Panama To Open Up Latin
American Diamond Market
By Andrew Beatty
PANAMA CITY, (Reuters) -
Diamond sellers are
setting their sights on
Latin America's
increasingly prosperous
middle class, which is
benefiting from economic
growth and stability, as
U.S. and European sales
of the rare stones slow.
Latin America is rich in
minerals, providing the
gold, silver and
emeralds that bankrolled
Spanish and Portuguese
empires, but it has long
been a backwater in the
diamond trade despite
modest production in
Brazil, Venezuela and
Guyana.
To meet the new demand,
Panama is building Latin
America's first diamond
exchange expected to be
recognized by the World
Federation of Diamond
Bourses, one of the main
players in the wholesale
diamond market.
"Latin America is the
last frontier," said
Erez Akerman, who heads
the Panama Diamond
Exchange, the group
behind the project. "We
are looking at four main
markets: Brazil, Mexico,
Argentina and Chile," he
told Reuters in the
exchange's temporary
offices in one of Panama
City's upscale
districts.
The $200-million
project, due to be up
and running by 2010,
will include a
purpose-built 50-story
building in Panama City
with safes, a
gemological institute,
laboratories, polishing
and cutting facilities
and a trading hall.
Panama will make the
exchange a tax-free zone
and has applied to join
the Kimberly Process to
stop the spread of
conflict diamonds so
rough stones can be
traded there.
Akerman hopes to draw
300 traders to Panama to
create a place for
buyers and sellers and
raise the profile of the
jewelry market in Latin
America.
"We believe the jewelry
market here grew about 5
to 10 percent a year in
the last 10 years. We
think we can change that
number to 20 to 25
percent per year," he
said.
NEW WEALTH
Economic growth and
ample access to credit
have sparked a boom in
parts of Latin America.
In the past two years,
some 23 million
Brazilians have jumped
from low-income status
to earn up to $745 a
month and the ranks of
the wealthy are
swelling.
Only China and India are
producing new dollar
millionaires at a faster
rate, according to
investment bank Merrill
Lynch.
Varda Shine, head of the
De Beers trading arm the
Diamond Trading Company,
which handles half the
world's trade in rough
diamonds, says Latin
America should be part
of the global expansion
already being felt in
India, China and Russia.
"Opportunities are
opening up in new
markets," Shine told an
industry conference in
Israel in February,
predicting that "in
addition to China and
India, Latin America
will become a large
market for diamond
jewelry."
Much of production in
Latin America today is
sold under contract to
established traders in
New York, Antwerp and
Israel and what little
regional trade exists is
highly informal, with
many diamonds being sold
on the black market to
avoid taxes.
"Right now, if we sell
on the Brazilian market
we are heavily taxed and
the market prices are 15
to 20 percent lower than
in Europe or elsewhere,"
said Kenneth Johnson,
president of
Toronto-based Vaaldiam
Resources, which runs
two diamond mines in
central Brazil producing
around 120,000 carats a
year.
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