified it.


                        “But… THAT is my only means of having fun!…” 


Wait a second. What? How much time would Evan have to actively pursue his dream [ie. Have Fun], if he didn’t procrastinate?  How focused are you on doing your best? If you really want to accomplish something, why are you putting it off? It takes effort!


What do you do from the moment you get up, to the moment you go to bed. Is how you are using your time improving your life, and enhancing and uplifting the lives of those around you? Or do you find yourself dreading the mountains of things you have to do, and then wasting time, in order to avoid doing the very things that are taking up “so much of your time”?


            Evan was King of his own Whinedom. He was in familiar territory, and he firmly believed in the idiom “Better the devil you know than the devil you don’t.”


Until he would choose to step outside his comfort zone and make some changes in his perspective and priorities, he would never see the rest of the world – or the potential he had in it – through anything but the distortion of his whine-colored glasses.


Have you ever noticed that the most successful people you know seem to be extraordinarily busy, and yet still manage to have time for interacting with friends and reading, and leisure activities? Have you ever wondered how on earth they could possibly have a moment to spare with their plate so full? But they do. They have learned to prioritize their time. They have put their work and leisure time into a symbiotic relationship where each feeds their ability to do the other even better.


“But … What will people think of me while I’m trying to accomplish this? People who are important to me are unsupportive, unenthusiastic or downright discouraging the process!”


A myriad of reasons cause people not to be supportive of change.  It could be that they’re suffering the same doubts about their own potential that you have had about yours, but they aren’t to the point of making a break from the negativity and pushing forward in their own lives. They may fear the changes you are making in your own life will require things of them that they are not willing or able to provide. It’s time for you to surge ahead and let your focus and tenacity be the example for them. You may have previously created a pattern of starting and quitting, that has left them having to pick up the pieces one too many times.  This time the pressure is on you to prove that you mean it. 


Find and surround yourself with people who are supportive. This doesn’t mean you abandon those you love and those who love you. It merely means you stand on your own two feet, rather than relying on them to provide what you need.  Find a way to get your own needs met, in order that you don’t drain their already-depleted resources.  As you proceed forward, they will observe the shift in focus and see the improvement in your attitude and the positive changes in your life and your attitude. In the long run, showing them your determination, you will more than likely not only gain their support, but their respect as well.


“But … What if I can’t actually do it after all? What about all those things I am afraid of doing that I would have to do to get there?”


We fear getting a chance at total success and failing. It’s easier to be good at average and knowing we can be better, than trying hard and failing miserably at something we always felt we wanted and could do.


We fear not being good enough to do it… or doing it wrong, even when given all the tools – because at that point, what do we go back to? What we used to do? We weren’t happy with it before, why would we be happy with it now? We have to figure out what we’ve learned in the process of getting to where we got, and either find a new passion, or reroute the passion we’ve been following.



            Eunice Kennedy Shriver traveled the U.S. in the late 50s and 60s, visiting institutions for children with intellectual disabilities. Having grown up with sports being an integral part of her life, she was disturbed to note that children with intellectual disabilities were being left out of athletics in school. They were not even being allowed to attend summer camps. She took it upon herself – in her own back yard – to open up a summer camp for children with intellectual disabilities. That first summer, in 1958, there were 75 children who attended the camp. One camp grew to five in and then by 1968 five had turned into 40 across the country.  Her passion for the cause didn’t waiver and those forty camps became the nucleus of the Special Olympics. By following her passion -by not giving up- she changed the lives of more people than she probably will ever know.


Many people are afraid they’ve set their sites too high. Afraid that once they reach their potential, they will realize they weren’t capable of being as good as they wanted to be. But you can’t be so focused on the process that you lose sight of what’s going on within the process. Find people with the skills you wish to acquire. Ask questions! Admire their work! Study what they did to get where they got, and apply those skills and attributes to yourself and what you are attempting to do.


But… The beliefs I was raised with conflict with what I feel I would have to do in order to become who I believe I am, and I feel guilty with every step I try to take! I just know I will disappoint those I love, if I follow through. They won’t like the results, because it will be in direct opposition to their beliefs.”


In the long run, are you truly willing to be false to yourself, in order to please others?  When it comes right down to it, then, are they not loving a lie?  Well-known author, Hugh Prather put it well when he said “Some people are going to like me and some people aren’t, so I might as well be me.  Then, at least, I will know that the people who like me, like me.”


  You cannot be true to yourself, if you are lying to others about who you are. If you are true to yourself and others cannot handle it, you must realize, lovingly, that their inability to accept you is their problem, and not yours. If you can help them handle it, then that’s great – but being untruthful is only feeding their fantasy about who they’d like you to be, and it doesn’t allow them to learn to grow and love and accept what may not be what they want, but is who you are.


But… Their problem is my problem if I created it.


On the other hand, you may find that, in being true to yourself, others will come to accept and love you even more. There may be those who cannot get past the disappointment, but as long as you are willing to be loving and accept where they are coming from (even if you don’t choose to change for them) their choice to let it become a rift between you will be their choice. You need not let it be yours, or drag you down.  At least you know you are being truthful, and they know who you are, and you will know, if and when they choose to accept you, that they are accepting the real you.


                        “But… That hurts, if they reject me, because I love them.


If you keep yourself wrapped up “safely” in a cocoon of untruths, are you really benefitting anyone, including yourself? If these people reject you for being who you are, at least you will know the truth from them as well. Far better a painful truth, than a positive lie. You are then, at least, dealing with reality. Someone once told me, “There is no growth without risk, or pain.” 



Some of our excuses feel very legitimate, but does that mean we cannot figure out a way around the obstacle?  Everywhere we look, if we’re willing to look, there are people in the world who have overcome every obstacle we can put forth in our excuses as to why we cannot do what we are potentially capable of.  But they did it…


Do we really want to achieve these things we complain that we are unable to achieve for whatever reason? Or are we lying to ourselves? If we gave it any serious thought, and we truly wanted to achieve our goals, we could just as readily argue against our very own excuses. 


So, let’s be honest. Let’s take it that step further: What is really stopping us? Only ourselves.


Now that we’re past that acknowledgment, we have two options: Accept where we are, that we’ve chosen to be there, and stop whining and wishing, or Figure Out how to make the necessary changes in ourselves to become who we are capable of being and who we want to be. If we can’t figure it out, we need to find someone who can help us figure it out, so we can move forward.


   If we want ‘whiner’s rights,’ maybe we need to be putting forth our best efforts to get where we want to be.  But if we’re doing that … we won’t really have time to whine. We’ll be too busy finding solutions to the excuses. We will be too busy figuring out what we have to do to destroy, or at least diminish the obstacles – the excuses – that we have put in our own paths, so that we can continue to move forward.  We’ll be too busy getting there.


We have to admit how many of our excuses are our own walls (and then we must figure out why we are putting up those walls to prevent our own success!)


How strange, that we fight so hard to stay mediocre. What does mediocrity give us? We gain nothing from it.  It only makes us feel depressed and without hope. We are not content with who we are, but we resist change. We whine because it’s difficult, and because we have to use self discipline, and it will take a bit of effort to improve our lives. 


All change – Even good change, can be difficult and takes effort. Something you were once familiar with is being left behind for something new, and different, and unfamiliar. 


Becoming who you are capable of being is a lot more important than being comfortable with being average. Because… you’re not really comfortable with being average.  That you are comfortable with it, is part of  the lie.  Don’t accept that lie anymore. Expand your horizons, and step outside that comfort zone.  Burst the toxic bubble of mediocrity and untruth.


Don’t wait until Monday, or the first of next month. Do it now! Every day is a fresh start. Every moment is a brand new chance to be doing something positive! That means you have 60 opportunities this hour – 1,440 opportunities today — 10,080 opportunities this week – 43,680 opportunities this month – and 524,160 opportunities this year. WOW! What a lot of chances! Don’t waste a moment of opportunity to make the most of your time! Spend it doing your best! All that time, is time to become who you are meant to be!


Time to get off your ‘But’!

Digging in the dumps

May 28th 2009

From The Economist print edition

Diamonds are a luxury—but not to some of the world’s poorest who mine them

THE people of Sierra Leone’s Kono district, in the east of the country, know all too well about diamonds—for better and for worse. In the 1990s, the drugged-up rebels of the Revolutionary United Front controlled Kono’s mines by means of rape, murder and mutilation. When that bloody civil war ended in 2002, mining companies replaced the rebels but brought their own problems. The largest firm, South Africa-based Koidu Holdings, was pitted against locals over blasting schedules and environmental issues. Small-time local miners, little more than licensed freelancers prospecting by hand, were disappointed to find that most of the mines near the surface had been exhausted. The jobs, the volume of production and Kono’s cut of tax revenue from exports disappointed almost everyone. “Progress in Kono has not been commensurate with expectations,” admits Ibrahim Kamara, who runs a kimberlite project for Koidu Holdings.

Such are the growing pains of a nascent industry in a dirt-poor African country. Yet Sierra Leone’s diamond mining has shown promise. Exports ballooned from a mere $26m in 2001 to $141m in 2007. Taxes on diamond exports helped finance the country’s post-war reconstruction; a quarter of the 3% tax on sales paid by artisanal miners, as the local small-timers are known, is returned to the people who live around the mines. Bigger companies, such as Koidu Holdings, have negotiated profit-sharing schemes that will benefit the locals once the mines start making money.

But now that virtuous circle may be broken by the collapse in the past ten months of world diamond prices, which have plummeted by nearly one-third. The country will be lucky to export $50m-worth this year. From Australia to Botswana and Canada, the industry is in the doldrums. Over the past few months De Beers, until recently the world’s biggest diamond producer, has seen the value of its “sights”—carefully calibrated sales of rough diamonds to a handpicked club of buyers called “sightholders”—fall from an average of $650m to a recent low of around $150m. In response to collapsing demand, mining companies have been temporarily closing mines or reducing production. This does not hurt countries such as Australia and Russia all that much. But it squeezes poorer ones, particularly in Africa, very hard.

Earlier this year, for instance, De Beers temporarily shut mines in Botswana and Namibia that it owns in partnership with those states. At least three-quarters of the companies in Namibia’s young cutting and polishing industry have closed. “We are suffering quite severely because of job losses,” says Bernhard Esau, Namibia’s deputy minister for mines. In India, home to the largest diamond cutting and polishing industry in the world, at least 100,000 diamond polishers are out of work. America, where half of all polished diamonds are eventually sold, is importing less than half the volume of polished diamonds compared with a year ago. “Diamonds are not necessary to live or to survive. It’s a luxury product,” said Philip Claes of the Antwerp World Diamond Centre, the industry’s leading promotional organisation. “So it’s the first thing probably that consumers skip on their lists.”

But Sierra Leone relies on those consumers to help prevent it from slipping back into chaos. When Koidu Holdings temporarily halted operations and laid off 540 people, leaving only 60 in work, it was especially nerve-racking. For Kono has the highest concentration of former rebel fighters in Sierra Leone. Despite political stability and fairly harmonious elections since the war ended, the conditions that led to it still prevail. Back in 1991, the rebels gained early if short-lived support by arguing that a country as mineral-rich as Sierra Leone should give all its people a decent living. Yet it was at the bottom of the UN’s human-development index when the war started—and is still at the bottom. There is “a time bomb of frustrated, disenfranchised youth”, says Joan Baxter of Partnership Africa Canada, a charity.

The diamond slump may have reached its bottom. The De Beers latest sight, last month, was worth around $250m, up on previous months. Some mines in Botswana have cautiously resumed operations. In Sierra Leone, Koidu Holdings says it will rehire a few hundred workers as the market improves. None of this is a guarantee against unrest. But a return to the diamond-fuelled warfare of the 1990s seems unlikely soon. For one thing, even rebels would have trouble finding a market for ill-gotten gemstones at present.

Besides, the diamonds’ recent lack of lustre may bring unexpected benefits. Many artisanal miners are going back to farming. In a country where food prices have doubled in a year, this is welcome. And companies are looking for other minerals that Sierra Leone has in abundance, such as gold, bauxite and rutile, a mineral that is used—among other things—to brighten the whiteness in paint, plastic and paper. In the longer run, a bit of diversity may be healthy.

Click here for the original article.

The Last Days of Cubicle Life

Thursday, May. 14, 2009

By Seth Godin

When Frank Lloyd Wright unveiled the Johnson Wax Building in 1939, it showcased a new way of looking at work. One room, covering half an acre (0.2 hectare), was filled with women, lined up in rows, typing. Work didn’t necessarily mean loud, dirty factories, but it still involved sitting in orderly rows, doing orderly work for a finicky boss.

In order to understand what your workplace is going to be like in five or 10 years, you need to think about what your work is going to be like. Here’s a clue: employers no longer need to pay you to drive to a building to sit and type. In fact, under pressure from an uncertain economy, bosses are discovering that there are a lot of reasons not to pay you to drive to a central location or even to pay you at all. And when work gets auctioned off to the lowest bidder, your job gets a lot more stressful. (See pictures of cubicle designs submitted to The Office.)

The job of the future will have very little to do with processing words or numbers (the Internet can do that now). Nor will we need many people to act as placeholders, errand runners or receptionists. Instead, there’s going to be a huge focus on finding the essential people and outsourcing the rest.

So, are you essential? Most of the best jobs will be for people who manage customers, who organize fans, who do digital community management. We’ll continue to need brilliant designers, energetic brainstormers and rigorous lab technicians. More and more, though, the need to actually show up at an office that consists of an anonymous hallway and a farm of cubicles or closed doors is just going to fade away. It’s too expensive, and it’s too slow. I’d rather send you a file at the end of my day (when you’re in a very different time zone) and have the information returned to my desktop when I wake up tomorrow. We may never meet, but we’re both doing essential work. (See pictures of office cubicles around the world.)

When you do come in to work, your boss will know. If anything can be measured, it will be measured. The boss will know when you log in, what you type, what you access. Not just the boss but also your team. Internet technology makes working as a team, synchronized to a shared goal, easier and more productive than ever. But as in a three-legged-race, you’ll instantly know when a teammate is struggling, because that will slow you down as well. Some people will embrace this new high-stress, high-speed, high-flexibility way of work. We’ll go from a few days alone at home, maintaining the status quo, to urgent team sessions, sometimes in person, often online. It will make some people yearn for jobs like those in the old days, when we fought traffic, sat in a cube, typed memos, took a long lunch and then sat in traffic again.

The only reason to go to work, I think, is to do work. It’s too expensive a trip if all you want to do is hang out. Work will mean managing a tribe, creating a movement and operating in teams to change the world. Anything less is going to be outsourced to someone a lot cheaper and a lot less privileged than you or me.

Godin is a popular blogger (sethgodin.typepad.com) and the author of 12 international best sellers. His most recent book is Tribes

See which businesses are bucking the recession.

Click here for original article.

Blue Diamond Fetches Record Price

BBC News

A rare blue diamond has sold for a record 10.5 million Swiss francs ($9.5m; £6.2m) at auction in Geneva.

It weighs 7.03 carats, is smaller than a penny piece, and is one of only a handful of blue diamonds in existence.

The anonymous phone bidder has yet to name the gem, mounted on a platinum ring, auctioneers Sotheby’s said.

The diamond was found in Cullinan mine in South Africa last year, and its clarity was graded as flawless – the highest designation.

Auctioneer David Bennett said: “It is a new world record price for a blue diamond.”

It had a pre-sale catalogue estimate of 6.8 million to 10 million francs, excluding commission.

‘Beyond beautiful’

The hammer price excluding commission was 9.3 million francs.

The scarcity of the gems is in part down to the fact so few places in the world mine for blue diamonds.

Mr Bennett said: “For people who are looking to buy something that nobody else has, or somebody who wants something that is beyond beautiful, a blue diamond is going to be very difficult to find, so when they appear on the market, you have to have a go.”

The stones get their colour when the chemical boron is present during formation.

In May 2008 a 3.73 carat diamond was sold by Sotheby’s at auction for nearly $5m (£3.4m) setting the world record price per carat for any gemstone at auction.

Click here for original article.

Bonded Diamonds: Diamonds for the “Conceptual Age”

It’s April 7th, 10:40AM. Good morning or good _________(fill in the blank) wherever you are right now in the future. I say future because as I write this newsletter, it dawned on me that these words will not be received, heard, or read until sometime in the future, if ever! But I’ll press on anyway.

We do this all the time—talk, write, create, destroy hoping and praying to be noticed; hoping to be heard. When others give us compliments, we feel good; ignored we feel bad. Why do we give that power to others, the ability to affect us? Employed we have self-worth. Lose our jobs, we feel worthless. Why is our happiness dependent on others? How well do you treat yourself? You can be kind to yourself, you know? Some people say “I’ve been really beating myself up over ________ (fill in the blank). Really? Beating yourself up? Worrying? Complaining? As Doctor Phil would say, “How’s that working for you?” The solutions may be found in the new “Conceptual Age”.

The “Conceptual Age” is defined as an era of creativity, innovation and design. As Daniel Pink says in his book, The Whole New Mind,“Answers need more problems!” That’s what the “Conceptual Age” represents! It’s about being able to see the book, not just as a source of knowledge, but as a paperweight, a source of energy (burn it to stay warm), a hat, a bullet-proof vest or even a door stop. We need our answers to solve more problems. We need to see the book as more than just a book. A diamond can no longer be just a diamond—not in this day and age. We expect more from things. A toaster can’t just be a toaster! Any toaster can do that! It has to be a thing of beauty! Heck, it spends 99% of its time just sitting around doing nothing. It might as well look beautiful while it sits on your counter top! If you can’t see a toaster as art and art as toaster, you haven’t joined the “Conceptual Age”. You are still stuck in the “Information Age”, where everything was safe and linear. A problem had one solution. Very, very safe. Don’t want to get hit? Stop moving! Want to be safe? Be perfectly still! Quite the paradox. Static was the old safe. Momentum, frequency, vibration, sound, harmony and symphony are the new. Creating chaos to find order and center. This is the new reality. Our “Conceptual Age” fully bonded diamond now is beauty, durability, symmetry, meaning, value, story, safe haven, flexibility, liquidity, nest egg, college fund, retirement fund, rainy day fund, get-out-of-jail-free card, life saver, new car, new job, starting over, upgrade, downgrade, save a life, define a life, make a life, and more. Now quite simply a fully bonded diamond isn’t just carbon from the earth. A fully bonded diamond doesn’t just make a connection; it defines it. It expands it! It grows with you. It goes with you! It is a part of you! A fully bonded diamond, like true love, doesn’t come with rules, regulations, or limits! It is endless, indefinable, and unpredictable—it flows! Any diamond can take you from A to B. That’s yesterday’s Newtonian diamond. Only a fully bonded diamond can take you anywhere you want to go!

Yesterday’s diamond could only be a diamond—one that depreciated with time like a used car. Today’s fully bonded diamond is ready to be whatever you want it to be. As time goes by, maybe it will be a bigger diamond, or maybe you will transform it into a down payment on your dream home! Only a fully bonded diamond can be anything you want it to be because it is the only diamond in the world that is liquid!

Anybody can own a diamond. Not everyone can own the future!

P.S. Remember, “you are the master of your fate; the captain of your soul.” Invictus by William Ernest Henley.

by Fred Cuellar, author of the best-selling book “How to Buy a Diamond.” More questions? Ask the Diamond Guy®

De Beers’ output cut to create crunch in rough diamonds

2 May 2009, 2218 hrs IST, Melvyn Thomas, TNN

SURAT: While the Indian diamond industry hopes that demand for polished stones will improve in the coming months, the biggest diamond cutting and polishing hub of Surat is likely to face an acute shortage of roughs. Reason: World’s largest diamond producer De Beers has reduced its first quarter production by almost 91 per cent in 2009.

Surat imports an estimated Rs 30,000 crore worth of rough diamonds per annum 60 per cent is supplied by De Beers to its 30-odd siteholders having offices in Mumbai and Surat through its diamond marketing arm Diamond Trading Company (DTC). The reduction in the diamond production by De Beers will certainly translate into shortage of rough diamonds in the coming months.

“The reduction in diamond mining operation by De Beers is certainly going to create shortage of rough diamonds in the market. But we expect the upcoming Christmas season to bring some hope for the ailing diamond sector,” said a leading DTC sightholder.

As per the official data from Anglo American, a parent company that owns 45 per cent share in De Beers, the production fell 91 per cent in the first quarter of 2009 after the company decided to scale down its mining operation because of weak demand for rough diamonds, mainly from India and other diamond cutting and polishing centre in Israel, Japan, China, etc. The output declined to 1.1 million carats during the three months ending March 31, 2009, compared with 11.8 million carats in the corresponding period previous year.

De Beers responded by closing all its Botswana mines for six weeks and keeping two of its mines Damtshaa mine and Orapa No 2 closed until the end of 2009. Temporary suspensions of operation were also implemented at its Namibia, Canada and South Africa mines.

In light of lower market demand, De Beers reduced production at all its mines through a combination of production holidays and reducing shifts worked, allowing sales from existing inventories in order that sales demand was met.

De Beers mined 48.1 million carats of diamonds in 2008. With the scaling back of operations, the company expects a reduction of diamond output at its respective sites in Bostwana and Namibia by 60 and 50 per cent respectively.

Bharat Gosai, a leading diamond manufacturer, said, “The market has seen a slight improvement in the last one month. If this continues, then the demand for rough diamond is likely to increase before the Christmas season. However, the cut in the production is likely to impact the industry.”

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5-Star Stocks Poised to Pop: Harry Winston

By Brian D. Pacampara

Motley Fool

Based on the aggregated intelligence of 130,000-plus investors participating in Motley Fool CAPS, the Fool’s free investing community, Canadian diamond miner and retailer Harry Winston Diamond (NYSE: HWD) has earned a coveted five-star ranking.

With that in mind, let’s take a closer look at Harry Winston’s business, and see what CAPS investors are saying about the stock right now.

Harry Winston facts:

Headquarters (founded)Toronto, Canada (1980)Market Cap$322.1 millionIndustryPrecious Metals and MineralsTTM Revenue$609.22 millionManagementCEO Robert Gannicott (since 1999)CFO Alan Mayne (since 2008)Return on Equity (average, last three years)17.6%Dividend Yield4.8%CompetitorsBHP Billiton (NYSE: BHP)De Beers Consolidated MinesCAPS members bullish on HWD also bullish on:General Electric (NYSE: GE)Vale (NYSE: RIO)Freeport-McMoRan (NYSE: FCX)CAPS members bearish on HWD also bearish on:US Airways (NYSE: LCC)General Motors (NYSE: GM)
Sources: Capital IQ (a division of Standard & Poor’s), and Motley Fool CAPS. TTM = trailing 12 months.

Over on CAPS, 117 of the 118 All-Stars members who have rated Harry Winston — or 99% — believe the stock will outperform the S&P 500 going forward. These bulls include starrider78 and Pumpstick.

Last week, starrider78 noted that Harry Winston “owns 40% of the Diavik mine, with right of first refusal on the rest of the mine.” Our CAPS member concludes: “When the economy picks back up, this stock will rocket. They are heavily dependent on Forex at the moment, but that will change as the economy improves.”

In a pitch from January, Pumpstick tapped the valuation (which is even cheaper today) as a bargain hunter’s best friend:

Diamonds are forever (TM) but not at this price!Some luxury goods will not suffer as much as others during a recession. Harry Winston is a brand with a long history. Harry Winston has a great reputation known for quality and exclusivity and is the ultimate of diamond design.

There will always be costumers for their jewelry, and there will be a growing demand in China, Russia and the Middle East….

This stock has been beaten down way too much. Their earnings are exceeding expectations. They have a relative low amount of debt, and are trading way below intrinsic value.
What do you think about Harry Winston Diamond, or any other stock for that matter? Make your voice heard on Motley Fool CAPS today. More than 130,000 investors are waiting to hear what you have to say. CAPS is 100% free, so simply click here to get started.

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Ten Things To Buy Before The Economy Improves

By: Daniel Indiviglio (Forbes)

Washington, D.C. – Sadly, someday this recession is going to end.

After 17 months of steep decline, both the president’s Council of Economic Advisors and the Federal Reserve now believe the economy will begin to recover sometime in 2009.

Great news, to be sure. But it’s also a warning to consumers: The deals you’re seeing on everything from houses and cars to televisions and furniture won’t last forever. Luckily, for a host of goods and services, the sale of the century (literally) is still on.

The reason is simple: no buyers. Personal savings in 2008 were nearly six times greater than in 2005, amounting to $191 billion or 1.8% of the nation’s disposable income. In 2009, annualized savings for January and February exceeded $450 billion, or more than 4% of disposable income.

For those feeling bold enough to bargain shop, opportunities abound. Some deals, like housing and automobiles, might be obvious, but others, like diamonds, might not be.

Big Ticket Items

At the top of the list: housing. This may be the best time in a generation to buy a home. According to the S&P/Case-Shiller U.S. National Home Price Index, fourth-quarter 2008 prices were down 25% from the four quarter of 2006. The stimulus bill Congress passed in February includes an $8,000 credit for first-time home buyers. According to bankrate.com, average interest rates are beginning to dip below 5% for a 30-year, fixed-rate mortgage.

More good news for consumers: Automakers had a miserable 2008. Auto demand is down by approximately 33% since October and dealers have excess inventory backing up and bills coming due. It’s a good time to buy.

Incentives from manufacturers have “probably never been as strong as they are today,” says John McEleney, a multi-franchise auto dealer and chairman of the National Auto Dealers Association. If you’ve got good credit, you can expect 0% financing and cash rebates as high as $6,000.

Another deal? Diamonds. Anyone in the market for a something sparkly will find prices down 14%, on average, since their highs in mid-2008, according to Ken Gassman of the Jewelry Research Institute. Gassman says more expensive diamonds have seen even greater drops. A pristine 4-carat diamond that went for $70,000 per carat is now selling for $51,700 per carat–a 26% discount.

Consumer Goods

Each year it seems like TVs get cheaper and cheaper, but this year those decreases are starting to make larger flat-panel TVs far more affordable. The radio/television category in February’s Consumer Price Index was down 9% from a year ago as more manufacturers get into the flat-panel business, driving prices down.

Same thing for furniture. The Consumer Price Index shows prices fell 2.4% since August, but even bigger bargains are out there. With fewer people buying houses, fewer shoppers are filling them. Jim Sluzewski, a spokesman for Macy’s, says demand has noticeably decreased over the past year. Retailers have excess inventory, leading to lower prices and better deals for consumers.

Women’s fashion is also an interesting story. Right now there is no dominant fashion trend in women’s apparel, according to Jeffrey Klinefelter, senior research analyst on the Piper Jaffray consumer team.

Women have been taking greater advantage of lower-cost clothing retailers like Forever 21 and Target, not feeling the need to spend more on expensive outfits. This allows the lower-cost chains to reduce their prices through production cost savings and requires the higher-cost chains and designers to cut prices on their excess inventory in response to lower demand.

So if you’re ready to spend a little, now’s the time. Bargains are out there–for as long as the downturn holds.

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